Top 10 News Items: First Reading of Q2 GDP; Fed's Bullard Concerned with Japan-Like Deflation, BP's Tony Hayward Finally Pushed Out of CEO Role
Here is a recap of the top news items on Wall Street this week:
1. Investors got their first glimpse of Q2 GDP this week, up 2.4% versus the economist estimate of up 2.6%. This level of growth is just slightly below the 2.7% that came in with the last reading from Q1, however this number was revised sharply higher with today's report, to 3.7%. Stocks traded lower at Friday's open but buyers stepped into the market during the last hour of trading but couldn't hang on and the Dow closed down a point. Notably, the Nasdaq and S&P 500 both ended this week's trading in positive territory.
2. President of the St. Louis Federal Reserve James Bullard warned investors of so-called Japan-like deflationary pressures this week. While the concerns have certainly been heard before, the regulators comments spooked traders and caused a sharp drop in stocks on Thursday of this week. Instead of continuing to keep interest rates at unprecedented levels, Bullard suggested that US regulators take a course of quantitative easing -- mostly through the purchase of Treasury's. Under such a model, the Fed would effectively be adjusting interest rates at each FOMC meeting.
3. Early this week BP (NYSE: BP) exec Tony Hayward was ousted from his position as the company's CEO. The management change is not being billed as an "ouster" however, as Hayward will merely be moved to the board of BP's Russian JV TNK-BP. Hayward will be replaced by another executive director, Bob Dudley.
4. Shares of FedEx (NYSE: FDX) surged more than 5% on Monday of this week as the company surprised the Street with raised Q1 and FY10 EPS guidance. FedEx now sees Q1 EPS of $1.05-$1.25, up from $0.85-$1.05 previously, and FY10 EPS of $4.60-$5.20, up from $4.40-$5.00 previously.
5. On the earnings front, consumer staple companies like Kellogg (NYSE: K) and Colgate-Palmolive (NYSE: CL) disappointed. Both Kellogg and Colgate shares fell almost 7% amid the earnings. DuPont (NYSE: DD), meanwhile, issued a "beat and raise" quarter.
6. Avis Budget (NYSE: CAR) topped Hertz's (NYSE: HTZ) recent bid for Dollar Thrifty (NYSE: DTG) this week, offering the rental company $46.50/share. Hertz had previously bid $41/share for Dollar Thrifty. Shares of DTG remained flat despite the sharply increased bid, however, as Avis, going all the way back to the beginning of May, said it would like to make a "substantially higher" bid for the company.
7. The hot news in the pharma market came out of Sanofi-Aventis (NYSE: SNY) as rumors that it was preparing a bid for Genzyme (Nasdaq: GENZ) hit the market this week. On Wednesday, reports were heard suggesting that Sanofi's Board would support a bid of up to $70/share for the massive Genzyme. Shares of Genzyme rallied about 10% this week amid the rumors.
8. NVIDIA (Nasdaq: NVDA) shares were absolutely slammed on Thursday of this week as the company slashed its Q2 sales guidance. The chip-maker now sees quarterly revenue of $800-$820 million, down sharply from $950-$970 million previously. The stock tumbled almost 10% amid the guidance.
9. Other notable earnings reports from this week: Lockheed Martin (NYSE: LMT), US Steel (NYSE: X), AK Steel (NYSE: AKS), UnitedHealth (NYSE: UNH), Sprint (NYSE: S), Comcast (Nasdaq: CMCSA), CVS (NYSE: CVS), Las Vegas Sands (NYSE: LVS), Boeing (NYSE: BA), ConocoPhillips (NYSE: COP), Raytheon (NYSE: RTN), Celgene (Nasdaq: CELG), Southwest Air (NYSE: LUV), ExxonMobil (NYSE: XOM), Northrop Grumman (NYSE: NOC), MEMC Electronics (NYSE: WFR) and Merck (NYSE: MRK).
10. Chinese-American investor and hedge fund manager, Li Lu might take over one of the top investing positions at Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) and may even be the eventual successor to legendary U.S. investor Warren Buffett, according to a report from the Wall Street Journal on Thursday. The Omaha, Nebraska-based company’s Vice Chairman Charlie Munger told the Journal that it is a "foregone conclusion" that Li would take over as one of the firm’s top investment officials.
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