Market Recap: Banks, J.C. Penney, Stocks Fall
Glum news in the retail sector gave way to the bears.
Major indexes were higher on the open with better-than-expected economic data. This morning the Commerce Department said Personal Income rose 0.5%, above estimates of 0.3% Personal Spending was inline with expectations, increasing 0.1% for February, but that level was the weakest since September 2006. Further, the PCE Deflator (y/y) increased 3.4% and excluding food and energy, rose 2% in February. For more analysis, read Professor Kevin Depew's Five Things You Need To Know.
Lehman Brothers (LEH) also popped on the open after receiving an upgrade from Citigroup. According to Bloomberg, Citi analysts said LEH had "extremely attractive" valuations with plentiful liquidity in addition to government entities that have the "ability to print money."
But any lift was canceled out by glum news in the retail sector. J.C. Penney (JCP) shares plunged nearly 13% after the third-largest U.S. department store cut its revenue and profit forecasts based on slower consumer spending.
"Add J.C. Penney to the heap of retailers and apparel companies warning this week," said retail specialist Professor Jeff Macke. "DSW (DSW) and Williams-Sonoma (WSM) all spent some time in the shed this week warning, taking down numbers, eliminating guidance (DSW), and, in the case of WSM, calling this the worst downturn since 1990.
JCP shares settled -7.5% to $37.48. Other stocks included Macy's (M) falling -6% to $21.97. Sears Holdings (SHLD) lost -4% to $101.03 and the broader retail ETF (RTH) lost -0.7% to $90.90.
Banking stocks also fell. LEH gave up all of its gains to close -2% to $37.87. Other notable decliners include Wachovia (WB) -4% to $25.99. Goldman Sachs (GS) lost -2% to $164.45, and Morgan Stanley (MS) lost -2% to $44.74. The broader Bank Index (BKX) declined -2.4% to $78.66. Check out Prieur du Plessis' column, Prieur Picture Du Jour: Injury Time For U.S. Long Bonds.
High beta tech stocks performed relatively well. Apple (AAPL) added +2.15% to $143.28. Research in Motion (RIMM) finished +3% to $115.41, and Baidu (BIDU) gained +4% to $247.11.
In other parts of the sector, Professor Adam Katz mentioned his concerns that investors weren't being rewarded. "Take a look at Tibco (TIBX). The company beat, and raised guidance but the stock is flat. Management is not being rewarded for providing positive sentiment and I suspect other teams to remain conservative in its guidance as well regardless of whether they bring in their respective quarters."
TIBX closed -4% to $7.08. Other stocks he mentioned included SonicWall (SNWL) -0.12% to $8.10, Interwoven (IWOV) -2.3% to $11.22, and Saba (SABA) -9% to $3.53.
Commodities were hurt today. Crude oil declined -2.17 to 105.41. Gold fell -19.60 to 929.20. Silver fell -0.60 to 17.950, and copper dropped -4.35 to 386.00.
The dollar index fell -0.052 to 71.610.
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: V, SPX, FLS, IWM, DIS, BRCM, XRX, JCP, SCUR, IWOV, SABA, RNOW, MA
Some bearish trade or investment ideas: SPY, MER, AEM, GLD, JCP, PSW, WSM, DOW, BIDU, PBY, CNK, WGO, CME, CTXS, CRM, UBS, USO
Have a great weekend, Minyans!
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