So Who Benefits From Higher Rates?
Stocks were
higher Wednesday after the Fed raised rates by 1/4 point, the first rise in four
years. Dick Bernet, the chief
economist at Morgan Stanley, expecting rates to reach 2% by the end of 2004 and
3% by mid-2005.
As of yesterday, Fed fund futures were pricing in a 30-40% chance of a 50 bp
rise in August.
Money market and CD investors will welcome the rate
rise, as will people living off interest and those saving up for a large
purchase. The Chicago PMI dropped unexpectedly to an eight-month low, down to
56.4 with slowing vehicle sales.
Oil rose $1 to 37.06; Saudi
Arabia –which has been producing well above its quota — said that the price
was at a fair value.
Research In Motion
(
RIMM |
Quote |
Chart |
News |
PowerRating)
jumped after reporting a profit of $55 million with sales that more than doubled
to $269.6 million. The company expects Q1 revenue to reach $250 million with EPS
of 21 cents. Piper Jaffray also raised 2005 pro-forma profit forecasts to $1.78
a share with revenue at $1.3 billion. CIBC raised their price target on the
stock to $80.
General Mills
(
GIS |
Quote |
Chart |
News |
PowerRating)
reported quarterly earnings that rose by 24% to $278 million on net sales of
$2.79 billion with strengths in cereal and yogurt products. For 2005, it expects
to earn $2.72 a share and raised quarterly dividend to 31 cents a share.
| Dow | +22.05 | 10435.48 |
| S&P 500 | +4.55 | 1140.75 |
| Nasdaq | +12.86 | 2047.49 |
Strong today were Gold and
Silver
(
XAU.X |
Quote |
Chart |
News |
PowerRating) +2.02%, Oil Services
(
OSX.X |
Quote |
Chart |
News |
PowerRating) +1.75%,
Homebuilders
(
HGX.X |
Quote |
Chart |
News |
PowerRating) +1.73%.
Weak today were Disk Drives
(
DDX.X |
Quote |
Chart |
News |
PowerRating) -0.64%, Drugs
(
DRG.X |
Quote |
Chart |
News |
PowerRating), -0.21%.
Economic news release today:
Chicago PMI that was much lower at 56.4 for the month of June; Fed raises rates
1/4 point.
10-year Notes were +230
at 109 105
The dollar
was -0.54 at 88.80
Gold was +0.30 at 392.10
Crude Oil was +1.40 at
37.06
Volume was 1.47 billion
on the NYSE, and 1.72 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 2430 | Up Vol 1024 |
| Declining | 872 | Down Vol 395 |
| Ratio | 2.78 | 2.59 |
| Nasdaq |
||
| Advancing | 1912 | Up Vol 1027 |
| Declining | 1237 | Down Vol 531 |
| Ratio | 1.54 | 1.93 |
Stocks in the news:
Kmart
(
KMRT |
Quote |
Chart |
News |
PowerRating) agreed
to sell up to 54 stores to Sears for $621 million. The deal will leave
Kmart with 1,420 stores and $20 billion in annual revenue.
Taser International
(
TASR |
Quote |
Chart |
News |
PowerRating) rose
8% after winning a $1.8 million contract from the US military. It is the largest
contract in the company’s history.
Lexar Media
(
LEXR |
Quote |
Chart |
News |
PowerRating) fell after
warning it may report a loss of $18 million on revenue of $155 million on
aggressive price cutting in the industry. The company will report Q2 numbers on
July 15th.
Autozone
(
AZO |
Quote |
Chart |
News |
PowerRating) dropped after
announcing same-store sales down 1% with overall retail sales for the quarter
down 3%.
Brice Wightman
bricew@tradingmarkets.com