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After a dull day for stocks, stocks got a nice jolt that could help the market on Thursday from better-than-expected guidance from BlackBerry maker Research In Motion (RIMM, news, msgs).
Research In Motion shares were up 4.2% to $120.60 in after-hours trading. The shares had dropped 1.4% to $115.79 in regular trading. The company expects fiscal first quarter earnings to double from a year ago. And its fourth-quarter earnings revenue, which were up 100% from a year ago, easily beat Wall Street estimates.
Research in Motion's results came after Federal Reserve Chairman Ben Bernanke said the economy may well be heading into a short-lived recession and the stock market finished mostly lower.
The market had surged sharply higher on Tuesday, with the Dow Jones industrials jumping 391 points, on hopes that the financial system had seen the worst of its problems.
The Dow closed down 49 points today, or 0.4%, to 12,606. The Standard & Poor's 500 Index was off 3 points, or 0.2%, to 1,368, and the Nasdaq Composite Index was off 1 point, or 0.1%, to 2,361.
Research In Motion expects to earn 82 to 86 cents a share in the quarter on revenue of $2.2 billion to $2.36 billion, more than double its first-quarter 2008 results. Analysts have been expecting 76 cents in earnings and $2.07 billion in revenue.
For the fiscal-fourth-quarter, Research In Motion said it earned 72 cents a share on revenue of $1.88 billion. Analysts had expected 70 cents in earnings and $1.85 billion in revenue. And it added 2.18 million new subscribers to its service in the quarter, at the high end of analyst estimates, and now has 14 million subscribers.
The company expects to add another 2.2 million subscribers in the first quarter.
While Research In Motion shares were higher in after-hours trading, bullish reports before have sent the stock up 10% or more. Today's reaction suggests investors are a bit cautious, Reuters said.
The shares are up more than 177% since the end of 2006. And that’s despite a 40% pullback between November and January.
Financial stocks drop back
Keeping markets in check today was a pullback in financial stocks, which had exploded on Tuesday. JPMorgan Chase (JPM, news, msgs), up 9.4% on Tuesday, was off 1.6% to $46.24 today. Citigroup (C, news, msgs) rose just 0.8% to $24.02 after an 11.3% rally on Tuesday.But healthcare stocks, which include drug stocks, were the weakest link.
Stock Chart (Year)
Research In Motion
The market leaders were energy and metals stocks, as prices for oil, copper, gold and other commodities were higher today. Newmont Mining (NEM, news, msgs) was up 3.3% to $46.28. Murphy Oil (MUR, news, msgs) was up 2.4% to $85.26.
Crude oil closed up 3.8% to $104.83 a barrel. Gold rose 1.4% to $900.20, and copper added 1.9% to $3.878 a pound. The dollar was lower today against the euro and the British pound. Interest rates were up slightly, with the 10-year Treasury note yielding 3.58%, up from 3.55% on Tuesday. The yield was 4.46% on Dec. 31%.
Twenty-one Dow stocks finished lower today, but 275 S&P 500 stocks finished higher, along with 53 stocks in the Nasdaq-100 Index ($NDX.X).
Department store chain Dillards (DDS, news, msgs) led the S&P 500 with a 14.5% gain to $21.08 after the company agreed to add outsiders to its board to avoid a proxy fight.
Ohio banking company National City (NCC, news, msgs) was the S&P loser, down 7.7% to $9.22. The company is mulling a possible sale because of losses from the mortgage crunch.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $104.83 | $100.98 | $3.85 | 3.20% | 9.22% |
| Heating oil (per gallon) | $2.9510 | $2.8797 | $0.0713 | -3.22% | 11.38% |
| Natural gas (per million BTU) | $9.8320 | $9.7240 | $0.1080 | -2.66% | 31.39% |
| Unleaded gasoline (per gallon) | $2.7736 | $2.6392 | $0.1344 | 6.01% | 11.35% |
Bernanke: A slowdown has started
The economic slowdown probably started in the fourth quarter, Fed Chairman Bernanke told the Joint Economic Committee."Our estimates are that we are slightly growing at the moment, but we think that there's a chance that for the first half as a whole, there might be a slight contraction."
The Fed has lowered its target for benchmark interest rates by 3 percentage points to 2.25 percent since mid-September, and Bernanke did not close the door to more rate reductions.
However, he said rate cuts to date and emergency measures to provide liquid funds to markets should promote growth over time -- remarks traders in financial markets saw as a signal that the Fed's sharp rate-cutting action may be nearing an end.
Bernanke said the economic outlook was uncertain and that risks to the Fed's somber forecast were to the downside. He added that inflation also remained a concern, saying uncertainty surrounded the outlook for prices as well.
Bernanke said that short-term pressures in bank funding have eased somewhat, but "financial markets remain under considerable stress."
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A Bear Stearns failure meant chaos
Bernanke spoke about the Fed's support for JPMorgan Chase’s takeover of Bear Stearns (BSC, news, msgs) as well. Fed loan guarantees to JPMorgan are the key to that deal. Bernanke said that the damage caused by a failure of Bear Stearns would have rippled across the entire U.S. economy.When Bear Stearns told the Fed on March 13 that it was going to have to file for bankruptcy, Bernanke said, the Fed believed that the issues posed by the collapse of the investment bank were bigger than the company itself.
"Our financial system is extremely complex and interconnected," Bernanke said, "And Bear Stearns participated extensively in a range of critical markets. With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence."
There will be much more on the Bear Stearns deal on Thursday, when JPMorgan CEO Jamie Dimon, Bear Stearns CEO Alan Schwartz and others testify about what led the Fed to act before the Senate Banking Committee.
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Monsanto's guidance disappoints
A disappointment today was seed-and-agricultural chemical maker Monsanto (MON, news, msgs), whose shares fell 1% to $112 in regular trading.The shares were down 15 cents to $111.85 in after-hours trading.
Monsanto is a global leader in the development of biotech corn, soybeans, cotton and other crops.
Stock Chart (Year)
Monsanto
On an ongoing basis, the company earned $1.79 a share for second quarter, which ended February 29. Analysts had been looking for $1.75 a share, Reuters said. Revenue was $3.8 billion, up 45% from a year ago. Monsanto shares were up 113% in 2007 but are off 13% from an intraday high of $129.80 on Jan. 15.
World markets follow Tuesday's rally
Even if U.S. markets were flat today, global markets reacted strongly to Tuesday's big rally that saw the Dow rise 391 points.Japan's Nikkei 225 Index rose 4.2% to 13,189.36. Hong Kong's Hang Seng Index climbed 3.2% to 23,872.4. China's Shanghai Composite Index finished 0.6% higher, having gained as much as 4.1% at one point. But that market is still off 45% from its peaks last fall.
Meanwhile, FTSE-100 Index ($GB:UKX) in the United Kingdom was up 1.1% to 5,915.90. Germany's DAX Index ($DE:DAX) added 0.9% to 6,777.44.
"Clearly there is a recognition the credit markets are healing -- usually stocks begin to rally about six months before the end of a slowdown," said Jeffrey Kleintop, chief market strategist at LPL Financial Services, to MarketWatch.com.
Continued: Where, oh where has the iPhone gone?
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