From Briefing.com: 4:10 pm : The latest policy statement from the Federal Open Market Committee (FOMC) enticed buyers to enter the bidding process and push stocks markedly higher. Buyers rallied around financial stocks, which yet again helped provide leadership to the broader market.
The FOMC is maintaining a target fed funds lending rate within the range 0.00% to 0.25%, as predicted. Exceptionally low levels are expected for an extended period.
The Fed will bolster its balance sheet by buying up to $300 billion of Treasuries during the next six months. The 10-year Note surged on the news; it finished almost 4 points higher, pushing its yield down to a two-month low of 2.55%.
Asset purchases didn't end there, though. The Fed will purchase an additional $750 billion of agency mortgage-backed securities this year, bringing the total to $1.25 trillion.
An additional $100 billion of agency debt will also be purchased this year, bringing the total to $200 billion.
News the Fed will be expanding its balance sheet weighed on the Dollar Index, which lost 2.7% as it fell to its lowest level since late January.
Still, the Fed's decision to purchase so many of these assets is aimed at helping stimulate the flow of credit and creating demand for the assets.
That recognition provided a lift to financial stocks. Financials had already overcome an early fit of weakness, but managed to climb even higher to close at session highs with a gain of 10.1%.
The strength of a broad range of diversified financial services companies (+13.2%) and diversified banks (+14.9%) helped the S&P 500 outperform its counterparts. The broader market had been stuck in negative territory and traded in a relatively narrow range until the FOMC's announcement convinced traders to follow the lead of the financial sector.
The stock market closed with broad-based gains even after sellers resurfaced during the last couple of hours of trading to knock the stock market off its session highs.
Outside of the financial sector, Sun Microsystems (JAVA 8.89, +3.92) and Adobe (ADBE 21.35, +2.22) traded with considerable strength. Sun was boosted by news from The Wall Street Journal that IBM (IBM 91.97, -0.94) is in talks to acquire the company for at least $6.5 billion in cash. As of Tuesday's close, Sun Microsystems had a market capitalization of just $3.7 billion. Meanwhile, Adobe is garnering interest after posting better-than-expected earnings for its latest quarter.
Oracle (ORCL 15.83, +0.43) also showed strength. The company announces its latest quarterly results after the closing bell.
Trading volume was heavy as more than 2.0 billion shares traded hands on the NYSE.
There were some higher-than-expected inflationary readings posted this morning. Still, they are unlikely to fuel inflation concerns. Instead, the reports should help ease deflation concerns. The Consumer Price Index for February showed a 0.4% month-over-month increase, which topped the 0.3% increase that was expected. Core CPI for February increased 0.2% month-over-month, which also exceeded the consensus 0.1% increase. DJ30 +90.88 NASDAQ +29.11 NQ100 +1.2% R2K +3.5% SP400 +3.1% SP500 +16.27 NASDAQ Adv/Vol/Dec 1926/2.15 bln/756 NYSE Adv/Vol/Dec 2492/2.07 bln/592
4:04PM Oracle beats by $0.03, reports revs in-line; declares first-ever quarterly dividend of $0.05 per share (ORCL) 15.83 +0.43 : Reports Q3 (Feb) earnings of $0.35 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.32; revenues rose 1.9% year/year to $5.45 bln vs the $5.45 bln consensus. Oracle also announces that its Board of Directors intends to pay a quarterly cash dividend of $0.05 per share, or $0.20 per share annually, on its common stock. (Briefing.com note: this equates to about a 1.2% yield, using its after-hours price of ~16.60.) "If you look past the effect of exchange rates, our new software license revenues for this quarter were higher than our new software license revenues for Q3 of last year... Achieving constant currency growth in new software license sales in this very challenging economy shows that we continue to beat our competitors in both technology and applications."
08:19 am Intel upgraded to Buy at Needham- tgt $18: . Needham upgrades INTC to Buy from Hold and sets target price at $18 saying recent checks suggest orders are tracking better than expected, as they believe both PC OEMs and the channel have reduced inventory and returned to a normalized order rate. Additionally, they believe Intel will keep prices and product mix stable, which should enable margins to recover in 2Q09 and beyond.
08:04 am Adobe Systems (ADBE)
Adobe Systems (ADBE 19.13) beat consensus earnings estimates for its fiscal first quarter as the software publisher controlled costs amid sales declines.
For its fiscal first quarter, Adobe reported earnings of $0.45 per share, excluding nonrecurring items, a penny better than the First Call consensus of $0.44.
Revenues fell 11.7% year-over-year to $786.4 million, ahead of the $784.2 million consensus.
Adobe was able to trim its non-GAAP operating expenses just over 9% year-over-year.
Looking ahead, the publisher of Photoshop issued in-line guidance for its fiscal second quarter, expecting earnings between $0.31 and $0.38 per share, excluding nonrecurring items. The consensus expects earnings of $0.35 per share.
Adobe forecasts second quarter revenues to range from $675 million to $725 million compared to the $694.40 million consensus. |
