Posted by: Catherine | June 30, 2009

Markets Drift Up

The summer doldrums are definitely here as the stock markets crept upwards on Monday. The Dow Jones Industrial average had the largest percentage gain of the three major averages rising 90.99 or 1.08% points to close around 8529.38. The Nasdaq added 5.84 or 0.32% and ended the day at 1844.06 and the S and P 500 Index finished up 8.33 or 0.91% settling at 927.23. The news of the day was unrelated to trading and involved Bernie Madoff getting a sentence of 150 years in prison meaning the 71 year old crook will likely die behind bars.

The earnings season is also creeping up on us and the largest tax preparer H and R Block reported today. The companies earnings were better than most stock traders were expecting saying in their press release that income from continuing operations grew to $513 million or 15%. Their earnings per share grew to $1.53 up from $1.36 in the same period last year. Their consolidated net income increased to $1.45 per share or $486 million after reporting a loss for the same period last year. They said earnings for the full year 2010 from continuing operations were expected to be $1.60 to $1.80 per share. The closed at 15.67 per share up around .25 or 1.62% around its highs for the day, it is still down nearly 33% year to date.

The other report stock traders were focused on was Apollo Group, Inc. which reported its third quarter fiscal 2009 results. Apollo Group is a company primary focused on higher education for working adults and runs colleges such as the University Of Phoenix and Western International University. Some of the highlights of their press release were posting their first quarterly revenue of over $1 billion a 26% increase over the same period last year. Apollo reported $201 million in net income on revenue of $1.05 billion for the three months ending May 31, 2009. The company had a third quarter profit of $1.26 per share significantly higher than the .85 cents per share they reported in the year ago period. Also well above analyst consensus estimates of 1.12 per share. The stock opened the day slightly higher but then dropped more 3.6% ahead of the news to close at 65.99 per share. After the bell Apollo Group jumped 5.3% and was trading around 69.53. Look for that good size pop to follow through on Tuesday.

Stock markets on Monday saw a drop in trading volume since the couple large moves last week and should continue the lazy summer trading tomorrow. Tuesdays most popular earnings release will be Sealy Corporation which analysts expected to make 0.04 cents per share. For Tuesday June 30 stock market investors will also be watching the release of the Chicago PMI (Purchasing Managers Index). The Chicago PMI is a survey released by the Institute of Supply Management surveying manufacturing and non-manufacturing business conditions in the Chicago area. Numbers above 50 percent indicate an expanding business sector. Stock market traders are looking for healthy economic growth because the view is that means corporate profits will be higher. While bond traders look for moderate growth that won’t create inflation. May’s number was weaker than expected at 34.9 and the consensus for June is estimated to be 40.

The other economic release traders will be watching is the consumer confidence number. The Conference Board surveys five thousand consumers across the country and asks them about their attitudes and expectations of the economy. Consumer spending is two thirds of the economy so their confidence directly and significantly affects economic growth. Stock market investors look for a high number which would mean higher corporate profits, while bond traders are always worried about excessive inflation should the consumer be overconfident. The number for May was 54.9 a major jump off the April level of 40.8 and the consensus estimate for June is 57.

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