Ups and Downs the Norm — Thursday’s IP Market Recap

by Marc Bastow | April 19, 2012 5:45 pm

IPMarketRecap Ups and Downs the Norm    Thursday's IP Market Recap[1]Weak economic data on U.S. jobless claims dashed optimism over a successful bond market sale in Spain, leading the markets to continue their downward trend from Wednesday in what is becoming a roller-coaster market.

The Dow dropped 0.53% to return below the 13,000 mark at 12.964.02, the Nasdaq finished down 0.79% at 3,007.56, and the S&P 500 followed with a loss of 0.59% to 1,376.92.

Initial hopes of an early rally were based on a strong showing for Spain’s auction of 10-year notes, which went off with yields under 6%, and positive earnings[2] from Bank of America (NYSE:BAC[3]) and Morgan Stanley (NYSE:MS[4]) to start the session.

BAC posted a better-than-expected first-quarter profit on a rebound in trading and better credit quality. Profits fell to $653 million, or 3 cents per share. However, factoring out accounting charges, earnings increased about 40% to $3.7 billion, or 31 cents per share, from $2.6 billion (23 cents) a year earlier, and beating Bloomberg analyst estimates for adjusted EPS of 12 cents. Still, BAC fell 1.7% on the news.

Meanwhile Morgan reported a 6-cent loss, but would have earned 71 cents per share without accounting for changes in the value of its debt. Analysts had been expecting the bank to post adjusted EPS 44 cents. Revenue of $8.91 billion (excluding DVA) compared to expectations for $7.31 billion. Investors bid up MS shares more than 2%.

The good news was offset however, by U.S. government statistics showing that while initial unemployment claims declined by 2,000 from last week, the total of 386,000 people exceeded the expected 375,000. In addition, existing home sales fell [5]2.6% from March, with the number of homes for sale dropping 1.3% during the month.

All but three stocks in the Dow were down Thursday, with Alcoa (NYSE:AA[6]) and McDonalds (NYSE:MCD[7]) down 1.9% and 2.1%, respectively. IBM (NYSE:IBM[8]) continued its slide from Wednesday, falling another 0.31% to fall under $200 for the first time in nearly threee months.

Property insurance company Travelers (NYSE:TRV[9]) and telecom giant Verizon (NYSE:VZ[10]) bucked the Dow’s losing trend, both on positive earnings.

Traverlers gained 3.75% after announcing Street-beating earnings of $2.01 per share, up from $1.92 in the year-ago period. The company also announced a 12% dividend hike, up to 46 cents per share. Meanwhile, Verizon climbed 1.3% after reporting better-than-expected profits of 59 cents per share and $28.24 billion in revenues.

Biopharmaceutical maker Human Genome Sciences (NASDAQ:HGSI[11]) rejected a buyout offer for a $13 per share[12] from GlaxoSmithKline (NYSE:GSK[13]), which equated to roughly $2.6 billion. HGSI also hired Goldman Sachs (NYSE:GS[14]) and Credit Suisse (NYSE:CS[15]) to help explore strategic alternatives.

Also on the NASDAQ, new issue Splunk (NASDAQ:SPLK[16]) broke the losing mold and a NYSE circuit breaker as demand for the company’s IPO shares[17] overwhelmed the system. The data collection software company rose 108% on its first day of trading to close at $35.48.

In after-hour trading, both Microsoft (NASDAQ:MSFT[18]) and Advanced Micro Devices (NYSE:AMD[19]) were trading higher on earnings results announced after the bell.

Three Up

Three Down

Marc Bastow is an Assistant Editor at InvestorPlace. As of this writing he is long TRV, VZ and MSFT.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/11/IPMarketRecap.gif
  2. positive earnings: http://investorplace.com/2012/04/big-banks-earnings-fit-for-goldilocks-bac-c-jpm-wfc-ms-gs/
  3. BAC: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAC
  4. MS: http://studio-5.financialcontent.com/investplace/quote?Symbol=MS
  5. existing home sales fell : http://investorplace.com/2012/04/existing-home-sales-drop-2-6-in-march/
  6. AA: http://studio-5.financialcontent.com/investplace/quote?Symbol=AA
  7. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  8. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  9. TRV: http://studio-5.financialcontent.com/investplace/quote?Symbol=TRV
  10. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  11. HGSI: http://studio-5.financialcontent.com/investplace/quote?Symbol=HGS
  12. rejected a buyout offer for a $13 per share: http://investorplace.com/2012/04/glaxos-2-6b-bid-for-human-genome-sciences-rebuffed/
  13. GSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSK
  14. GS: http://studio-5.financialcontent.com/investplace/quote?Symbol=GS
  15. CS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CS
  16. SPLK: http://studio-5.financialcontent.com/investplace/quote?Symbol=SPLK
  17. demand for the company’s IPO shares: http://investorplace.com/ipo-playbook/splunks-ipo-goes-stratospheric/
  18. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  19. AMD: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMD
  20. LCC: http://studio-5.financialcontent.com/investplace/quote?Symbol=LCC
  21. EBAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=EBAY
  22. CVI: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVI
  23. GNTX: http://studio-5.financialcontent.com/investplace/quote?Symbol=GNTX
  24. QCOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=QCOM
  25. NUE: http://studio-5.financialcontent.com/investplace/quote?Symbol=NUE

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