There was every reason for the stock market to fall apart today: a miserable economy, a weak open, rotten earnings from U.S. Steel (X, news, msgs), the global outbreak of swine flu and struggling banks.
But the market managed to remain basically even on the day. Moreover, the market looks like it will end April with a gain and its first two-month gain since last summer.
The Dow Jones Industrial Average ($INDU) closed down a whopping 8 points to 8,017. The index cross the unchanged level 82 times during the day, Dow Jones officials said.
The Standard & Poor's 500 Index ($INX) was down 2 points, 0.2%, to 855. The Nasdaq Composite Index ($COMPX) was off 6 points to 1,674, while the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, was down 8 points to 1,362.
The weakness: banks, falling on reports that the government wants Bank of America (BAC, news, msgs) and Citigroup (C, news, msgs) to raise more capital. Bank of America was off 8.6% to $8.15. Citigroup dropped 5.9% to $2.89.
If there was a hero today, it was IBM (IBM, news, msgs), which bumped its dividend up 10%. The stock rose 2% to $101.94.
Also adding a little cheer was a report that consumer confidence was improving off badly depressed levels. And a report on home-price trends offered the hope that price declines are starting to slow down.
In other words, less bad was a good thing.
Shares of Verizon Communications (VZ, news, msgs) were up 1.4% to $30.96 on news that the company is working with Microsoft (MSFT, news, msgs) to develop a competitor device to Apple's (AAPL, news, msgs) iPhone. Microsoft was off 2.3% to $19.93. Apple slipped 0.7% to $123.90. (Microsoft is the publisher of MSN Money.)
Eleven of the 30 Dow stocks were higher, along with 199 S&P 500 stocks and
35 Nasdaq-100 stocks.
The Nikkei 225 Index ($JP:N225) fell 2.7% to 8,493, the MSCI Asia Pacific Index lost 1.8%, and Hong Kong's Hang Seng Index ($HSIX) dropped 1.9% to 14,555. In Europe, bank shares pushed stocks lower. The Dow Jones Stoxx 600 Index was down 1.5% to 194, and London's FTSE 100 Index ($GB:UKX) had fallen 1.7% to 4,096.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $49.92 | $50.14 | -$0.22 | 0.52% | 11.93% |
| Heating oil (per gallon) | $1.3167 | $1.3229 | -$0.0062 | -3.74% | -6.33% |
| Natural gas (per million BTU) | $3.3210 | $3.2530 | $0.0680 | -12.05% | -40.93% |
| Unleaded gasoline (per gallon) | $1.3977 | $1.4032 | -$0.0055 | -1.66% | 38.63% |
GDP, Fed meeting, more earnings ahead
Investors on Wednesday will focus closely on what the Federal Reserve says about the economy and any new steps it may take to shore up the credit system. An announcement should come out around 2:15 p.m.At 8:30 a.m. ET, the government will report its first estimate on first-quarter economic activity. Economists expect the report to show the economy contracted at a 4%-to-5% annual rate.
In another big day of earnings reports, releases are due from Aetna (AET, news, msgs), Burger King (BKC, news, msgs), General Dynamics (GD, news, msgs), hotel operator Wyndham (WYN, news, msgs), Time Warner (TWX, news, msgs) and Visa (V, news, msgs).
Consumer confidence climbs off the floor
Americans are starting to feel better about the economy.The Conference Board's April report on consumer confidence surged to a reading of 39.2, up 46% from the reading of 26.9 in March. The monthly gain was the fourth-biggest in the 32-year history of the survey. Economists had expected only a slight improvement to a reading of 28.8.
The survey's expectations index surged to 49.5 in April from 30.2 in March, which was the biggest increase since the fall of Baghdad in the spring of 2003.
"Consumers believe the economy is nearing a bottom," Lynn Franco, the director of the Conference Board's consumer research center, said in a statement. Still, the index "remains well below levels associated with strong economic growth."
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February's consumer confidence reading was the second-lowest on record, following January's miserable reading of 25.3, which was the worst on record.
"The survey results do not alter the dismal way in which consumers continue to view the economy, but they fit the 'green shoots' idea currently driving market prices," Tony Crescenzi, chief bond strategist at Miller Tabak, wrote clients today. "Eventually, focus will shift to both the sustainability and depth of recovery."
A separate report on home prices also showed some improvement. Or at least, the bad news isn't getting any worse.
Home prices fell 2.2% in February, according to the Case-Shiller home price index of 20 major metropolitan cities. The decline was an improvement from the 2.8% drop in January.
On a year-over-year basis, prices fell 18.6%, also a slight improvement from the 19% decline for the 12 months ending in January.
- Talk back: Is the economy starting to recover?
But February's annual decline was the first in 16 months that was not a record low. Homebuilding stocks were mixed on the news. Ryland (RYL, news, msgs) was down 3.6% to $23.05. Pulte Homes (PHM, news, msgs) was off 3.9% to $11.50.
On Wednesday, investors will get their first glimpse at how gross domestic product fared in the first quarter. Economists expect GDP to have contracted at a 4.9% annualized rate, which would be an improvement from the negative 6.3% rate seen in the fourth quarter.
Dendreon's prostate cancer drug prolongs lives
Researchers found Dendreon (DNDN, news, msgs) drug Provenge prolonged the lives of advanced prostate cancer patients by 4.1 months, raising fresh expectations that the controversial treatment is now poised for approval by the U.S. Food and Drug Administration.In a presentation to doctors today at a Chicago meeting of the American Urological Association, investigators who led the 512-patient study known as Impact, said 31.7% of men who received the medicine were still alive after three years, compared with 23% who were given a placebo.
Dendreon said the results met targets set under a special agreement with the FDA in 2007 when the agency said it wanted to see results of the Impact study before deciding whether to approve Provenge. It plans to file an amended application with the FDA in the fourth quarter, timing that could lead to a decision on approval in the first half of 2010.
Dendreon shares were halted for most of the day and were down 45% to $11.81 before trading was halted. Officials at Nasdaq investigated the trading and said all trading stood.
With Monday's close, the stock was up 716% since the market bottom on March 9. If the stock resumes trading at $11.81, the gain would be 347%.
More capital needed at Bank of America, Citigroup?
They don't want to raise new capital, but Bank of America and Citigroup may have to do just that, The Wall Street Journal said today.The need for capital was one of the preliminary results of the government's "stress tests" of 19 U.S. banks.
Executives of both banks object to the findings, the report said, and are planning rebuttals. And investors were disappointed, which is why the stocks fell.
The government has said that the need to raise more capital should not indicate insolvency. However, the additional capital is a measure to help cushion against potential future losses, the report said.
Bank of America and Citigroup are not the only banks under the government's gun. There is speculation that some regional banks have "failed" the stress tests and will have to seek partners to stay alive. Three banks, in particular, are considered likely to fail: Regions Financial (RF, news, msgs), KeyCorp (KEY, news, msgs) and Fifth Third Bancorp (FITB, news, msgs).
Regions Financial was down 4.1% to $4.71. KeyCorp was down 1.5% to $6.07. Fifth Third was up 2.2% to $3.70.
At least one expert was concerned about the government's stress test.
"Among the many delicate points, you have to wonder where the government will get the funds to bail some of the top 19 banks out they don't want to let go," Kenneth Broux, an economist at Lloyds TSB Corporate Markets, told MarketWatch. "Either the banks will have to tap private investors, the capital markets, or see the government preference share holding converted into ordinary shares."
Results of the stress tests will be released next week.
Swine flu fears increase
Worries about the swine flu added to the financial jitters after more cases were confirmed around the globe.Cases have now been confirmed in Mexico, the U.S., New Zealand, Israel, Canada, Spain and Scotland, among other countries.
- Top Stocks blog: Worst-case scenario for swine flu
"We were already seeing a predisposition to protectionism going on," James Auger, a senior analyst with Global Insight, told CNNMoney.com. "So some countries could now take advantage of (the swine flu) and use it as an excuse to protect their domestic industries.
"It's a very bad time for (the outbreak) to be happening when you want to remove trade restrictions to help economies recover," Auger said.
Travel-related stocks, battered by the swine-flu news on Monday, were mixed today. Host Hotels and Resorts (HST, news, msgs), the worst-performing S&P 500 stock on Monday, was the fifth-best S&P 500 performer today, up 7.1% to $7.11.
Cruise-line operator Carnival (CCL, news, msgs) was up 3.9% to $25.55.
But United Airlines parent UAL (UAL, news, msgs) fell 8.2% $5.05. Continental Airlines (CAL, news, msgs) was off 4.6% to $10.57.
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Pfizer issues cautious guidance
Drug giant Pfizer (PFE, news, msgs) this morning lowered its 2009 forecast because of slowing sales of some of its drugs.Shares were off 0.7% to $13.39 as a result.
Pfizer said it expects full-year earnings to come in between $1.20 and $1.35 per share, down from previous guidance of between $1.34 and $1.49 per share.
Stock Charts (Year)
Pfizer
But sales were pretty bad. Revenue fell 8% to $10.9 billion, missing the consensus estimate of $11.1 billion and weighed down by weak sales of its key cholesterol drug, Lipitor. Sales of Lipitor fell 13% to $2.7 billion, amid greater competition from a generic version of the drug. Overall sales of Pfizer's prescription drugs fell 10% in the U.S., with foreign sales down 7%.
Pfizer shares are down nearly 25% this year.
US Steel posts huge loss
Shares of U.S. Steel (X, news, msgs) fell 5.6% to $26.15 today after the company late Monday posted a much bigger first-quarter loss than had been expected.U.S. Steel posted a net loss of $439 million, or $3.78 per share, down from net profit of $235 million, or $1.98 per share, in the same period a year ago. Sales tanked 47% to $2.78 billion in the quarter.
The results are much worse than analysts had expected. Wall Street was looking for a loss of $1.69 per share on revenue of $3.14 billion.
The average price of hot-rolled steel sheet, which is the benchmark product used in cars and appliances, fell by more than 50% to $471 a ton in March from a record in July, according to Purchasing Magazine.
Stock Charts (Year)
U.S. Steel
Nucor
"Steel is not the place you want to be, because industrial production is going nowhere," John Stephenson, money manager at First Asset Investment Management, told Bloomberg News. "The auto industry is absolutely falling off the map in North America, and construction has ground to a halt, so where is the demand going to come from?"
The concerns about demand were evident in the company's outlook for the current quarter.
"We continue to face an extremely difficult global economic environment," Chief Executive Officer John Surma said in a statement. "We expect an operating loss in the second quarter as our order book remains at low levels and idled facility carrying costs continue to be incurred."
Last week, rival steel maker Nucor (NUE, news, msgs) reported its first-ever quarterly loss of 60 cents per share and forecast a bigger loss in the second quarter. Nucor was off 3.7% to $37.50.
Demand for steel in the U.S. is "virtually nonexistent," Nucor CEO Dan DiMicco said after the company posted its loss.
Chrysler, Fiat close to deal
The deadline for a deal between Chrysler and Fiat (FIATY, news, msgs) is only two days away, but it looks like it will go through.The United Auto Workers union would own 55% of a restructured company, with Fiat getting 35% and creditors, including the U.S. government, getting 10%.
UAW leaders tentatively agreed to a deal on Monday, but it now will be sent to local unions for ratification.
In related news, Chrysler's former parent, Daimler (DAI, news, msgs) late Monday reached a deal to unload its remaining stake in Chrysler. Daimler will pay $200 million for three years to secure pension payments. The German automaker will also forgive the repayment of loans and dispose of its 19.9% Chrysler stake.
Andrew Rosenbaum contributed to this report.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.120% | 0.090% | 0.030 | -40.00% | 4.35% |
| 5-year Treasury note yield | 1.927% | 1.847% | 0.080 | 15.04% | 24.24% |
| 10-year Treasury note yield | 3.002% | 2.921% | 0.081 | 11.81% | 33.78% |
| 30-year Treasury bond yield | 3.955% | 3.838% | 0.117 | 11.06% | 46.97% |
| Currencies | |||||
| U.S. Dollar Index | 85.325 | 85.920 | -0.595 | -0.66% | 3.86% |
| British pound in dollars | $1.4639 | $1.4628 | 0.0011 | 2.17% | -0.64% |
| Dollar in British pounds | £0.6831 | £0.6836 | -0.0005 | -2.12% | 0.65% |
| Euro in dollars | $1.3153 | $1.3021 | 0.0132 | -0.75% | -6.12% |
| Dollar in euros | € 0.7603 | € 0.7680 | -0.0077 | 0.76% | 6.51% |
| Dollar in yen | 96.39 | 96.71 | -0.32 | -2.52% | 6.33% |
| Canadian dollar in U.S. dollars | $0.820 | $0.820 | -$0.0004 | 3.53% | 0.26% |
| U.S. dollar in Canadian dollars | $1.220 | $1.219 | $0.0015 | -3.36% | -0.26% |
| Commodities | |||||
| Gold | $893.60 | $908.20 | -$14.60 | -3.39% | 1.05% |
| Copper | $1.9165 | $1.9855 | -$0.07 | 3.90% | 35.92% |
| Silver | $12.4260 | $12.9850 | -$0.56 | -4.30% | 14.96% |
| Corn | $3.7500 | $3.7225 | $0.03 | -7.35% | -7.86% |
| Crude oil (NYMEX) (per barrel) | $49.92 | $50.14 | -$0.22 | 0.52% | 11.93% |
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