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Market Recap: Bear Stearns, Oracle, FedEx; Markets Close Higher


Bear Stearns reported its first loss ever but finished the day higher. FedEx falls. Markets close higher.

As one Minyan put it, "the old leaders are losing their predictive tells." The Dow Industrials gained +38 points, or +0.29% to 13245, the S&P 500 added +7 points, or +0.49% to 1460, and the Nasdaq Composite added +39 points, or +1.53% to 2640.86.

Bear Stearns' (BSC) earnings were the main focus for investors this morning. The company reported a loss of -$6.90 per share marking the first time the company recorded a loss. Analysts had expected a performance of -$1.79 EPS. The company also announced $1.9 bln in write-downs, which canceled out the company's revenue for the quarter. CEO James Cayne called the results "unacceptable" and announced he and others would be forgoing bonuses for the year. (Bloomberg)

Yet with all the negativity, BSC shares rallied late in the day, closing +0.91%

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In other parts of the financial sector, Discover (DFS) reported $0.40 EPS above analyst expectations of $0.36 with revenues coming in at $374 mln versus $374.5 mln consensus. Minyan Peter noted on the Buzz the company's 15% decrease in managed earnings due to a 40% increase in the loan loss provision.

"What was most startling to me, however, was that while managed balances were up 1% for the quarter, sales volume was down 4% for the quarter. If I had any doubt that credit card companies had become the lender of last resort to the US consumer, this last point removed it," said Minyan Peter. DFS closed -2.71%. The broader Philadelphia Bank Index (BKX) fell -0.52% yet the major investment banks mostly gained on the day: Lehman Brothers (LEH) added +0.71%. Morgan Stanley (MS) added +2.58% and Credit Suisse (CS) added +0.81% but Goldman Sachs (GS) lost -0.73%. Read Minyan Peter's Do The Best Have Traction? and see a related article, Professor Mish Shedlock's Minyan Mailbag: Morgan Stanley Questions.

FedEx (FDX) shares fell today after reporting results for its second quarter. Earnings per share came in $0.04 above analyst expectations at $1.54 with revenues increasing +5.8% year-over-year to $9.45bln vs. $9.32 bln cons. The company, however, issued downside guidance for 3Q, citing rising fuel costs and a decreasing demand for US domestic express package and less-than-a-truck-load freight services. Although Professor Depew acknowledged the fact that the company is less dependent on the U.S. economy and benefitting from the weaker dollar, he asked "…is the company underestimating the global macroeconomic conditions and the potential for economic weakness here to spill over to the global economy?" FDX closed -1.06% for the day.

In the technology sector, investors were more than pleased with Oracle's (ORCL) performance. The company beat estimates last night after the bell with earnings of $0.31 per share. Revenues rose 27.2% on an annualized basis to $5..36%. Tech Specialist Professor Adam Katz said that "Oracle is illustrating that there is a clear focus on infrastructure spending...and the instances of software licenses is going to go up dramatically." ORCL finished the day +6.41%.

In commodities, crude oil finished -0.06 to 91.18. Gold fell -2.20 to 803.20. Silver gained 0.118 to 14.34 and copper finished higher +0.75 to 296.55.

For more summaries, click on Minyanville's Buzz Bits.

Idea Flow

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: CIEN, ORCL, CY, TIVO, OXPS, AKAM, GS, FDX, HOLX, TXCO

Some bearish trade or investment ideas: KMX, MS, BKX, C, XBD, TGT, CAG

Have a great night! See you in the mornin'.

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No positions in stocks mentioned.

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