Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:22 AM EST
S&P 500: -7.20; 1,551.50
NASDAQ 100: -13.00; 2,047.75
Dow: -38.00; 14,012.00
NIKKEI 225: -1.11%; 18,015.58 (-201.69)
HANG SENG: -0.93%; 22,841.92 (-215.38)
SHANGHAI SE COMPOSITE: +0.87%; 3,930.06 (+33.87)
BSE SENSEX 30: +0.07%; 15,301.17 (+11.35)
FTSE 100: -0.81%; 6,605.00 (-54.10)
CAC 40: -0.94%; 6,041.73 (-57.48)
XETRA-DAX: -1.46%; 7,921.03 (-117.18)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.30%; $74.24 (+$0.22)
Gold: +0.29%; $667.80 (+$1.90)
Natural Gas: -0.51%; $6.28 (-$0.03)
Silver: +0.21%; $13.045 (+$0.027)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
JP Morgan Beats on Strong Investment Banking, Asset Management
U.S. brokerage firm JP Morgan Chase reported second-quarter earnings of $1.20 per share, up 17.5% from a year ago, beating the $1.08 analysts were forecasting. Net income rose 19.6% to $4.23 billion. Revenue climbed 25.3% to $18.91 billion, beating the $17.53 billion analysts were expecting. Earnings results were driven by a strong performance from its investment banking unit, and record earnings and revenue from its asset management and Treasuries unit, the company said. Acknowledging investor worries about how subprime lending woes might affect the sector, CEO Jamie Dimon said: "We continue to focus on being prepared for a less favorable environment. Given the diversity of our business mix, improving operating margins across our businesses and the strength of our balance sheet, the firm is well-positioned for the future." Knott Capital's Peter Schofield agreed: "On the surface it certainly looks good. JPMorgan is growing with deals, trading and investment banking everywhere." Shares, up just 3.3% YTD, are down 1.4% in pre-market trading.
Sources: Press release (.pdf), Bloomberg
Commentary: Why Aren't Banks Keeping Up With the Market? • Why Aren't Banks Keeping Up With the Market?
Stocks/ETFs to watch: JPMorgan & Chase Co. (JPM). Competitors: Goldman Sachs Group Inc. (GS), Morgan Stanley (MS), Merrill Lynch & Co. Inc. (MER), Bear Stearns Companies Inc. (BSC)
Conference call transcript: JP Morgan Earnings Conference Call Transcript (later today)
Altria Beats, Lowers Full Year Outlook
Altria Group reported earnings Wednesday before the open, beating estimates, while lowering its full year outlook to below analyst expectations. Net income was $2.22 billion, good for EPS of $1.05 a share, including a $0.12 a share impairment charge. On an adjusted basis, EPS was $1.15, two cents above consensus estimates of $1.13. Revenue rose nearly 10% to $18.81 billion. The company's full year outlook was revised down $0.15 to a range of $4.05-$4.10. Consensus estimates were calling for full year EPS of $4.27. Altria, who owns cigarette maker Philip Morris, raised prices on top brands like Marlboro, Parliament and Virginia Slims, in December, and on 12 other brands in February. The company credited Marlboro sales for its strong quarter saying "Marlboro achieved a record retail share of 41.0%" in the U.S. Clover Capital portfolio manager Matthew Kaufler: "Internationally, tobacco is a growth business."
Sources: Press Release, Bloomberg, Reuters, MarketWatch [check back later today for Altria's most recent conference call transcript]
Commentary: Altria Group Moves Toward PMI Spin • Altria to Close NC Plant, Shift Production to Europe • Cramer's Take on MO
Stocks/ETFs to watch: Altria Group, Inc. (MO). Competitors: British American Tobacco plc (BTI), Reynolds American Inc. (RAI), Imperial Tobacco Group PLC (ITY). ETFs: DIAMONDS Trust, Series 1 (DIA), iShares Dow Jones US Consumer Goods (IYK), Consumer Staples Select Sect. SPDR (XLP), Vanguard Consumer Staples (VDC)
Pfizer Q2 Profit Drops 48%, Misses Estimates, Maintains EPS Guidance
Shares of Pfizer are trading lower by about 2.5% to $25.30 in thin pre-market activity, on news its Q2 net income fell 48% to $1.27b, or $0.18/share on a 6% decline in revenues to $11.08b. Adjusted EPS totaled $0.42. Analysts were expecting $0.50/share on sales of $11.4b. Pfizer acknowledged Q2 was challenging, citing "the loss of U.S. exclusivity for Zoloft and Norvasc, the timing of some expenses and Lipitor’s performance in the U.S." However, CEO Jeffrey Kindler said the company is "still on track to meet [its] previously announced 2007 and 2008 revenue and adjusted diluted EPS goals." Pfizer estimates full year 2007 adjusted EPS of $2.08 - $2.15, on sales of $47b - $48b, with free cash flow from operations of $12b - $13b. For 2008, it expects adjusted EPS of $2.31 - $2.45, on sales of $46.5b - $48.5b, with FCF from operations of $18b - $19b. Shares of Pfizer lost 0.5% to $25.96 on Tuesday.
Sources: Press release, MarketWatch
Commentary: Pfizer's Lyrica Gets FDA Approval to Treat Fibromyalgia • Pfizer's Axitinib Shows Positive Results Against Pancreatic Cancer in Phase II Trial • Three Direct Stock Purchase Plans: Pfizer, Health Care REIT, IndyMac Bancorp
Stocks/ETFs to watch: Pfizer (PFE). Competitors: Amgen (AMGN), Biogen (BIIB), Bristol Myers Squibb (BMY), Glaxosmithkline (GSK), Eli Lilly (LLY), Teva (TEVA), Merck (MRK), Schering-Plough (SGP), Sanofi-Aventis (SNY), AstraZeneca (AZN). ETFs: iShares Dow Jones US Pharmaceutical Indx (IHE), Pharmaceutical HOLDRS (PPH), Vanguard Health Care ETF (VHT)
United Technologies Beats by a Penny, Raises Guidance
United Technologies reported Q2 net income increased 4% to $1.15 billion, or $1.16/share, on sales growth of 13% to $13.9b. Analysts were expecting $1.15/share and sales of $13.3b on average.
United Technologies raised its full year 2007 EPS guidance to $4.15 - $4.25, compared to $4.05 - $4.20 previously. Its new sales estimate is $53b (vs. $51b prior). On average, 20 analysts had forecast EPS of $4.19 on sales of $52.4b. United Technologies cited continuing strength in commercial aerospace and commercial construction markets. The company also reported accelerating shipments at its Sikorsky helicopter unit. "The single soft spot in our markets remains the North American Residential HVAC business, reflecting the continuing U.S. housing downturn," commented United Technologies CEO George David. Still, riding global strength in commercial markets, its Carrier unit was able to increase its operating income at a double-digit clip. The company repurchased $500m of its common stock during the quarter ($1b total ytd). Shares of United Technologies rose 0.2% to $76.84 on Tuesday.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Are Stocks Over-Extended? • Four Energy Efficiency Stocks For a Cool Summer
Stocks/ETFs to watch: United Technologies Corp. (UTX). Competitors: General Electric Co. (GE), Honeywell International Inc. (HON), Boeing Co. (BA). ETFs: Diamonds Trust Series 1 ETF (DIA), iShares Dow Jones US Aerospace & Defense (ITA), Industrial Select Sector SPDR (XLI), PowerShares Aerospace & Defense (PPA)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Stocks were mixed yesterday, but the Dow Jones Industrial Average gained again. The blue chip buying continued with American Express (AXP) leading the way, as it was up $2.86 (4.5%) after an upgrade by Goldman Sachs (GS).
Microsoft (MSFT) and Intel (INTC) pushed up the tech sector and Novellus Systems (NVLS) closed higher (up 11.2%) on better-than-expected earnings. As a result, the Philly Semiconductor Index [SOX] led all other indexes with a gain of 3%. Additionally, DuPont (DD) rose 2.5% and IBM closed higher by 1%.
All was not summer roses, though, as Bear Stearns (BSC) advised holders that its two troubled hedge funds were "practically worthless," and Johnson & Johnson (JNJ) fell 1.7% as concerns grew over future sales of several of its key products. But the Producer Price Index carried a surprise -- it dropped 0.2% (a gain of 0.2% was expected) -- and this provides further evidence of a moderating inflation tone.
After rising to a new high of 14,022 yesterday, the Dow Industrials had gained 21 points to settle at 13,972. The S&P 500 lost a fraction and closed at 1,549 and the Nasdaq gained 15 points to 2,712. Trading volume on the Big Board was 1.4 billion shares and 2.2 billion changed hands on the Nasdaq, with declining issues outpacing advancers by 18-to-13 on the NYSE, but gainers were ahead on the Nasdaq by 15-to-14.
Crude oil (August contract) closed 13 cents lower at $74.02 a barrel, and the Amex Energy SPDR (XLE) lost 74 cents (at $72.28) as a result of mild profit-taking. The near-term objective for the XLE is still $76-$78.
Gold (August contract) fell 40 cents to close at $665.90 per troy ounce, and the Philly Gold and Silver Index [XAU] lost 44 cents, closing at $149.08. Support for the XAU is now at the July 6 closing price of $145.
What the Markets Are Saying
With last week's breakouts from the supposed triple-tops of the Dow, S&P 500 and the NYSE Composite Index, and three consecutive new highs since then from the Dow, there can be little doubt that the stock market is headed higher.
Despite that, the bears still roar their dissatisfaction and continue to build on their put positions, while the odd-lotters short stocks and the American Association of Individual Investors' index still shows major skepticism on the part of the public.
Meanwhile, the institutions that are still flush with cash and foreigners who can buy our stocks with bargain-basement buying power are investing in the best of the best, and that has resulted in a new run on the blue chips. This is one powerful bull!
Today's Trading Landscape
Today we'll get a look at the inflation numbers from the consumer's point of view as the June Consumer Price Index will be reported, along with housing starts, building permits and weekly mortgage applications.
Earnings are expected from the following companies: Abbott Labs (ABT), Altria (MO) (read above), Noble Corp. (NE), Pfizer (PFE) (read above), Southwest Airlines (LUV), Washington Real Estate (WRE), Allstate (ALL), Amdocs (DOX), American Standard (ASD), Amphenol (APH), BlackRock (BLK), Cintas (CTAS), CIT Group (CIT), Delta Air (DAL), eBay (EBAY), Gannett (GCI), IBM (IBM), Intersil (ISIL), Johnson Controls (JCI), JPMorgan Chase (JPM) (read above), Juniper Networks (JNPR), Northern Trust (NTRS), Piper Jaffray (PJC), Seaspan (SSW), Sovereign Bancorp (SOV), St. Jude Medical (STJ), Teradyne (TER), United Technologies (UTX) (read above) and others.
In addition to earnings and economic reports, the complete failure of the Bear Stearns (BSC) funds and the appearance of Fed Chairman Ben Bernanke before the House Financial Services Committee will no doubt have an impact on trading today.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Decline for Third Day; Canon Drops on Stronger Yen, BHP Falls Asian stocks fell for a third day, the longest losing streak in two months, on concern losses at a Bear Stearns Cos. (BSC) hedge fund will prompt investors to favor government bonds over equities.
• Yen Rebounds After Bear Stearns Hedge-Fund Losses Restrain Carry Trades The yen rose against the dollar and euro as losses on Bear Stearns Cos. hedge funds caused investors to pare purchases of riskier assets with money borrowed in Japan.
• Thailand Cuts Key Interest Rate for Fifth Time This Year to Boost Economy Thailand's central bank cut its benchmark interest rate for the fifth consecutive time this year to spur an economy blighted by slumping consumer confidence after last year's military coup.
• Woori Chief Executive Officer Park Says Bank to Control Risk as Loans Soar Woori Bank, South Korea's second- biggest by assets, will put priority on containing the risk of defaults after its lending to small companies soared, Chief Executive Park Hae Choon said.
• KPIT Cummins Infosystems Plans to Raise Fees to Overcome Rising Rupee Cost KPIT Cummins Infosystems Ltd., an Indian software maker that sells to Hewlett-Packard Co. (HPQ) and other clients, plans to increase fees and ask customers to shoulder currency risk.
European Headlines (via Bloomberg.com)
• European Stocks Drop, Led by Technology Companies; Infineon, UBS, ST Fall European stocks fell for a second day as the dollar's decline hit shares of automakers and the Bear Stearns Cos. (BSC) fund debacle pushed financial companies lower.
• Imperial Tobacco Agrees to Buy Altadis for $17 Billion to Add Gauloises Imperial Tobacco Group Plc (ITY) agreed to buy Altadis SA for 12.6 billion euros ($17 billion), gaining Gauloises cigarettes and the world's best-selling cigars after a four-month takeover battle with CVC Capital Partners.
• ABN Amro to Meet With Royal Bank-Led Group, Barclays to Discuss Takeover ABN Amro Holding NV (ABN) will meet with a team led by Royal Bank of Scotland Group Plc (RBSPY.PK) to discuss its plans to buy the Dutch bank for 71.1 billion euros ($98 billion) in the biggest banking takeover.
• Heineken Raises Profit Forecast, Predicts 25 Percent Gain as Sales Climb Heineken NV (OTC:HINKY), the Dutch brewer that sells beer in more than 170 countries, doubled its forecast for profit growth as sales increased in Russia and Poland. The shares rose the most in nine years.
• Trichet Says Attempts to Influence European Central Bank Violate EU Treaty European Central Bank President Jean- Claude Trichet said comments by French European Affairs Minister Jean-Pierre Jouyet on influencing the ECB's monetary policy are ``not acceptable.''