Top 10 News Items 2/22-2/25: Crude Cracks the $100/Barrel Level; Latest Q4 GDP Reading Worse-Than-Expected at 2.8%; HP Tumbles on Earnings, Outlook
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Here is a recap of the top news items from this week on Wall Street:
1. Crude oil prices just barely touched over the $100 per barrel level this week, retaking a price which the commodity has not seen since late-2008. Social unrest in the Middle East and Northern Africa (with the epicenter surrounding Libya's Qaddafi) sparked the sharp rally in oil. Stocks traded in opposition to oil; the Dow fell as much as 395 from last Friday's close while the S&P 500 fell as many as 48 points before bouncing. Speculation in oil had oil and gas stocks across the board surging.
2. The first revision to US GDP during the fourth quarter came in down sharply from the prior reading and from where economists had been expecting. The second reading showed growth of 2.8% during the last quarter of 2010, down from 3.2% previously and compared to growth of 3.3% from a consensus of Wall Street economists.
3. Shares of Hewlett-Packard (NYSE: HPQ) tumbled 9.6% on Tuesday and another 3.3% on Wednesday amid mixed Q1 results and a weak Q2 outlook. The quarterly EPS came in up 27% to $1.36 while sales were up 4% to around $32.3 billion. The Street had been expecting EPS of $1.29 on sales of $32.95 billion. HP said it expects to report Q2 EPS in the range of $1.19-$1.21 on sales of $31.4-$31.6 billion, below the analyst consensus of $1.25 in EPS and $32.6 billion in sales. For FY11 the company sees EPS of $5.20-$5.28.
4. While the stock market was closed on Monday due to President's Day, execs at Chesapeake Energy (NYSE: CHK) were at the bargaining table hammering out a deal to sell assets in the Fayetteville shale to BHP Billiton (NYSE: BHP) for $4.75 billion cash. Traders responded positively to the M&A activity, pushing CHK shares about 12% higher over Tuesday and Wednesday's trading sessions.
5. Elsewhere on the earnings front: Home Depot (NYSE: HD), Medtronic (NYSE: MDT), Lowe's (NYSE: LOW), priceline.com (Nasdaq: PCLN), Target (NYSE: TGT), GM (NYSE: GM), First Solar (Nasdaq: FSLR), salesforce.com (NYSE: CRM), Gap (NYSE: GPS), JC Penney (NYSE: JCP), Toll (NYSE: TOL) and Wal-Mart (NYSE: WMT) also reported.
6. Shares of Clinical Data (Nasdaq: CLDA) sold-off by more than 10% this week following news on Tuesday that Forest Labs (NYSE: FRX) will acquire the company for $30 per share in cash plus contingent consideration of up to $6.00 per share that may be paid upon achievement of certain commercial milestones related to Viibryd™.
7. Investors in Mentor Graphics (Nasdaq: MENT) had a good week as activist investor Carl Icahn, in a 13D filing with the SEC, disclosed that he offered to buy the company for $17 per share in cash. Icahn said that he expects a higher offer to emerge and that he will not insist on a break-up fee related to the deal.
8. Several indicators of the US consumer came in strong this week: the government's consumer confidence reading for the month of February was 70.4, much better than the 65.5 the Street was looking for, while the UofM survey came in at 77.5, vs. the estimate of 75.5.
9. Housing-related stocks had a rough week as data points came in worse-than-expected. The SPDR S&P Homebuilder ETF (NYSE: XHB) fell 4.2% on Tuesday, another 1.7% on Wednesday, was flat on Thursday and retook some gains on Friday. S&P/CaseShiller home price index for December fell to 142.42 and new home sales were below the estimate at 284,000. Existing home sales, however, did come in better-than-expected at 5.36 million.
10. The number of American filing for first time unemployment benefits fell more than estimated last week, marking a strong sign for the trudging recovery in the labor market. The Labor Department reported Thursday that applications for initial jobless benefits dropped 22,000 to 391,000 for the week ended February 19. Economists had estimated a more modest drop to 405,000.
1. Crude oil prices just barely touched over the $100 per barrel level this week, retaking a price which the commodity has not seen since late-2008. Social unrest in the Middle East and Northern Africa (with the epicenter surrounding Libya's Qaddafi) sparked the sharp rally in oil. Stocks traded in opposition to oil; the Dow fell as much as 395 from last Friday's close while the S&P 500 fell as many as 48 points before bouncing. Speculation in oil had oil and gas stocks across the board surging.
2. The first revision to US GDP during the fourth quarter came in down sharply from the prior reading and from where economists had been expecting. The second reading showed growth of 2.8% during the last quarter of 2010, down from 3.2% previously and compared to growth of 3.3% from a consensus of Wall Street economists.
3. Shares of Hewlett-Packard (NYSE: HPQ) tumbled 9.6% on Tuesday and another 3.3% on Wednesday amid mixed Q1 results and a weak Q2 outlook. The quarterly EPS came in up 27% to $1.36 while sales were up 4% to around $32.3 billion. The Street had been expecting EPS of $1.29 on sales of $32.95 billion. HP said it expects to report Q2 EPS in the range of $1.19-$1.21 on sales of $31.4-$31.6 billion, below the analyst consensus of $1.25 in EPS and $32.6 billion in sales. For FY11 the company sees EPS of $5.20-$5.28.
4. While the stock market was closed on Monday due to President's Day, execs at Chesapeake Energy (NYSE: CHK) were at the bargaining table hammering out a deal to sell assets in the Fayetteville shale to BHP Billiton (NYSE: BHP) for $4.75 billion cash. Traders responded positively to the M&A activity, pushing CHK shares about 12% higher over Tuesday and Wednesday's trading sessions.
5. Elsewhere on the earnings front: Home Depot (NYSE: HD), Medtronic (NYSE: MDT), Lowe's (NYSE: LOW), priceline.com (Nasdaq: PCLN), Target (NYSE: TGT), GM (NYSE: GM), First Solar (Nasdaq: FSLR), salesforce.com (NYSE: CRM), Gap (NYSE: GPS), JC Penney (NYSE: JCP), Toll (NYSE: TOL) and Wal-Mart (NYSE: WMT) also reported.
6. Shares of Clinical Data (Nasdaq: CLDA) sold-off by more than 10% this week following news on Tuesday that Forest Labs (NYSE: FRX) will acquire the company for $30 per share in cash plus contingent consideration of up to $6.00 per share that may be paid upon achievement of certain commercial milestones related to Viibryd™.
7. Investors in Mentor Graphics (Nasdaq: MENT) had a good week as activist investor Carl Icahn, in a 13D filing with the SEC, disclosed that he offered to buy the company for $17 per share in cash. Icahn said that he expects a higher offer to emerge and that he will not insist on a break-up fee related to the deal.
8. Several indicators of the US consumer came in strong this week: the government's consumer confidence reading for the month of February was 70.4, much better than the 65.5 the Street was looking for, while the UofM survey came in at 77.5, vs. the estimate of 75.5.
9. Housing-related stocks had a rough week as data points came in worse-than-expected. The SPDR S&P Homebuilder ETF (NYSE: XHB) fell 4.2% on Tuesday, another 1.7% on Wednesday, was flat on Thursday and retook some gains on Friday. S&P/CaseShiller home price index for December fell to 142.42 and new home sales were below the estimate at 284,000. Existing home sales, however, did come in better-than-expected at 5.36 million.
10. The number of American filing for first time unemployment benefits fell more than estimated last week, marking a strong sign for the trudging recovery in the labor market. The Labor Department reported Thursday that applications for initial jobless benefits dropped 22,000 to 391,000 for the week ended February 19. Economists had estimated a more modest drop to 405,000.
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