From Briefing.com: 4:35 pm : Stocks were hit hard at the open by sellers who were focused on disappointing guidance from Cisco and Akamai Tech, rather than a better-than-expected initial jobless claims report, but the major averages rallied when it became clear that buyers remain in control.
This morning's sell-off was a broad based affair, but it didn't last much more than half an hour. Once stocks stabilized, a buy-the-dip mentality became apparent as participants pushed back in for fear of missing out on further gains. Overall share volume was not completely impressive -- it did break above 1 billion shares on the NYSE for the first time in seven sessions -- but watching the tape today left little doubt that bullish participants continue to call the shots.
Even though the broader market rallied, sellers barely let up on Cisco (CSCO 18.92, -3.12) and Akamai (AKAM 40.75, -7.24). The 15% loss suffered by AKAM was its worst single-session slide in more than a year and left shares at a six-month low. As for CSCO, its 14% drop was its worst in three months and caused shares to set a new 52-week low. Weakness in CSCO proved a principal cause in the Dow's failure to find higher ground, ultimately snapping its eight-session streak of gains.
The rest of the earnings picture was rather mixed as Molson Coors (TAP 45.48, -2.09) and Sprint Nextel (S 4.60, +0.25) both missed the consensus earnings estimate, but PepsiCo (PEP 63.36, -1.06), MetLife (MET 47.27, -0.33) and Prudential (PRU 65.00, +1.87) posted upside surprises. Whole Foods (WFMI 60.05, +6.30) surged after it complemented an upside earnings estimate with increased guidance.
There was some volatility to late trade. Stocks seemed to gyrate with every word of Egypt's President Mubarak, who indicated in a speech that he will not leave office until September, despite calls from his citizens for him to step down immediately. Mubarak's refusal in the face of protests carries potential for geopolitical upset.
Participants got their first dose of data in a few days with the release of initial jobless claims for the week ended January 29. Initial claims totaled 383,000, which is less than Briefing.com consensus of 410,000 and only the second time since July 2008 that initial claims came in below 400,000.
Wholesale inventories for December increased 1.0%, but that news was of little concern to participants. News that the Treasury Budget for January featured a smaller-than-expected $49.8 billion deficit was also shrugged off.
Treasuries resumed their descent this session, but the yield on the benchmark 10-year Note remains below 3.70% after its rally in the prior session. Results from today's 30-year Bond auction proved less inspiring. The auction drew a bid-to-cover of 2.51, dollar demand of $40.2 billion, and an indirect bidder participation rate of 43.1%.
Advancing Sectors: Energy (+0.9%), Telecom (+0.5%), Industrial (+0.4%), Materials (+0.3%), Consumer Discretionary (+0.2%), Health Care (+0.1%), Utilities (+0.1%)
Unchanged: Financial
Declining Sectors: Consumer Staples (-0.5%), Tech (-0.5%)DJ30 -10.60 NASDAQ +1.38 NQ100 +0.1% R2K +0.4% SP400 +0.6% SP500 +0.99 NASDAQ Adv/Vol/Dec 1347/2.51 bln/1244 NYSE Adv/Vol/Dec 1570/1.02 bln/1390
09:49 am CSCO Guides Q3 EPS Below Consensus (CSCO)
Cisco (CSCO $19.40 -2.64) reported second quarter earnings of $0.37 per share, $0.02 better than the Thomson Reuters consensus of $0.35. Revenues rose 6.1% year-over-year to $10.4 billion versus the$10.23 billion consensus.
The company said, "The quarter played out as we expected. Our strategy of tightly integrating our multiple products through an architectural approach is working, and we are delivering innovation in each major product family," said John Chambers, chairman and CEO, Cisco. "As a company, we are going through a period of transition as we move aggressively in the market with our architectural strategy..."
On the conference call, the company provided guidance as follows: In the third quarter, the company expects to see earnings in the range of $0.35 to $0.38 versus $0.40 Thomson Reuters consensus; sees revenues +4-6% year-over-year versus +4.7% Thomson Reuters consensus (equates to ~$10.8-11.0 billion versus $10.85 billion Thomson Reuters consensus). In the fourth quarter, the company expects to see earnings in the range of +8-11% year-over-year +7.9% Thomson Reuters consensus (equates to ~$11.7-12.0 billion versus the $11.7 billion Thomson Reuters consensus)... In fiscal year 2011, the company sees revenues at low end of prior guidance for +9-12% year-over-year versus +8.6% Thomson Reuters consensus.
09:42 am Initial Claims Level Drops Below 400,000; Snowstorms May Have Played a Role
The initial claims level declined to its lowest level since July 2008. Claims fell from 419,000 for the week ending January 29 to 383,000 for the week ending February 5. The Briefing.com consensus expected the initial claims level to fall to 410,000.
The current initial claims level is now only about 60,000 claimants higher than levels normally found during times of full employment. We do not expect to see a significant reduction in the initial claims level from this point forward until payroll growth puts a significant dent in the total number of unemployed.
While the DOL has not released any information, there could be some slight bias in the initial claims data due to severe snowstorms that affected much of the Midwest and Northeast in the beginning of February.
The "true" initial claims level, therefore, could actually be slightly higher than the reported number. We will not know for sure if the snowstorms had any effect on the claims level for another couple of weeks.
The continuing claims level declined from 3.935 million for the week ending January 22 to 3.888 million for the week ending January 29. The Briefing.com consensus expected continuing claims fell to 3.900 million. |
