Daily Market Reports | Apr 14 2009
By Greg Peel
The Dow closed down 25 points or 0.3% while the S&P gained 0.3% and the Nasdaq was as good as square. The Dow held up above the 8000 mark, closing at 8057.
As was the case on Thursday, trading was holiday-light. The market opened lower from the bell and the Dow was down 120 early, falling below the 8000 mark. But bank stocks were again sought despite the big rally on Thursday inspired by a Street-beating earnings report from Wells Fargo. Citigroup, for one, added another 25% last night. With more banks reporting this week, Wall Street is setting itself for more upside surprises, no doubt assisted by the recent relaxation of the mark-to-market rules.
Goldman Sachs was 5% higher on the session, but then surprised Wall Street by releasing its first quarter earnings report a day early, just after the closing bell. Goldmans posted US$3.39 earnings per share, up from US$3.23 in the first quarter 08, and again well ahead of the Street’s estimate at US$1.64. It appears that bank analysts, who for the most part were very wrong all the way down, have probably now shifted too far the other way.
Goldmans also announced a US$5bn capital raising, and stated the capital will be used to help redeem all of the US$10bn of TARP injection as soon as possible after the stress test is complete. If the bank can free itself of TARP money it will also free itself from accompanying restrictions including the 90% tax on executive bonuses.
The reaction to the Goldmans result in the after-market was nevertheless muted, with the share price falling a bit under 1%. After two days of rallying there has no doubt been a bit of “sell the fact”.
It was not all good news during the day-session however. While news that President Obama will make some major announcements about the economy in a speech tonight helped to push indices back into the green, profit warnings from aircraft maker Boeing and oil producer Chevron (both Dow components) offered a drag, as did General Motors (Dow) which appears more and more likely to head into bankruptcy as its only option.
With Europe on holiday, the US dollar slid away again last night against all currencies. The Aussie has added over a cent to US$0.7317. Gold clawed back another US$12.10 to US$892.60/oz.
Despite a weaker greenback, oil fell US$2.19 to US$50.05/bbl following a downgrade in the International Energy Agency’s global demand forecast for 2009.
London was closed but metals prices were mostly higher in New York futures trade. Copper added another 2%.
The SPI Overnight was closed, thus remaining up 63 points from Thursday night’s session.
