Topping headlines this morning, financial stocks fell after Bank of America (BAC) reported results for the first quarter. The second largest U.S. bank missed analyst estimates by 18 cents, saying profits came in at $0.23 per share. The company also reported $1.31 billion in trading-related losses, including $1.47 billion in writedowns of collateralized-debt obligations and $439 million on leveraged loans. Further, BAC said it increased its provision for credit losses to $6.01 billion from $1.24 billion, indicating further weakness in the home-equity, small-business and homebuilding portfolios. BAC closed -2.24% to $70.39.
National City (NCC) news added further fuel for the bears. According to Bloomberg, NCC shares plunged -27% to a 17 year low after the company cut its dividend and said it agreed to sell a $7 billion stake at a 40% discount to Corsair Capital.
In all, the Philadelphia Bank index (BKX) dropped almost -3% on the news to close at $79.39. Other notable performances include Morgan Stanley (MS) -1.19% to $47.20, Wachovia (WB) -3% to $26.43, and Merrill Lynch (MER) fell -2% to $46.41. See Todd’s Monday Morning Quarterback.
But not all financial stocks were hurt on the day. Credit card titans MasterCard (MA) and Visa (V) had a solid showing. Professor Jeffrey Cooper noted on the Buzz, “Visa and MasterCard are streaking and have solid trend days going. V has a near term projection to 73 while last week I mentioned the inverse H&S pattern on MA to 175/190 ish. Note the tail on MA on Friday, giving the appearance of a false breakout, if that tail is offset MA should rip."
MA settled +0.98% to $236.00, and V added +2.86% to $70.97. Also bucking the trend were UBS (UBS) +1.47% to $35.84, Goldman Sachs (GS) +0.26% to $180.40, and Deutsche Bank (DB) +0.33% to $121.97. Read Professor John Mauldin’s The Road to Economic Recovery.
Caterpillar’s (CAT) shares took a tumble after analysts at Wachovia and Credit Suisse downgraded the stock. Both analysts cited concerns that the company wouldn’t be able to boost efficiency and improve profit margins. (Bloomberg). CAT shares dropped -2.29% to $83.33.
Elsewhere, coal stocks surged on the numbers of Arch Coal (ACI). The second largest U.S. coal producer soundly beat estimates and said 1Q profits more than doubled. On top of that the company raised its guidance for FY'08 saying it saw EPS in the range of $2.40-2.80 vs. prior figures of $2.00-2.50 per share.
Almost all the coal plays hit a new 52 week highs. Notables include Massey Energy (MEE) +4% to $54.63, Peabody (BTU) +3.2% to $68.83, Consol Energy (CNX) +2.14% to $88.10, and ACI finished +6.5% to $62.18.
As for other commodities, gold settled +3.2 to 915.40. Crude oil closed +1.11 to 117.80. Silver fell -0.360 to 17.460, and copper closed -1.75 to 390.20.
The dollar index fell -0.335 to 71.677.
For more Buzz insight, check out Minyanville’s Buzz Bits.
Below is a recap of some of the idea flow on today’s Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: NDX, PKTR, BCSI, RIMM, RIO, CYD, ERES, V, MA, MFN, RIO, Suns/Spurs
Some bearish trade or investment ideas: CF, NCC, NDX, C, MER, NAC, NSTK, POT, BIDU, LEH, JPM, GS, GOLD, oil
Mondaaays! The worst is over! Have a great night!
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