Microsoft’s Move, Plus, The Cost Of High Oil
Stocks
were mixed on light volume as investors weighed mixed earnings reports and
weaker-than-expected economic data. Weekly initial claims rose by
12,000 to 345,000. The Dow fell 50 points after a disappointing Philly Fed
number — 23.8 in May vs. 32.5 in April. The four-week moving average fell 2,750
to 333,500; the average gives a better sense of the employment picture than the
volatile weekly number.
Ciena
(
CI |
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News |
PowerRating) reported a
second-quarter loss of $76.2 million with revenue that rose to $74.7 million,
below consensus. The company expects third-quarter revenue to increase by up to
30%.
Intuit
(
INTU |
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News |
PowerRating)
reported a profit of $264 million with revenue up 12% to $713 million. Shares
fell 8% after the company issued a negative outlook, expecting a net loss of 11
cents with revenue in the $268 million range. Microsoft
(
MSFT |
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News |
PowerRating) plans
to cut expenses by $80 million a year by charging employees for name-brand
drugs, cutting vacation time for new employees and reducing employee stock
discounts. MSFT has $50 billion in cash.
Oil prices remained strong,
trading above $41 a barrel. OPEC will meet on Saturday to discuss possible quota
increases; Saudi Arabia has proposed a 1.5 million barrel per day
increase. Saudi Arabia’s oil minister offered to build 2 refineries in the US.
Cost: $70-100 million. It takes 5-7 years to get a refinery up and running. The
last refinery built in the US was in the ’80s.
Airlines were stronger on
improved April traffic data, although high oil prices are taking a toll.
Goldman Sachs lowered estimates on the sector, saying if oil stays at
current levels, airlines will lose $3.2 billion this year, and said they feel
$40 is here to stay. In American Airlines’ case, for example, a 1 cent
increase in the price of oil amounts to a $39 million annual hit. Most major air
carriers raised fares this week, starting with Continental Airlines.
IPOs Blue Nile (NILE)
and Animas (PUMP) began trading today. Blue Nile, an online jewelry
retailer, was priced at $20.50 and closed at $28.38. Animas, a maker of insulin
pumps, was priced at $15 and closed at $18. The company estimates that 3% of the
global population has diabetes. The next big name scheduled: Domino’s Pizza
(NYSE: DPZ). Expected range, $15-17.
The possibility of higher
interest rates continues to be a topic among traders. Ben Bernanke said
the Fed should be able to push rates up at a gradual pace.
After the close, Wet Seal
(
WTSLA |
Quote |
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PowerRating) beat by 0.03 but was light on revenues; Sharper Image
(
SHRP |
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PowerRating)
beat by a penny; Aeropostale
(
ARO |
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Chart |
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PowerRating) beat by 0.02 and raised its Q2
outlook; Electronics Boutique
(
ELBO |
Quote |
Chart |
News |
PowerRating) beat by 0.03; Marvell
(
MRVL |
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Chart |
News |
PowerRating)
beat by 0.02, ex-items and beat on revenues; Serena Software
(
SRNA |
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PowerRating)
beat by 0.04, ex-items; Nordstrom
(
JWN |
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News |
PowerRating) beat by five cents and guided
higher.
| Dow | -0.07 | 9937.64 |
| S&P 500 | +0.50 | 1089.18 |
| Nasdaq | -1.58 | 1896.59 |
Strong today were Banks
(
BKX.X |
Quote |
Chart |
News |
PowerRating) +2.54%, Airlines
(
XAL.X |
Quote |
Chart |
News |
PowerRating) +2.79%, Homebuilders
(
HGX.X |
Quote |
Chart |
News |
PowerRating) +0.43% Natural Gas
(
XNG.X |
Quote |
Chart |
News |
PowerRating) +0.39%
Weak today were Disk Drives
(
DDX.X |
Quote |
Chart |
News |
PowerRating) -1.61%, Networking
(
NWX.X |
Quote |
Chart |
News |
PowerRating) -1.21% and Healthcare
(
HMO.X |
Quote |
Chart |
News |
PowerRating) -0.85%.
Economic news releases today:
Initial claims that rose to 345,000, leading indicators up 0.1%, Philly Fed for
May, 23.8 vs. 31 consensus.
10-year Notes were +175
at 109 085
The dollar
was +0.49 at 91.00
Gold was -3.45 at 378.15
Crude Oil was -0.87 at
40.65
Volume was 1.21 billion
on the NYSE, and 1.52 billion on the Nasdaq.
Market breadth was mixed.
| NYSE | Issues | |
| Advancing | 1936 | Up Vol 522 |
| Declining | 1371 | Down Vol 578 |
| Ratio | 1.41 | 1.10 |
| Nasdaq |
||
| Advancing | 1299 | Up Vol 608 |
| Declining | 1813 | Down Vol 808 |
| Ratio | 1.39 | 1.32 |
Stocks in the news:
Symantec
(
SYMC |
Quote |
Chart |
News |
PowerRating)
acquired anti-spam technology leader Brightmail in a cash deal for $370 million.
Brightmail protects networks of enterprise service providers and wireless
carriers by filtering out spam viruses at the Internet Gateway.
Network equipment distributor Black Box
(
BBOX |
Quote |
Chart |
News |
PowerRating)
reported earnings of $11.5 million on lower revenue of $130 million. The
earnings included a charge of $2 million to a federal securities lawsuit. Black
Box also expects to raise its dividend by 4 cents to 24 cents a share.
Brocade Communications
(
BRCD |
Quote |
Chart |
News |
PowerRating) reported a smaller net loss of $1.98 million on
revenue that was up 11% to $145.6 million. For the third-quarter, the company
forecasted an EPS of 4 cents on revenue of $150 million
Tellabs
(
TLAB |
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Chart |
News |
PowerRating) announced a deal to
purchase Advanced Fibre Communications
(
AFCI |
Quote |
Chart |
News |
PowerRating) for $1.9 billion in a
cash and stock deal. Under the deal, AFC shareholders would receive 1.55 shares
of Tellabs shares and $7 in cash for each AFCI share.
Brice Wightman
bricew@tradingmarkets.com