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Market Recap: Wells Fargo Tries to Cover Losses, Crude Oil Takes a Hit


As stocks gained impressively, Hump Day wasn't so kind to commodities...

The U.S. markets continued where they left off yesterday, posting all around big gains. The Dow Industrials gained 331.01 points, or 2.55%, and closed at 13,289.45. Not to be outdone, the Nasdaq added 82.11 points, or 3.18%, to close at 2,662.91. Rounding out the bunch, the S&P 500 gained 40.79 points, or 2.86%, and finished at 1,469.02.

Yesterday after the close, Wells Fargo (WFC) set aside $1.4 bln in an attempt to cover some of its loan losses. More specifically, the reserve fund covers and $11.9 bln portfolio of loans acquired through mortgage brokers and other sources. This morning Professor Shedlock tried to 'shed' some light on the move in his article Wells Fargo's $1.4 Billion Loan Loss. He says that WFC CEO John Stumpf is describing a plan for deflation in which the company "is liquidating (cutting its losses in existing credit), while tightening lending standards for new credit." Despite the negative news, WFC stock traded higher today, closing up 2.98% to 30.72. Professor Depew tried to determine why the bad news was so good in today's Five Things You Need to Know.

The commentary continues to flow in the wake of yesterday's $7.5 bln deal between Citigroup (C) and Abu Dhabi's investment arm. Mr. Practical looks at the irony of the situation, noting that while stocks rallied on the news, shares of C underperformed the financial sector as a whole. Professor Katsenelson also chimed in with Citigroup's Future Profitability. Professor Tatro looked at ways of Making Money Off Of Citigroup's Deal. He says that this is all evidence that there is support out there for the broader market, and specifically for the energy sector, in the international community.

Looking at commodities, crude oil took a hit today, dipping -3.1% to close at 91.47. Professor Michael vibed on the Buzz that the forecast isn't looking good for Texas Tea or for Natural Gas due to several weather forecasters predicting unseasonably warm winters. On the other hand, while gold and silver were along for the downside ride early on, the metals gained back some of the losses late in the day.

See our Buzz Bits for more samples of content from the Buzz & Banter.

Earnings Review

Coldwater Creek
(CWTR) reported a loss of $0.07 EPS vs. an expected loss of $0.11. Revs rose 5.8% y/y to $271.2 mln vs. $264.6 mln cons.

Men's Wearhouse (MW) reports EPS of $0.69 on revs of $512.1 mln, in line with analyst expectations.

TiVo (TIVO) reported a loss of $0.08 EPS vs. a loss of $0.13 EPS cons on revs of $58.3 mln vs. $56.7 mln cons.

Sigma Designs (SIGM) reported $0.79 EPS vs. $0.55 EPS cons on revs of $66.2 mln vs. $51.8 mln cons.

Go take care of the important stuff and we'll start fresh tomorrow.
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