Intel cheers Street; crude nears $114

By Charley Blaine and Elizabeth Strott

Stocks could see a bounce on Wednesday after upbeat guidance from chip giant Intel (INTC, news, msgs).

Intel shares were up 7.3% to $22.43 in after-hours trading, after gaining 1.1% to $20.91 in regular Nasdaq trading.

The Intel report came after stocks moved modestly higher and crude oil nearly hit $114 a barrel in New York. Crude closed at a new high of $113.79, up 1.8% from Monday.

Wholesale gasoline also hit a record $2.88 a gallon on the day, up 2.1% from Monday, which means, as Mark Waggoner of Excel Futures told CNBC this afternoon, there will be no relief for consumers until late spring and possibly midsummer.

The national average retail price of gasoline hit $3.39 a gallon today, up a penny from Monday and 18.5% in the last year, AAA said.

Major indexes moved up on higher prices for energy and financial stocks. The Dow Jones industrials closed up 60 points, 0.5%, to 12,362. The Standard & Poor's 500 Index was up 6 points, or 0.5%, to 1,334, and the Nasdaq Composite Index was up 10 points, or 0.5%, to 2,286.

Intel, a Dow component, reported first-quarter earnings of $1.44 billion, or 25 cents a share, down from $1.64 billion, or 28 cents, a year ago. But the earnings were in line with analyst estimates.

Revenue was a touch ahead of estimates at $9.67 billion. The gross profit margin of 53.8% was in line with estimates. The gross profit margin is a key measure of Intel's profitability.

For the second quarter, the company expects revenue of $9 billion to $9.6 billion. The consensus Wall Street estimate has been $9.2 billion. It sees a gross profit margin of 56%, rising to 57% for the full year.

The report cheered analysts, who had been concerned, as Cody Acree of Stifel Nicolaus told Reuters, that weakness in the economy was going to hurt sales of personal computers.

More than anything, he added, "Intel is not giving an indication that the wheels are coming off."

In fact, computer makers Hewlett-Packard (HPQ, news, msgs), Dell Inc. (DELL, news, msgs) and Apple (AAPL, news, msgs) were all higher in after-hours trading.

Intel isn't expecting much from its flash-memory business, whose revenue fell 15% to $497 million from $586 million in the fourth quarter. It was up 6%, however, from a year ago. Chief Financial Officer Stacy Smith told reporters that the company sees a supply glut for the rest of 2008.

The chip maker lowered its first-quarter gross-margin forecast last month, as weak prices for NAND memory chips -- flash-memory chips used in products like digital cameras and mp3 devices -- hit the company.

The market for flash-memory chips has been glutted this year, a common problem for semiconductors generally, and that has offset gains in microprocessors, which have long been Intel's profit engine.

Sales for processors were up 12% in the fourth quarter, while sales of other chips, which include flash memories, were down 7.8%, reflecting falling prices.

Semiconductor stocks nearly regained early losses ahead of the Intel report. The Philadelphia Semiconductor Index ($SOX.X) finished down 0.2% to 352.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$113.79	$111.76	$2.03	12.02%	18.56%
Heating oil (per gallon)	$3.2739	$3.2029	$0.0710	7.37%	23.57%
Natural gas (per million BTU)	$10.2050	$10.0530	$0.1520	1.03%	36.38%
Unleaded gasoline (per gallon)	$2.8810	$2.8218	$0.0592	10.12%	15.67%

Oil shares, financials boost market

ExxonMobil (XOM, news, msgs) was the third-best performer among the 30 Dow stocks with a 1.2% gain to $90.80. Chevron (CVX, news, msgs) added 1% to $90.17.

And a number of financial stocks had strong performances, including Regions Financial (RF, news, msgs), up 8.4% to $20.12, and M&T Bank (MTB, news, msgs), up 6.3% to $85.86. Both reported better-than-expected earnings.

Shares of beleaguered savings bank Washington Mutual (WM, news, msgs) jumped 3% to $10.66 and rose briefly an additional 4% after reporting a loss of $1.40 a share for the quarter because investors were relieved the loss wasn't bigger. The loss was also in line with its guidance last week. It also said it had closed a deal that brought in $7 billion in new capital from private-equity firm TPG Group. At 6:30 p.m., WaMu was up 0.4% to $10.70.

Thanks to pricey oil, airline stocks were battered this afternoon despite the announcement of a merger of Delta Air Lines (DAL, news, msgs) and Northwest Airlines (NWA, news, msgs). Delta shares were down 12.6% to $9.16, and Northwest shares were down 8.4% to $10.28.

Bad weather forced the closure of export terminals in Mexico, analysts at Action Economics said.

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The news follows an announcement by Italy's Eni SpA on Monday that a fire at one of its oil plants in Nigeria had caused a disruption in production of approximately 5,000 barrels of oil a day.

Crude is up 78% over the past year, up 157% since the end of 2004 -- and up a whopping 929% since hitting $10.86 a barrel at the end of 1998.

Earnings Wednesday will include reports from three Dow components: IBM Corp. (IBM, news, msgs), JPMorgan Chase (JPM, news, msgs) and Coca-Cola (KO, news, msgs).

In addition, banking giant Wells Fargo (WFC, news, msgs) and eBay Inc. (EBAY, news, msgs) will release profit reports.

Of these five, watch Wells Fargo, which comes out before the market open and has a big exposure to the mortgage market, and IBM, which will come out after the close.

Delta, Northwest plan to merge

Hoping to ease the pressure of rising fuel costs and intense competition, Delta and Northwest airlines late Monday announced plans for a merger that would create the world's biggest airline.

Northwest shareholders would get 1.25 shares of Delta for each Northwest share owned. That represented nearly a 17% premium to Northwest's closing price on Monday, but the premium was pretty well wiped out today.

Delta said the combined airline would have an enterprise value of $17.7 billion and would be called Delta. It would be based in Atlanta and have access to 390 destinations in 67 countries.

• Video: More on Delta and Northwest

Delta and Northwest have been trying to merge for months, but talks had stalled when unions representing the two groups of pilots couldn't agree on a plan that would integrate seniority systems.

State Street shares tumble on mortgage worries

State Street (STT, news, msgs) this morning reported a 69% jump in first-quarter profit.

But the stock fell 9.9% to $69.23 on the day on concern the company will be forced to bail out four mortgage-backed debt funds that are sitting on $1.49 billion of potential losses. The stock-price decline was the biggest for the asset manager in five years.

The company has purchased $850 million of securities from the funds, known as conduits, at a loss of $11.6 million, executives said today on a conference call. The off-balance-sheet investment pools hold $28.3 billion in assets, mostly mortgage debt. Boston-based State Street manages the funds and has agreed to provide backup financing.

Investors are worried that State Street, the world's largest money manager for institutions, will be forced to spend more money to keep the funds afloat, Bloomberg News said.

That's what Citigroup (C, news, msgs) did in December when it rescued seven similar funds (called structured investment vehicles) and brought $49 billion of assets onto its balance sheet.

State Street earned $530 million, or $1.35 per share, up from $314 million, or 93 cents per share, in the same quarter last year. On a non-GAAP basis, State Street earned $1.39 per share, topping Wall Street's estimate of $1.30 per share. (GAAP is an abbreviation for generally accepted accounting principles.)

Johnson & Johnson shows a 40% earnings gain

Drug giant and Dow component Johnson & Johnson (JNJ, news, msgs) reported first-quarter earnings of $3.6 billion, or $1.26 per share, up from $2.57 billion, or 88 cents per share in the same quarter a year ago. Analysts were looking for earnings of $1.20 per share for the first quarter.

• Video: Inside Johnson & Johnson earnings

Revenue rose to $16.2 billion from $15 billion, thanks to strong sales of its consumer products including Tylenol and Sudafed.

Shares, however, slipped 9 cents, or 0.1%, to $65.65.

Producer prices rise in March

The Producer Price Index rose 1.1% in March on soaring food and oil prices, the Commerce Department reported this morning. The increase was well above Wall Street's expectations and followed a 0.3% increase in February. Economists had expected wholesale prices to rise 0.4%.

The core PPI, which excludes volatile food and energy prices, rose 0.2% last month, in line with analysts' expectations and down slightly from February.

Year over year, the PPI is up 6.9%, and the core PPI is up 2.7%.

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The Federal Reserve continues to worry about inflation despite focusing on the weakening economy in recent months, and Wednesday's report on consumer prices could give more clues to the inflation picture. Economists are expecting the CPI to rise 0.3% in March from an unchanged reading in February.

Short hits from the markets -- 4 p.m.

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.100%	1.075%	0.025	-18.52%	-64.97%
5-year Treasury note yield	2.664%	2.586%	0.078	5.09%	-22.89%
10-year Treasury note yield	3.570%	3.503%	0.067	3.00%	-11.52%
30-year Treasury bond yield	4.405%	4.341%	0.064	1.38%	-1.21%
Currencies
U.S. Dollar Index	72.330	72.130	0.200	0.23%	-5.69%
British pound in dollars	$1.9646	$1.9778	-0.0132	-0.96%	-1.24%
Dollar in British pounds	£0.5090	£0.5056	0.0034	0.97%	1.25%
Euro in dollars	1.5795	1.5845	-0.0050	0.28%	8.07%
Dollar in euros	€ 0.6331	€ 0.6311	0.0020	-0.28%	-7.47%
Dollar in yen	101.84	101.10	0.74	2.03%	-8.95%
Canadian dollar in U.S. dollars	$0.983	$0.982	$0.0003	0.50%	-1.04%
U.S. dollar in Canadian dollars	$1.018	$1.018	$0.0004	-0.51%	1.06%
Commodities
Gold	$932.50	$928.70	$3.80	0.59%	11.28%
Copper	$3.8570	$3.8975	-$0.04	-2.22%	26.83%
Silver	$17.8300	$17.7900	$0.04	0.79%	19.50%
Corn	$6.0600	$5.9175	$0.14	6.83%	33.04%
Crude oil (NYMEX) (per barrel)	$113.79	$111.76	$2.03	3.31%	18.56%

Bear Stearns' profit plunges

Fulfilling dire expectations, Bear Stearns (BSC, news, msgs) reported a plunge in first-quarter profit, although the struggling financial-services company still managed to make some money.

Bear said late Monday that it earned $115 million, or 86 cents per share -- a 79% drop from the $554 million, or $3.82 per share, it earned in the same quarter in 2007. Analysts had expected 87 cents per share.

Revenue fell 29% to $3.43 billion.

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"The continuation of the global liquidity crisis coupled with a further re-pricing of credit risk created a difficult operating environment," Bear said in a statement.

The company's quarter ended on Feb. 29, just before Bear nearly collapsed in mid-March. JPMorgan Chase and the Federal Reserve helped rescue the company, with JPMorgan offering first $2 and then $10 per share for Bear stock.

Shares of Bear dipped 4 cents to $10.07 today.

Foreclosures surge in March

Meanwhile, the mortgage mess -- which precipitated Bear's problems -- continues to cause havoc. The number of U.S. foreclosure filings jumped 57% in March, from last year, according to data from RealtyTrac. Foreclosure filings were up 5% from February.

More than 234,000 homes were in some phase of the foreclosure process -- either default notices, auction-sale notices or bank repossessions -- last month, the report said. Auction notices rose 32% last month from March 2007.

• Homeowners who just walk away

James Saccacio, CEO of RealtyTrac, said that's an indication that defaulting homeowners are "simply walking away and deeding their properties back to the foreclosing lender."

Nevada had the highest foreclosure rate last month, the 15th month in a row that the state has topped the list. One out of every 139 households in Nevada received a foreclosure filing in March, nearly four times the national rate, RealtyTrac said.

California was in the No. 2 spot, followed by Florida.

"What this report shows us is that the housing-market correction is ongoing and we shouldn't expect the subprime problem to vanish anytime soon," said Jared Bernstein, a senior economist with the Economic Policy Institute, to CNNMoney.com.

About 2.5 million foreclosed properties will be on the market this year and next, Lehman Bros. analyst Michelle Meyer wrote in a recent client report.