Posted by: Catherine | July 2, 2009

Stock Markets Determined To Trade Sideways

Stock markets on Wednesday traded marginally higher before giving up about half the gains heading into the close.  The Dow Jones Industrial Average closed up 57 points or 0.68% to close at 8504.06, the Standard and Poors 500 Index closed up just over 4 points or 0.44% to end the day at 923.33 and the Nasdaq day gained 10.68 points or 0.58% finishing the session at 1845.72. 

General Mills, the maker of Cheerios brand and other cereals and snack products reported earnings for their fiscal fourth quarter and fiscal 2009 before the bell this morning.  For the fiscal year of 2009 net sales were us 8 percent to $14.7 billion and earnings per share excluding special items rose 13 percent to $3.98, well above analysts consensus estimates. For the fourth quarter ’09 net income was $358.8 million or $1.07 per share, above the estimated .81 cents per share. The stock finished the day up 2.16 or 3.86% to close at 58.18 per share.  The stock has been on a consistent climb since hitting March lows of around $46, but is still well off of its 52 week high of $72 per share set last September.

Constellation Brands, the largest wine company in the world, announced its fiscal first quarter 2010 results this morning.  The company reporting net income of $6.5 million or 3 cents per share well off of its $44.6 million profit in the same quarter a year ago.  The companies stock was higher on the day by 7.33% up to 13.61 per share after the company reiterated its profit outlook for the full fiscal year.  “We are generally pleased with our quarterly results, which were in-line with our expectations,” said Robert Sands President and CEO in the earnings press release, “we took steps over the past 18 months to shift the focus of our strategy to building must-have brands that return the greatest profits and that represent good value for consumers.”  The full press release is available on their website.

Today the ADP employment report was released and missed expectations.  The report came in with 473,000 jobs lost during the month of June, this was much higher than analyst estimates of 394,000.  The report showed the rate of job cuts slowed slightly from Mays 485,000 number, but was still a sign that the recession may drag out longer than people had hoped.  The ISM Manufacturing number, a survey of over three hundred manufacturing firms on different aspects of their business, was released on Wednesday and came in at 44.8.  This was the highest reading for the Index since last August and slightly higher than the average estimates of analysts of 44.5.

Motor vehicle sales for June were also reported by major automakers on Wednesday afternoon.  Ford (F) had its smallest drop this year with sales falling 11% last month.  On the other hand Chrysler had a 42% drop in auto sales, Toyota (TM) reported a 32% fall and Nissan (NSANY) had a 23% dip in the month of June.  Despite those numbers Ford (F) shares were down 2.6% on the day, while Toyota and Nissan posted only modest declines of 0.3% and 0.6%.

Software company LogMeIn went public today in an uncertain ipo market and was trading higher throughout the day.  The company makes on demand remote connectivity solutions for small and medium size businesses.  The offering was for 6,666,667 shares of common stock and was priced at $16 per share, which was the high end of the range.  LogMeIn (LOGM) expects to make $107 million on the offering which was trading above the $20 per share level in early afternoon action.  The book managers for the offering were JP Morgan Securities and Barclays Capital Inc.

Tomorrow is the now much anticipated release of the initial jobless claims report.  After the ADP report negative surprise no doubt analysts are revising their estimates.  The initial jobless claims is a weekly report put out by the US Department of Labor on the number of individuals filing for unemployment for the first time.  The consensus estimates on Wall Street were for 620,000 new applicants.  I expect this number to be higher around 625,000-626,000.  Several small companies will be reporting earnings tomorrow Methode Electronics, Inc. symbol MEI estimate  -0.16, Acuity Brands, Inc. symbol AYI estimate  0.57, MSC Industrial Direct Co. symbol MSM estimate  0.38 symbol MSCI Inc. symbol MXB estimate 0.24 per share.  The earnings releases should not have any effect on the overall markets or the individual company sectors.

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