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Top 10 News Items 6/4-6/8: China Unexpectedly Cuts Key Interest Rate, Markets Rally; Fed Says QE3 Not Yet In The Cards; Aid to Spain Could Be Coming

June 8, 2012 4:28 PM EDT Send to a Friend
Here is a recap of the top news items from this week on Wall Street:

1. Stocks followed up a very strong Wednesday with a sharp open Thursday after China unexpected reduced its key interest rate, however, a late-day move lower caused the Dow to close up just 46 points. From the People's Bank of China: The People's Bank of China decided to cut financial institutions RMB benchmark deposit and lending interest rates since June 8, 2012. One-year benchmark deposit rate cut of 0.25 percentage points, year benchmark lending interest rate cut by 0.25 percentage points; other deposit and lending interest rates and individual housing provident fund deposit and lending rates be adjusted accordingly.

2. Ben Bernanke issued the Fed's economic outlook and policy on Thursday, giving several key takeaways for traders. First, Big Ben gave no indication that QE3 would be coming soon, and also said the euro crisis poses "significant risks' to the US's condition.

3. Spain dominated headlines out of Europe this week as fears continue to weigh. While Fitch downgraded the country's sovereign rating three notches to BBB, a government bond auction sold better than expected. Many are expecting the EU to announce a deal over the weekend which would help Spain's embattled banks. Figures out of the IMF put the total amount of funds needed at $50 billion, but economists are now saying the cost of restructuring is closer to $75 to $100 billion.

4. Chesapeake Energy Corp. (NYSE: CHK) shares rallied about 18 percent this week amid rumors the company was looking to sell numerous billions in Midstream assets. On Friday morning, the company confirmed the rumor. Chesapeake announced it will sell its limited partner units and its general partner interests in Chesapeake Midstream Partners, L.P. (NYSE: CHKM) to Global Infrastructure Partners for cash proceeds of $2.0 billion. The company also announced Mid-Continent gathering and processing assets to CHKM for more than $2 billion.

5. Best Buy (NYSE: BBY) shares were volatile this week as the company's Chair and Founder Richard Schulze resigned from the Board and said he would explore options for his 20.1 percent stake in the company. Word on the Street is Schulze could look to take the company private.

6. Shares of lululemon (Nasdaq: LULU) fell nearly 9 percent on Thursday following Q1 results which beat the Street, but guidance which was below the Street. Earnings during the quarter totaled 32 cents per share on sales of $285.7 million. The company said it expects Q2 EPS of $0.28-$0.30, versus the consensus of $0.33, and revenue of $273-$278 million, versus the consensus of $289.78 million. Sees FY2012 revenue of $1.32-$1.34 billion, versus the consensus of $1.35 billion. EPS of $1.55-$1.60, which compares to the Street estimate of $1.63.

7. Nasdaq (Nasdaq: NDAQ) set up a $40 million fund for losses related to errors with the Facebook (Nasdaq: FB) IPO, however, some traders are already saying its not enough. A report on Friday said UBS (NYSE: UBS) may sue Nasdaq for up to $350 million for the debacle.

8. Shares of McDonald's (NYSE: MCD) had a rough Friday following a worse-than-expected 3.3 percent rise in comps during May. Analysts on the Street were expecting a 5.2 percent rise.

9. Tempur-Pedic (NYSE: TPX) brought down the entire mattress sector Wednesday following a warning. Shares of TPX plunged nearly 50 percent. The company said it is looking for FY12 sales of about $1.43 billion on EPS of about $2.70. The company had previously expected sales of $1.60 - $1.65 billion and EPS of $3.80 - $3.95. The Street sees revs of $1.65 and EPS of $3.93.

10. In one of the few economic data points this week, the Labor Department showed a modest drop in first-time jobless claims for the week ended June 2nd. Claims totaled 377,000, down from an upwardly-revised 389,000 in the prior week. The Street was expecting claims of 378,000.




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UBS, Ben S. Bernanke, StreetInsider.com Top 10 News Items for the Week, Earnings

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