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| Weekly Wrap Up |
The markets had a rough start last week. The Dow Jones and the Nasdaq both dropped 51.29 and 14.88 points respectfully on Monday. The S&P did not fare much better as it posted an 8.72 point decline. The airline sector took a dive as concerns about the economic implications of the swine flu increased. However amidst the stock market turmoil, General Motors announced a new cost-cutting restructuring plan that investors seem to believe will extend the lifeline of the struggling car maker. Verizon (VZ: Charts, News, Offers) also continued the good news as it reported better than expected first quarter earnings. Unfortunately, the markets' negative momentum carried over into Tuesday. The government's "stress tests" of Bank of America (BAC: Charts, News, Offers) and Citigroup (C: Charts, News, Offers) revealed that the banks will need to raise more capital. The details of these reports are expected to be released sometime this week. In addition, Pfizer (PFE: Charts, News, Offers) reported lower than expected earnings on an already conservatively adjusted quarter forecast. Adding to the bad news, Level 3 Communications Inc. (LVLT: Charts, News, Offers) posted a first-quarter loss of $132 million and plans to lay off 150 workers companywide. The early week skid stopped on Wednesday as Wall Street rallied after the Federal Reserve concluded that the recession has started to ease. The Standard and Poor's 500 Index added 18.48 points while the Nasdaq posted an 38.13 point gain. The Dow Jones also showed positive movement with a 168.78 point push. For the most part, stocks retreated into the red on Thursday after an announcement that Chrysler has begun bankruptcy proceedings. Dow Chemical (DOW: Charts, News, Offers) posted a 97 percent drop in first-quarter profit, but still managed to beat out analyst predictions. Despite the week's earlier mishaps, Friday managed to close out another week of gains for the markets. The better than expected economic reports seemed to boost the markets into positive territory. Although, Chevron (CVX: Charts, News, Offers) did report that it had missed first quarter sales and earnings expectations U.S. light crude oil for June delivery rose $2.14 to $53.26 a barrel on the New York Mercantile Exchange. More Market News
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| Economic News |
There is nothing like a monumental surge in government stimuli to help boost the markets and, by extension, people's perceptions of the news. I've been struck by how well the recent stock market rally illustrates an old saw -- the market writes the news -- because as this powerful rally has built over the past six weeks, enthusiasm has increased with it. The primary reason for the rally, in my opinion, is the extraordinary amount of liquidity and fiscal stimuli that has been provided by the Federal Reserve and the federal government. In a recent issue of Grant's Interest Rate Observer, Jim Grant charted the stimulus money (both monetary policy and government spending) as a percentage of gross domestic product for this downturn, compared with the previous 13 recessions. (Source: MSN Money) Full Story
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Consumer confidence in the U.S. jumped by the most since 2005 this month as stocks rallied, mortgage rates dropped and Americans anticipated more jobs would become available. The Conference Board’s sentiment index rose more than forecast to a five-month high of 39.2. A separate report showed the decline in home prices in 20 U.S. cities slowed in February for the first time since 2007, with the S&P/Case-Shiller index posting an 18.6 percent drop from the same month a year before. "There certainly is starting to be a shift here, where the data is either less bad or even starting to improve," Michael Darda, chief economist at MKM Partners LP in New York, said in an interview with Bloomberg Television. While "we certainly haven’t turned the corner yet" the economy "could bottom out between June and October of this year and then start" growing. (Source: Bloomberg) Full Story
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For most people, it was the last three months of 2008 in which the economy's plunge seemed harshest. Unemployment spiked to over 8% nationally. Housing prices plunged. The stock market swooned. Christmas was a bust. Economists too had expected the fall to be less sharp in 2009. But new data out this morning showed that in the first quarter, the economy continued its fall at nearly the same pace as the last three months last year. The Commerce Department's Bureau of Economic Analysis, the official arbiter of the size of the U.S. economy, reported on Wednesday that real gross domestic product decreased at an annual rate of 6.1% in the first three months of 2009. The median estimate of economists in a Bloomberg survey projected a decline of 4.7%. (Source: Forbes.com) Full Story
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| Business News |
Time Warner Inc. (TWX: Charts, News, Offers) said Wednesday it plans to spin off one or more of its struggling AOL businesses, which helped drag down its first-quarter profit by 14 percent. The owner of Time magazine, Turner Broadcasting and HBO earned $661 million, or 55 cents per share, for the period ended March 31, down from the year-earlier result of $771 million, or 64 cents per share. The adjusted results were better than Wall Street expected. Time Warner also maintained its full-year adjusted earnings forecast. "Although the company’s Board of Directors has not made any decision, the company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions," Time Warner said in a filing with the Securities and Exchange Commission. (Source: MSNBC) Full Story
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Chrysler LLC filed for bankruptcy protection Thursday and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes. The Obama administration said it had long hoped to stave off bankruptcy for the third-largest U.S. automaker, but it became clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline. (Source: Yahoo! Finance) Full Story
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ExxonMobil (XOM: Charts, News, Offers), the world's largest publicly traded company, said Thursday that its quarterly profit fell 58%, missing Wall Street estimates, as the global recession sliced into demand for crude oil. ExxonMobil, based in Irving, Texas, said earnings the first three months of the year came to $4.6 billion, or 92 cents a share, down from $10.9 billion, or $2.02 a share, a year ago. On average, analysts polled by Thomson Reuters were looking for net income of 95 cents a share. The last time Exxon had lower earnings was the third quarter 2003, when its net income was $3.65 billion. (Source: USA Today) Full Story
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| Technology Focus |
Verizon Wireless (VZ: Charts, News, Offers) is warming to the idea of an Apple (AAPL: Charts, News, Offers) partnership. Verizon Wireless is in talks with Apple to distribute two new iPhone-like devices, BusinessWeek has learned. Apple has created prototypes of the devices, and discussions reaching back a half-year have involved Apple CEO Steve Jobs, according to two people familiar with the matter. One device is a smaller, less expensive calling device described by a person who has seen it as an "iPhone lite." The other is a media pad that would let users listen to music, view photos, and watch high-definition videos, the person says. It would place calls over a Wi-Fi connection. One of these devices may be introduced as early as this summer, one person says. (Source: BusinessWeek) Full Story
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IBM (IBM: Charts, News, Offers) shares crept up in Tuesday trading after the tech bellwether announced plans to boost its quarterly dividend and launch a $3 billion stock repurchase program. The company raised its quarterly dividend from 50 cents to 55 cents a share, marking the 14th year in a row that IBM has increased its dividend. Not surprisingly, investors responded positively to the news, and IBM's stock rose $2.43, or 2.43%, to $102.38, outpacing a modest advance in tech stocks that saw the Nasdaq climb 0.14%. (Source: TheStreet) Full Story
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| Your Money |
Exchange-traded funds can be great for long-term investors, as long as you steer clear of these traps.When exchange-traded funds were introduced in 1993, they were one of the greatest innovations for long-term investing in decades. A class of mutual funds that trade throughout the day like stocks, "Better than Mutual Funds" is how we described them in one headline. Early on, ETFs mostly parroted broad benchmarks like the S&P 500 for rock-bottom fees and with excellent tax efficiency. The fanciest ones did nothing more exotic than break down the indexes into a handful of component parts--consumer staples, health care and financials, for example. (Source: Forbes) Full Story
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