| Market Summary |
Wall Street closed an erratic session moderately higher Tuesday after upbeat earnings and a strong regional manufacturing report gave investors the boost of confidence they needed. The Dow Jones Industrial Average spent time on both sides of the flat line before finishing 60 points higher at 12,362. The Nasdaq Composite ticked up 10 points to close at 2,286. At the start of the session investors were pleased by the New York Federal Reserve’s report that regional manufacturing expanded modestly in April after shrinking in March. Record oil and gas prices kept the market swaying on both sides until upbeat earnings from Johnson & Johnson sent the market higher during afternoon trading. Johnson & Johnson (JNJ: Charts, News, Offers) reported higher quarterly sales and earnings that topped estimates. Northern Trust (NTRS: Charts, News, Offers) also reported higher quarterly earnings. State Street (STT: Charts, News, Offers) reported earnings that beat Wall Street's estimates, but plunged 10.2% after speculation surfaced that Fitch Ratings may be considering downgrading the company. U.S. light crude oil for May delivery rose $2.03 to settle at a record $113.79 a barrel. COMEX gold for June delivery rose $3.30 to settle at $932 an ounce.
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| Market News |
U.S. Bancorp (USB: Charts, News, Offers) said Tuesday its first-quarter earnings fell 4 percent due to losses stemming from the mortgage crunch but declared its credit problems will continue to be manageable. The Minneapolis-based bank said it earned $1.09 billion, or 62 cents per share, down from $1.13 billion, or 63 cents per share, during the same period last year. Revenues were $3.87 billion, up 14 percent from $3.39 billion in the first quarter of 2007. Analysts polled by Thomson Financial had expected earnings of 61 cents per share on revenue of $3.66 billion. In morning trading, shares of U.S. Bancorp dipped 18 cents to $31.49. U.S. Bancorp, the country's seventh-largest bank, has avoided many of the mortgage and credit-related problems of some of its peers. (Source: Yahoo! Finance) Full Story
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The onslaught of homes facing foreclosures has yet to ebb, a research report showed Tuesday, with bank repossessions skyrocketing last month as more troubled homeowners mailed in their keys and walked away. And the worst isn't over: the wave of adjustable-rate loans resetting to higher rates will crest in May and June. And that's expected to push more homeowners into default and foreclosure in the third and fourth quarters of this year, according to RealtyTrac Inc. of Irvine, Calif. "Once we're through that batch of loans, the worst will have been worked through the system," said Rick Sharga, RealtyTrac's vice president of marketing. The number of U.S. homes receiving at least one foreclosure filing jumped 57 percent in March to 234,685, compared with 149,150 properties a year earlier. Filings include default notices, auction sale notices and bank repossessions. (Source: BusinessWeek) Full Story
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Delta Air Lines (DAL: Charts, News, Offers) and Northwest Airlines (NWA: Charts, News, Offers) on Monday night announced plans to merge their vast domestic and international networks, creating the world's largest airline. The proposed merger would be the largest U.S. airline deal ever, creating a global giant with more than 800 jets, 6,400 daily flights and nearly $32 billion in annual revenue. The carriers estimate the value of the new company at $17.7 billion dollars, far above their current market value. The proposal could also be a catalyst for further consolidation among the big airlines at a time when the industry is threatened by steep losses from high fuel prices and a weakening economy. If the merger closes, the new airline will be named Delta and headquartered in Atlanta, where Delta is based. Delta CEO Richard Anderson will be its CEO. (Source: USA Today) Full Story
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| Market Analysis |
Wachovia Corp.'s (WB: Charts, News, Offers) $3.5 billion sale of common shares produced instant profits for investors. Anyone wanting to lock in the gains may have to act fast. Two other U.S. financial companies that sold stock during the past month after suffering mortgage-related losses -- MGIC Investment Corp., the country's largest home-loan insurer, and Washington Mutual Inc., the biggest savings and loan -- have dropped in the stock market since doing so. MGIC's shares have fallen as much as 15 percent from the $11.25-a-share price at which the company, based in Milwaukee, raised $420 million from investors on March 24. They closed at $10.60 yesterday. Washington Mutual, which raised $7 billion last week by selling a stake to the TPG Inc. private-equity firm and other investors, fell yesterday to its lowest price since the accord was announced. The retreat effectively reduced the discount on the shares, sold at $8.75 each, by about half. (Source: Bloomberg) Full Story
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You might suppose that the stars are in near-perfect alignment for major reform of CEO pay. The mammoth pay and disastrous performance of Countrywide Financial's Angelo Mozilo, Citigroup's Chuck Prince, and Merrill Lynch's Stan O'Neal should be enough to make the public furious. Each CEO departed with $100-million-plus compensation after misadventures with subprime mortgages. Now add the economic slowdown to the mix; ordinary Americans are worried about making ends meet while failed pooh-bahs rake it in. Then throw in one more element - a presidential election. Put it all together, and how could change not be imminent? The answer is that whatever remedies reformers enact, corporate boards can always find a way to pay the boss whatever they like. Over the past 25 years CEO pay has risen regardless of the economic or political climate. It rises faster than corporate profits, economic growth, or average workforce compensation. (Source: CNN Money) Full Story
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It may not be official but it is increasingly obvious: America's economy has slipped into recession. The latest labour-market figures—a jump in the unemployment rate to 5.1% and the loss of 98,000 private-sector jobs in March, the fourth consecutive month of decline—point to a shrinking economy. So do surveys of manufacturing and services. So does Ben Bernanke, chairman of the Federal Reserve. On April 2nd he told a congressional committee that output was unlikely to “grow much, if at all, over the first half of 2008 and could even contract slightly.” The official judges of American downturns—a group of academics at the National Bureau of Economic Research (NBER)—define a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.” (Source: The Economist) Full Story
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| On This Date |
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April 15, 2000: A Montreal teenager is arrested in connection with the February 2000 hacker attacks on Amazon.com, eBay.com, and Buy.com.
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| Notable Quotable |
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Annual income, twenty pounds; annual expenditure, nineteen pounds; result, happiness. Annual income, twenty pounds; annual expenditure, twenty-one pounds; result misery. - Charles Dickens' father, to Charles (and later, Mr. Micawber in Dickens' David Copperfield)
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| April 14, 2008 |
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