JDfn Daily Digest - October 15, 2008
Federal Reserve Board Chairman Ben Bernanke believes more difficulties lie ahead for the U.S. economy, but the U.S. is in better position to get through them now that the government has new powers to strengthen the banking sector. He said the Fed is committed to using "all the tools at our disposal" to improve market functioning, reduce stress in credit markets and complement the work of the Bush administration and foreign governments to strengthen the financial system.
The Commerce Department reported retail sales decreased 1.2 percent last month, nearly double the 0.7 percent drop that had been expected. It was the biggest decline since retail sales fell by 1.4 percent in August 2005.
Wholesale prices fell for the second straight month in September, driven by a sharp drop in energy costs. The Commerce Department said the producer price index, which measures inflation pressures before they reach the consumer, fell 0.4 percent in September. That decline matched analysts' expectations. Producer prices are up 8.7% over the past 12 months. In August, overall producer prices fell 0.9%, while the core gained 0.2%.
Manufacturing activity in the New York area deteriorated sharply in October. The bank's Empire State Manufacturing index fell to a record negative 24.6 in October from negative 7.4 in September. The new orders index also fell to a record low, and the indexes for shipments, unfilled orders, and inventories all declined sharply.
U.S. businesses added to their inventories in August as their sales slumped. Sales fell 1.8%, the biggest decline in two years, while inventories rose 0.3%. The key inventory-to-sales ratio ticked up to 1.27 from 1.24 in July, a sign that inventories are building up from very low levels. Inventories at retail auto dealers fell 1.6%.
The Organization of Petroleum Exporting Countries revised its forecast for world oil demand growth for 2009, citing the impact of ongoing financial market turmoil. World oil demand growth for next year has been revised down by 100,000 barrels a day to show a growth of 800,000 barrels a day.
Scheduled U.S. Economic Reports (Thursday)
Jobless Claims, Consumer Price Index, Industrial Production, Philadelphia Fed Index, Home Builder’s Index
In Earnings News
Delta Air Lines Inc. (DAL), weighed down by hefty fuel costs, said it swung to a loss in the third quarter despite a 9 percent rise in sales. The results missed Wall Street's reduced expectations.
Charles Schwab (SCHW) earned $304 million, or 26 cents per share, during the third quarter. Analysts, on average, forecast earnings of 23 cents per share.
Wells Fargo (WFC) reported earnings of $1.64 billion, or 49 cents per share, compared with $2.17 billion, or 64 cents per share, in the prior-year quarter. Analysts had expected a profit of 41 cents per share.
The Coca-Cola Co. (KO) reported a 14 percent profit increase for the third quarter, as business in emerging markets offset U.S. weakness. The company posted earnings of $1.89 billion, or 81 cents per share. Analysts expected 77 cents per share.
Abbott Labs (ABT) earned $1.08 billion, or 69 cents per share, compared with profit of $717 million, or 46 cents per share. Excluding charges, the company said profit rose to 79 cents per share. Analysts expected profit of 77 cents per share.
Piper Jaffray (PJC) lost $27 million, or $1.72 a share, in the third quarter. In the same period a year ago, Piper Jaffray earned $4 million, or 27 cents a share. Analysts estimated, on average, a loss of 22 cents a share.
State Street (STT) said its third-quarter earnings rose 33 percent. The company earned $477 million, or $1.09 per share, from $358 million, or 91 cents per share, during the same quarter last year. Analysts forecast earnings of $1.19 per share for the quarter.
Scheduled Earnings Reports (Thursday)
Google, IBM, Capital One, Advanced Micro Devices, Southwest Airlines, Harley Davidson, Merrill Lynch, Hershey, Nokia, Shoe Pavilion
Stocks in the News
Intel (INTC) reported a 12% jump in third-quarter net profit, although the company warned that the global financial crisis has led to "signs of stress" and market uncertainty in the fourth quarter.
JPMorgan Chase & Co.'s (JPM) profit tumbled 84 percent in the third quarter after it took big hits from souring mortgage investments, leveraged loans and home loans.
Experian (EXPGY) said it will sell its transaction processing activities in France for 203 million Euros.
St. Jude Medical (STJ) third-quarter net income rose 21% to $193 million, or 55 cents a share, from $160 million, or 46 cents, in the year-ago period.
Altera Corp’s (ALTR) third-quarter profit rose to $94.7 million, or 31 cents a share, from $69 million, or 20 cents a share, in the year-ago period.
Genentech Inc (DNA) third-quarter net income grew to $731 million or 68 cents a share, from $685 million, or 64 cents a share, for the year-earlier quarter.
The Commerce Department reported retail sales decreased 1.2 percent last month, nearly double the 0.7 percent drop that had been expected. It was the biggest decline since retail sales fell by 1.4 percent in August 2005.
Wholesale prices fell for the second straight month in September, driven by a sharp drop in energy costs. The Commerce Department said the producer price index, which measures inflation pressures before they reach the consumer, fell 0.4 percent in September. That decline matched analysts' expectations. Producer prices are up 8.7% over the past 12 months. In August, overall producer prices fell 0.9%, while the core gained 0.2%.
Manufacturing activity in the New York area deteriorated sharply in October. The bank's Empire State Manufacturing index fell to a record negative 24.6 in October from negative 7.4 in September. The new orders index also fell to a record low, and the indexes for shipments, unfilled orders, and inventories all declined sharply.
U.S. businesses added to their inventories in August as their sales slumped. Sales fell 1.8%, the biggest decline in two years, while inventories rose 0.3%. The key inventory-to-sales ratio ticked up to 1.27 from 1.24 in July, a sign that inventories are building up from very low levels. Inventories at retail auto dealers fell 1.6%.
The Organization of Petroleum Exporting Countries revised its forecast for world oil demand growth for 2009, citing the impact of ongoing financial market turmoil. World oil demand growth for next year has been revised down by 100,000 barrels a day to show a growth of 800,000 barrels a day.
Scheduled U.S. Economic Reports (Thursday)
Jobless Claims, Consumer Price Index, Industrial Production, Philadelphia Fed Index, Home Builder’s Index
In Earnings News
Delta Air Lines Inc. (DAL), weighed down by hefty fuel costs, said it swung to a loss in the third quarter despite a 9 percent rise in sales. The results missed Wall Street's reduced expectations.
Charles Schwab (SCHW) earned $304 million, or 26 cents per share, during the third quarter. Analysts, on average, forecast earnings of 23 cents per share.
Wells Fargo (WFC) reported earnings of $1.64 billion, or 49 cents per share, compared with $2.17 billion, or 64 cents per share, in the prior-year quarter. Analysts had expected a profit of 41 cents per share.
The Coca-Cola Co. (KO) reported a 14 percent profit increase for the third quarter, as business in emerging markets offset U.S. weakness. The company posted earnings of $1.89 billion, or 81 cents per share. Analysts expected 77 cents per share.
Abbott Labs (ABT) earned $1.08 billion, or 69 cents per share, compared with profit of $717 million, or 46 cents per share. Excluding charges, the company said profit rose to 79 cents per share. Analysts expected profit of 77 cents per share.
Piper Jaffray (PJC) lost $27 million, or $1.72 a share, in the third quarter. In the same period a year ago, Piper Jaffray earned $4 million, or 27 cents a share. Analysts estimated, on average, a loss of 22 cents a share.
State Street (STT) said its third-quarter earnings rose 33 percent. The company earned $477 million, or $1.09 per share, from $358 million, or 91 cents per share, during the same quarter last year. Analysts forecast earnings of $1.19 per share for the quarter.
Scheduled Earnings Reports (Thursday)
Google, IBM, Capital One, Advanced Micro Devices, Southwest Airlines, Harley Davidson, Merrill Lynch, Hershey, Nokia, Shoe Pavilion
Stocks in the News
Intel (INTC) reported a 12% jump in third-quarter net profit, although the company warned that the global financial crisis has led to "signs of stress" and market uncertainty in the fourth quarter.
JPMorgan Chase & Co.'s (JPM) profit tumbled 84 percent in the third quarter after it took big hits from souring mortgage investments, leveraged loans and home loans.
Experian (EXPGY) said it will sell its transaction processing activities in France for 203 million Euros.
St. Jude Medical (STJ) third-quarter net income rose 21% to $193 million, or 55 cents a share, from $160 million, or 46 cents, in the year-ago period.
Altera Corp’s (ALTR) third-quarter profit rose to $94.7 million, or 31 cents a share, from $69 million, or 20 cents a share, in the year-ago period.
Genentech Inc (DNA) third-quarter net income grew to $731 million or 68 cents a share, from $685 million, or 64 cents a share, for the year-earlier quarter.
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