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The Markets Now: Natural Gas Glut Hurts Energy Sector


Plus, Walgreen partners with new pharmaceutical distributor.

After stocks rose on encouraging housing starts data, the uncertainty surrounding the Cyprus bailout pushed stocks lower. Legislators in Cyprus did not approve the bank levy necessary to secure a $13 billion international bailout package. The Dow (INDEXDJX:.DJI) decreased 0.25% to 14,415.73. The S&P 500 (INDEXSP:.INX) dropped 0.57% to 1,543.29, and the Nasdaq (INDEXNASDAQ:.IXIC) fell 0.66% to 3,216.16.

The United States Census Bureau reported today that housing starts grew 0.8% in February after falling 7.3% in January. The multifamily component increased 1.4%, and the single family component grew 0.5%. On an annualized basis, February starts numbered 917,000 units, a 27.7% gain from last year. Housing permits also increased from 904,000 in January to 946,000 in February.

The International Council of Shoppers reported the ICSC-Goldman same-store sales index increased by 1.4%, citing strong growth at grocery stores, apparel stores, and discounters. Year-over-year the index has increased 2.3%. The index measures same-store sales at major retailers and accounts for about 10% of total retail sales.

Redbook Research reported that retail sales at chain stores, discounters, and department stores increased 2.9% year-over-year. Month-over-month, Redbook Research shows a 0.7% gain. Like the ICSC-Goldman index, the Johnson Redbook Index accounts for approximately 10% of total retail sales.

Schlumberger (NYSE:SLB) fell 3.97% to $73.31. The oilfield services company announced yesterday that its North American activity was weaker than expected in the first quarter. Its customers reactivated fewer rigs because of the natural gas glut. Stocks of companies in the same industry have also been hit.

Chesapeake Energy Corporation (NYSE:CHK) fell 4.78% to $21.11. Sterne Agee analyst Tim Rezvan downgraded Chesapeake Energy to underperform today with a price target of $20. Rezvan cited stated that the energy company's current 2013 gas hedges "dampen exposure to resurgent natural gas prices."

Walgreen (NYSE:WAG) jumped 5.09% to $44.59. Today, the national drugstore reported its second-quarter earnings. Net income for the period ended February 28 increased 11% to $756 million, or $0.79 per share, from $683 million, or $0.78 per share, a year earlier. Excluding items, the company earned a profit of $0.96, beating analyst estimates of $0.93.

Walgreen also announced that -- along with Alliance Boots -- it signed a ten year distribution contract with pharmaceutical distributor AmerisourceBergen (NYSE:ABC). Cardinal Health (NYSE:CAH) will no longer serve as a distributor for Walgreen.

Cliffs Natural Resources (NYSE:CLF) tumbled 6.98% to $20.25. Investors have pushed the stock lower after the iron ore mining company announced earlier this month that it would idle its Wabush Pointe Noire pellet plant in Quebec.

Morgan Stanley (NYSE:MS) dropped 3.39% to $22.21. The results of the Cyprus vote has caused investors to worry that the financial system in Europe will become more unstable. Also, the bank announced that it will close its Princeton, New Jersey, office and will move the company's 95 employees to a new location.
Twitter: @ChrisWitrak
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