Here's a truth about the auto industry. Business is terrible right now. Chrysler Group, which filed for Chapter 11 bankruptcy protection on Thursday, is not alone.
In fact, April sales for Toyota Motor (TM, news, msgs) were so bad that Ford Motor's (F, news, msgs) sales topped the Japanese auto company's for the first time in more than a year.
Ford said Friday it had sold 134,401 vehicles in April, down 31.6% from a year ago and a bigger decline than the 26% decline that analysts had expected.
Toyota, meanwhile, said its sales fell 41.9% to 126,540 vehicles, a stunning decline for a company that seemed on the verge of taking over the industry.
That reality may have kept stocks in check for most of Friday until a late rally pushed the major indexes higher.
The Dow Jones industrials ($INDU) were up 44 points, 0.5%, to 8,212. The Standard & Poor's 500 Index ($INX) had added 5 points, 0.5%, to 878.
The Nasdaq Composite Index ($COMPX) added 2 points, 0.1%, to 1,719, and the Nasdaq-100 Index, which tracks the largest Nasdaq stocks, was up 2 points, or 0.2%, to 1,397.
The Dow and S&P 500 had their seventh weekly gains in the last eight weeks. The Nasdaq finished ahead for an eighth straight week. Moreover, the S&P 500 finally moved past 874, a big resistance level that had generated sales of stocks.
But volume was very light, and many analysts believe the rally is running out of gas. The Dow is up 25% since its March 9 closing low, with the S&P 500 up 29.7% and the Nasdaq up 35.5%.
For the year, the Dow is off 6.4%. The S&P 500 is off 2.9%. The Nasdaq is up 9%.
No automaker was immune in April to the problem of weakening demand. General Motors (GM, news, msgs) saw a 26.6% sales decline in cars and light trucks from a year ago. But the company did note that its April sales were better than those in March.
The one hope, analysts said, is that the auto market has just about hit bottom and that the industry will start to see stronger sales later in the year.
The weak auto sales were one problem for the market. Another was that the government said it would delay the results of its stress tests for 19 banks and financial institutions from Monday, the original release date, until Thursday.
That pulled financial stocks lower. The S&P financial exchange-traded fund -- technically the Select Sector SPDR-Financial (XLF, news, msgs) ETF -- was down 0.8% to $10.65.
Citigroup (C, news, msgs), JPMorgan Chase (JPM, news, msgs), Bank of America (JPM, news, msgs) and American Express (AXP, news, msgs) were all lower Friday.
American Express had been the top Dow stock in April.
Crude oil was up $2.10, or 4.1%, to $53.20 a barrel, its highest weekly close since November.
Nineteen of the 30 Dow stocks were higher on Friday, led by Alcoa (AA, news, msgs), up 6.8% to $9.69, and Caterpillar (CAT, news, msgs), up 4.7%to $37.26.
In addition, 289 S&P 500 stocks were higher, along with 52 Nasdaq-100 stocks. Travel company Expedia (EXPD, news, msgs) was up 8.7% to $14.79; it's up 79% this year.
Markets face a week of big drama
Next week, investors face two huge reports:- The bank stress test report. Originally scheduled for a Monday release, this report is due after Thursday's market close. It will include an aggregate picture of the health of the 19 institutions and individual results.
- The monthly report on unemployment and payroll employment. Arguably the most important economic report of any month, the government is expected to report that the U.S. unemployment rate hit 8.9%, perhaps higher, with payrolls dropping 625,000 or more.
In addition, the week will be rich with earnings from Walt Disney (DIS, news, msgs) and Wynn Resorts (WYNN, news, msgs) on Tuesday; Cisco Systems (CSCO, news, msgs) and News Corp. (NWSA, news, msgs), owner of the Fox television network and The Wall Street Journal, on Wednesday; and Crocs (CROX, news, msgs) and homebuilder D.R. Horton (DHI, news, msgs) on Thursday.
How many banks need more capital?
The big result from the stress tests appears to be that at least six of the 19 banks, including Citigroup and Bank of America, will require additional capital, published reports said.Many are not happy about it and have been arguing with the Treasury and the Federal Reserve about the results.
Meanwhile, JPMorgan Chase analysts lowered their 2009 and 2010 earnings estimates for Bank of America, Citigroup, SunTrust (STI, news, msgs), US Bancorp (USB, news, msgs), and Wells Fargo (WFC, news, msgs).
The analysts lowered Fifth Third Bancorp's (FITB, news, msgs) 2009 estimates.
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What's ahead for stocksBank stress tests are the big story. And delay as it might, the government had better not whitewash the news lest it scare investors away from the entire financial sector.
Wells Fargo was down 2% to $19.61. US Bancorp dropped 1.4% to $17.96. SunTrust fell 4.4% to $13.81. Bank of America fell 2.6% to $8.70. Citigroup slid 2.6% to $2.97.
| Close for week | Wk. ago close | % chg. | 2009 YTD chg. | |
|---|---|---|---|---|
| Dow Jones Industrial Avg. | 8,212.41 | 8,131.33 | 1.00% | -6.43% |
| S&P 500 Index | 877.52 | 869.60 | 0.91% | -2.85% |
| Nasdaq Composite Index | 1,719.20 | 1,673.07 | 2.76% | 9.02% |
| Russell 2000 Index | 486.98 | 479.37 | 1.59% | -2.50% |
| Crude oil per barrel | $53.20 | $52.24 | 1.84% | 19.28% |
| 10-yr. Treasury yield | 3.17% | 2.93% | 0.25% | 41.44% |
| Gold per troy ounce | $888.20 | $883.30 | 0.55% | 0.44% |
No relief for automakers
Ford kicked off a day of gloomy news for the automakers, with its 31.6% sales plunge. Shares fell 4.9% to $5.69.Truck sales at Ford slid 33% to 77,435 units, with a 35.8% decrease in sales of the flagship F-Series pickup to 28,757. "We continue to operate in a very challenging economic and competitive environment," Ken Czubay, vice president of sales and marketing, said in a statement.
Chrysler, meanwhile, posted a 48% drop in sales to 76,682 units from 147,751 in April 2008. Cars sales were off 60%; truck sales were down 43.5%.
Toyota said sales slumped 41.9% to 126,540. Honda Motor (HMC, news, msgs) said U.S. sales were off 41.9% to 101,029 units. Nissan (NSANY, news, msgs) sales dropped 37.8% to 47,190 units.
Toyota shares were up slightly to $79.01 in New York. Honda rose 0.7% to $29.26. Nissan fell 0.2% to $10.38. Daimler (DAI, news, msgs) rose 0.7% to $35.96.
- Top Stocks blogs: A great April for stocks also made history
Analysts expect total U.S. light-vehicle sales to hit an annual rate of 9.8 million. (An annual rate indicates where sales will be 12 months from now based on the current figures.) Today's projected rate would represent a 31% decline in sales from April 2008.
In March, the sales rate came in at 9.86 million, which was better than analysts had expected and an improvement from the 9.12 million in February, which was the worst month since December 1981.
Consumers could be hesitant to buy vehicles from Chrysler after its bankruptcy filing, and from GM, which is struggling to avoid a bankruptcy filing.
| March 2009 | March 2008 | Chg. | |
|---|---|---|---|
| General Motors | 172,150 | 257,638 | -33.18% |
| Ford Motor | 134,401 | 196,385 | -31.56% |
| Chrysler | 76,682 | 147,751 | -48.10% |
| Toyota | 126,540 | 217,700 | -41.87% |
| Honda | 101029 | 135,180 | -25.26% |
| Nissan | 47,190 | 75,855 | -37.79% |
| Mercedes Benz | 15,602 | 20,808 | -25.02% |
| Subaru | 15,649 | 16,771 | -6.69% |
| Hyundai | 33,952 | 39,280 | -13.56% |
Consumer sentiment improves
Things didn't seem quite so terrible last month, a report on consumer sentiment showed Friday.The Reuters/University of Michigan survey of consumer sentiment came in at a reading of 65.1 in April, up from a reading of 57.3 in March. Economists had expected a final reading of 62 for April.
The report's expectations index, which more closely predicts the direction of consumer spending, rose to 63.1 from 53.5 in March.
The report, which is compiled from surveys of 500 households, was at 90 in March 2007 before the recession began.
On Tuesday, a separate consumer confidence report from The Conference Board showed a huge 46% jump in confidence.
- Talk back: Is the economy starting to recover?
In other economic news, a manufacturing report from the Institute of Supply Management also showed some improvement in the sector. The ISM survey rose to a reading of 40.1 in April, up from a reading of 36.3 in March. Readings below 50 indicate contraction in the sector.
But a report on factory orders for durable goods showed a bigger-than-expected decline in March.
Factory orders fell 0.9% in March, following a revised 0.7% gain in February.
Economists had expected a decline of 0.6% in March.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $53.20 | $51.12 | $2.08 | 4.07% | 19.28% |
| Heating oil (per gallon) | $1.3884 | $1.3368 | $0.0516 | 5.61% | -1.23% |
| Natural gas (per million BTU) | $3.5460 | $3.3730 | $0.1730 | 5.13% | -36.93% |
| Unleaded gasoline (per gallon) | $1.5174 | $1.4658 | $0.0516 | 2.93% | 50.51% |
Continental Airlines to cut service to Mexico
Continental Airlines (CAL, news, msgs) is not taking any chances with the swine flu.The airline said Friday that it is temporarily cutting its capacity to Mexico by 50%.
"We are closely monitoring demand in the Mexico market and will adjust flight schedules as necessary," Julie King, a spokeswoman for Continental, told Bloomberg News on Thursday.
Continental has 500 weekly departures from the United States to 29 cities in Mexico, the most by any U.S. carrier. Continental shares rose 4% to $10.94.
MasterCard, Chevron report results
The recession has certainly caused many people to stay away from the plastic, but MasterCard (MA, news, msgs) is benefiting from consumers' use of their debit cards.The credit card company reported better-than-expected first-quarter results Friday. MasterCard said it earned $367.2 million, or $2.80 per share, down from $446.9 million, or $3.37 per share, last year. Analysts were looking for $2.61 per share.
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Shares of MasterCard fell 5.8 to $172.90 on Friday.
Rival Visa (V, news, msgs) late Wednesday said profit fell, but it also has capitalized on consumers who used their debit cards. MasterCard and Visa operate differently than American Express in that they do not lend to consumers. They merely process transactions, profiting from fees they charge banks that issue the cards and run the risk of extending credit to cardholders.
Visa was up slightly to $65.01; American Express fell 3.7% to $24.29.
Stock Charts (Year)
MasterCard
Chevron
Meanwhile, Chevron (CVX, news, msgs) followed oil giant Exxon Mobil (XOM, news, msgs) with its first-quarter results Friday. The declining price of oil directly hit sales at Chevron.
Chevron earned $1.84 billion, or 92 cents per share, down 64% from the $5.17 billion, or $2.48 per share, it earned in the same quarter last year.
Revenue slumped 46% to $34.99 billion.
Analysts had forecast earnings of 86 cents per share on revenue of $24.1 billion.
Chevron shares 1.2% to $66.87 Friday.
Senate votes down mortgage-relief bill
The Senate late Thursday voted against a controversial measure to modify delinquent mortgages for troubled homeowners, dealing a blow to the Obama administration.The "cram-down" provision failed on a 51-45 vote, with about a dozen Democrats voting against the bill -- one that had been a key component of President Barack Obama's foreclosure-prevention plan.
"The result will be higher interest rates for home loans and fewer Americans will be able to afford to buy a house," Sen. Jon Kyl, R-Ariz., said late Thursday. "The answer is not to incentivize bankruptcy by making it the means to save one's home."
The bill won little support from the financial industry, with the exception of Citigroup. Democrats had negotiated with JPMorgan Chase (JPM, news, msgs), Wells Fargo and Bank of America, but they failed to get their support.
Andrew Rosenbaum contributed to this report.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.145% | 0.125% | 0.020 | 16.00% | 26.09% |
| 5-year Treasury note yield | 2.031% | 2.017% | 0.014 | 0.69% | 30.95% |
| 10-year Treasury note yield | 3.174% | 3.124% | 0.050 | 1.60% | 41.44% |
| 30-year Treasury bond yield | 4.088% | 4.044% | 0.044 | 1.09% | 51.91% |
| Currencies | |||||
| U.S. Dollar Index | 84.690 | 84.775 | -0.085 | -0.10% | 3.09% |
| British pound in dollars | $1.4919 | $1.4789 | 0.0130 | 0.88% | 1.25% |
| Dollar in British pounds | £0.6703 | £0.6762 | -0.0059 | -0.87% | -1.24% |
| Euro in dollars | $1.3273 | $1.3231 | 0.0042 | 0.32% | -5.26% |
| Dollar in euros | € 0.7534 | € 0.7558 | -0.0024 | -0.32% | 5.55% |
| Dollar in yen | 99.28 | 98.53 | 0.75 | 0.76% | 9.52% |
| Canadian dollar in U.S. dollars | $0.844 | $0.838 | $0.0064 | 0.76% | 3.21% |
| U.S. dollar in Canadian dollars | $1.186 | $1.194 | -$0.0082 | -0.68% | -3.11% |
| Commodities | |||||
| Gold | $888.20 | $891.20 | -$3.00 | -0.34% | 0.44% |
| Copper | $2.1010 | $2.0475 | $0.05 | 2.61% | 49.01% |
| Silver | $12.5000 | $12.3250 | $0.18 | 1.42% | 9.12% |
| Corn | $4.0625 | $3.9625 | $0.10 | 2.52% | -0.18% |
| Crude oil (NYMEX) (per barrel) | $53.20 | $51.12 | $2.08 | 4.07% | 19.28% |
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