Market briefing --- Lori (slow)
Nasdaq --- Brett (slow)
Rally --- Suzanne (slow)
recapping the day on wall street, as soon as crude oil hit $75 a barrel, the markets turned south but the dow managed a slight gain today -- speaking of google, the nasdaq clearly the laggard of the three averages. semi stocks, a big reason why. computer hardware makers did not fare all that much better. here’s brett gering at the market site with more. brett?
>> lori, it was the second straight session that the nasdaq composite finished lower, further away from wednesday’s fresh five-year high. decliners led advancers by a margin of 7-6. but the nasdaq still managed to close up about .7% for the week. the big winners this week, financial-related shares, those were the ones keeping the nasdaq composite in positive territory. that said, $75 oil was a drag on the nasdaq composite and you could see it in transportation-related shares. let’s look at some of the airlines that trade on the nasdaq composite, u.a.l., sky west, jetblue, all finishing the day lower. sky west lower most of the session. trucking and logistics companies posting better than 2% or more losses. that being said, computer-related stocks also in the minus column, led by dell computer. dell was downgraded by citigroup today for the first time in at least 10 years. the analysts there saying that dell is now not competing with the likes of h.p.xment, the likes of i.b.m. on pricing. so its growth measurements should be over for now and that stock seeing a three-year low today. intel down today, leading the semiconductors lower. it was the most-active stock by volume, down 2% on the day. it’s a three-year low for the share price of that stock and sandisk also lower today, down 8.33%. the world’s biggest maker of memory cards for portable electronics said first-quarter profit fell 26%. investors concerned that price cuts are hurting profitability. i want to show you some of the winners we had on the nasdaq composite. google leading the pack, a gain of 5.33%. first-quarter earnings exceeded even the highest estimates among the roughly 40 analysts covering that stock. that stock is up nearly 10% for this week alone. back to you.
>> thank you. u.s. stocks did finish the week higher despite the runup in oil today. let’s get the weekly talfrom -- tally from suzanne o’halloran. we did see resilience all week for stocks.
>> that’s right. the afternoon surge in oil prices threatened the week’s rally but the better-than-expected earnings reports except stocks in the black for the week. in fact, 70% of the 169 companies in the s&p 500 that have reported have exceeded analysts’ estimates. and the range is broad. computer companies such as google, as we covered yesterday, yahoo and old manufacturing names, general motors and 3m to name a few. the dow and s&p gained nearly 2% for the week. the nasdaq just under 1%. larry adams, chief investment strategist with deutsche bank, expects the s&p to reach between 1320 and 1340. the s&p is at 1311. so not too far from the low end of his target. if company earnings continue to beat expectations, larry says he’ll boost that forecast higher.
>> if earnings continue to come in better than estimates, we could raise that higher and if the goldilocks scenario comes to fruition with growth at 3% and contained inflation with core around 2%, we’ll have more confidence in next year’s earnings and would take that estimate higher.
>> the rally this week is broad. 13 of the 24 industry groups in the s&p rose for the week. energy, autos and raw material producers are leading the gains. the laggards were telecom, tech hardware and food. although the bulk of the earnings news was positive, we did have a weak report from intel and intel also lowered its sales forecast for the june quarter. intel was one of the dow’s weaker performers this week along with disney and home depot. contrary to that, dow members united technologies, caterpillar and boeing all are trading around record levels. as oil did hit the $75 level, and with gasoline futures higher, we did see a pullback in stocks today, although higher energy prices have been an achilles heel for stocks, one investor’s view is that higher prices could signal fewer rate snctions―increases by the fed.
>> that’s the balancing act between oil prices over $80, difficult for the market , and yet more dovish tones from the federal reserve governors, susan bies talking about the economy being more in equal equilibrium now and those are the competing forces we see at the moment but in general, a more dovish tone from the fed and provided oil prices don’t go above $80, good news in general for the equity market .
>> $75 is not far from 80 and we’ll keep an eye on that.
>> arch coal posted its biggest gain in five years. other coal producers rallied in sympathy. one analyst says the market is gone gangbusters. ford hits another bump in the road, delivering its biggest quarterly loss since 2001. revenue also fell. detail and investor reaction straight ahead.
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Listen Focus: Money & Politics
>> 20’s minutes -- 20 minutes away from “money & politics,” michael mckee is here.
>> finance ministers from the group-of-seven nations are meeting in washington and have a lot to talk about with $75 oil and the huge u.s. current account deficit. will they do anything but talk, however? we’ll ask expert william cline and get the outlook for oil from energy analyst neal dingmann. we’ll take a a last look at hu jintao’s visit to the u.s. it hasn’t impressed china critic, representative sandra levin. • sander levin. i’m sure you’ll stay right there and watch.
>> we’ll catch you later. shares of ford motor plunging today on a $1.2 billion net loss, missing analysts’ estimates. greg miles joins us with details. interesting, g.m. and now ford.
>> that’s right and the stock down about 8% for the day. ending near its lows. investors, once they took a closer look, were involved in the selloff. when you look at the operating numbers for the company, they didn’t look all that bad. they came in at 24 cents a share, only a penny below forecasts. but when you look at the net income income figures, it was ugly with a loss of 64 cents a year versus a profit of 60 cents a year ago. chief financial officer don leclair told us in an interview earlier today that fixing the company or restructuring it for the long term is the number one priority. let’s listen to what the c.f.o. had to say.
>> job number one is to improve our business and that’s what we’re doing and that’s why we went through all the restructuring discussion this morning and we’re going through the painful steps of closing plants and reducing our work force as well as developing new products and introducing those new products to the marketplace. that’s really job number one. we do that well, the credit rating will come along with it.
>> the restructuring was a big factor with the north american operations in the first quarter. that’s the operation they tried to turn around with $1.6 billion in losses for all of last year in that operation and the first quarter, the unit lost $457 million pretax versus a profit in the same quarter a year ago of $663 million as they closed plants, cut jobs and experienced falling sales. that’s a billion dollar swing in profit from a year ago. ford motor credit did pretty well in the quarter, comparatively, but still they had a decline in earnings of 33%. so not a good quarter for ford.
>> summing it up, thank you. on the other side of the spectrum, arch coal had its best day in five years. shares rose almost 10%, closing at $92.85 a share on very heavy volume. other coal producers rallied along with it. peabody up 6.5%. gains for consol energy and massey energy, those shares up more than 2%. the gains took place after the release of arch’s first-quarter results, the company earning 84 cents a share compared to seven cents a share last year. analysts were expecting 58 cents. a big surprise. joining us on the phone for a closer look is analyst at rhame james. • raymond james. union pacific earlier reported huge coal shipments and arch coal reporting profits increasing nine-fold. where is all of this coal going?
>> it’s going primarily to the u.s. where, even, believe it or not, despite the lack of winter which you’ve heard about in the gas markets , we’re still running coal demand up in the neighborhood of 2%-plus, year in, year out, last year was closer to 3 and we’re still undersupplied in the market . it’s been a great market on the pricing side.
>> if we’re undersupplied, should we assume coal prices should continue to climb?
>> certainly with where natural gas prices and crude oil prices are today, you have a lot of room for that to happen. it kind of goes in stair steps and right now we’ve seen prices more than double over the last two years in different regions and we’ve kind of been sitting in a fairly steady range and right now the coal companies are catching up their contract base to those spot prices which were pretty strong and, yeah, it wouldn’t surprise me at all to see prices gain further ground over the coming years.
>> and the demand will keep up with that to continue buoying the prices?
>> when you’re looking at natural gas be and crude oil trading at $8 and with crude at $75, it’s almost over $12 per million b.t.u.’s and coal at a relative price between $1.75 and $3 per million b.t.u.’s, a lot of room on the relative economics.
>> explain the link between coal and $75 crude oil.
>> if you look at the standby ratio between coal and natural gas, it’s a roughly 6-1 ratio. take the price six and―take the price of coal and divide by six. $8 gas today, a little over $12 crude and the different products range from anywhere from $1.75 delivered to over $3.
>> we only have 10 seconds. should we be buying coal stocks right now?
>> generally yes. the stocks have been on a tear recently so may be waiting for a pullback in the short term but on the long term, coal has a great future
>> thank you.
