JDfn Daily Digest - September 26, 2008
President Bush tried to reassure the markets that Congress, despite a breakdown in negotiations, would pass a $700 billion financial rescue plan. President Bush wants Congress to complete a bipartisan agreement on a mortgage rescue plan before Wall Street opens on Monday.
The Commerce Department said Gross Domestic Product, the measure of total goods and services output within U.S. borders, expanded at a 2.8 percent rate in the April-June second quarter rather than the 3.3 percent rate it estimated a month ago.
According to the University of Michigan/Reuters consumer index, consumer sentiment improved in September. The index rose to 70.3 in late September, compared with 63 in August. Economists were expecting the September result to reach 71.5.
As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks -- Washington Mutual Inc. (WM) -- has collapsed under the weight of its enormous bad bets on the mortgage market. The Federal Deposit Insurance Corp. seized WaMu, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.
JPMorgan Chase & Co. (JPM) said the average home price in California could fall as much as 58% if the country enters a severe recession. Currently, J.P. Morgan estimates that home prices in California will fall 44% from their highs of a few years ago before bottoming out.
HSBC Holdings PLC (HBC), Europe's largest bank by market value, is cutting 1,100 jobs worldwide in the wake of the financial turmoil. The London-based bank is laying off 4 percent of its global banking and market division, with half of them taking place in the bank's operation in Britain.
The Federal Reserve expanded deals today with two of its counterparts in Europe in order to make an extra $13 billion available to banks there, after reporting increased lending to U.S. banks and Wall Street firms. The deal will have the Fed provide $10 billion to the European Central Bank and $3 billion to the Swiss National Bank. In return, it will receive a reciprocal amount of foreign currency from each country.
According to the survey from the AAA, gas prices dropped for the ninth day in a row, bringing the total decline to nearly 17 cents over that time period. The average price of unleaded regular dropped a further 1.7 cents to $3.68 a gallon, from $3.70 a gallon.
Entergy Corp. (ETR) applied for a license to build and operate a nuclear power generator in Louisiana. Entergy has said 90 percent of the plant's costs would still be recovered only after power generation begins.
Scheduled U.S. Economic Reports (Next Week)
Personal Income & Spending, Chicago PMI, ADP Employment Report, ISM Report, Construction Spending, Motor Vehicle Sales, Factory Orders, ISM Non- Manufacturing Report, Non-Farm Payrolls
In Earnings News
KB Home (KBH) says its third-quarter loss quadrupled from a year-ago period. The company's loss widened to $144.7 million, or $1.87 per share. Analysts had predicted a loss of $1.22 per share on revenue of $734.7 million.
Jabil Circuit Inc. (JBL) said its net income rose nearly fivefold in the latest quarter compared to a year ago. The company said it earned $57.5 million, or 28 cents per share. Analysts expected earnings of 31 cents per share, excluding items, on $3.2 billion in revenue.
American Greetings Corp. (AM) reported second-quarter profit dropped 73 percent on lower margins and higher costs as the greeting card company invested in products to drive sales growth. Profit dropped to $2.3 million or 5 cents per share while analysts expected 10 cents.
GenCorp Inc. (GY) reported results for the third quarter. Net loss for the third quarter of 2008 was $2.7 million, or 5 cents per share. Net income for the third quarter of 2007 was $15.6 million, or 26 cents per share, including a $12.4 million income tax benefit.
Scheduled Earnings Reports (Next Week)
There are very few earnings reports scheduled as we await the third quarter earnings season to begin on October 7th when Alcoa releases its quarterly numbers. Next week look for Family Dollar Stores, Circuit City, Steelcase, Pepsi Bottling, Micron Technology, Constellation Brands, and Marriott International.
Stocks in the News
Research In Motion (RIMM) fell more than 20% in premarket trading after the company reports a surge in second-quarter earnings but spooks investors worried about its growing expense line.
Accenture Ltd (ACN) said that fiscal fourth-quarter net income came in at $434.8 million, up 37% from a year earlier.
Tibco Software (TIBX) reported its third-quarter net income rose to $11.1 million, or 6 cents a share, from $4.6 million, or 2 cents a share, in the same period a year earlier.
Pharmacopeia (PCOP) traded higher after the biopharmaceutical company agreed to be acquired for as much as $70 million of stock by Ligand Pharmaceuticals.
McDonald’s Corp’s (MCD) board approved increasing the quarterly cash dividend by 33% to 50 cents.
Alpharma Inc (ALO) announced it is rejecting a bid from King Pharmaceuticals Inc. because it's inadequate.
The Commerce Department said Gross Domestic Product, the measure of total goods and services output within U.S. borders, expanded at a 2.8 percent rate in the April-June second quarter rather than the 3.3 percent rate it estimated a month ago.
According to the University of Michigan/Reuters consumer index, consumer sentiment improved in September. The index rose to 70.3 in late September, compared with 63 in August. Economists were expecting the September result to reach 71.5.
As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks -- Washington Mutual Inc. (WM) -- has collapsed under the weight of its enormous bad bets on the mortgage market. The Federal Deposit Insurance Corp. seized WaMu, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.
JPMorgan Chase & Co. (JPM) said the average home price in California could fall as much as 58% if the country enters a severe recession. Currently, J.P. Morgan estimates that home prices in California will fall 44% from their highs of a few years ago before bottoming out.
HSBC Holdings PLC (HBC), Europe's largest bank by market value, is cutting 1,100 jobs worldwide in the wake of the financial turmoil. The London-based bank is laying off 4 percent of its global banking and market division, with half of them taking place in the bank's operation in Britain.
The Federal Reserve expanded deals today with two of its counterparts in Europe in order to make an extra $13 billion available to banks there, after reporting increased lending to U.S. banks and Wall Street firms. The deal will have the Fed provide $10 billion to the European Central Bank and $3 billion to the Swiss National Bank. In return, it will receive a reciprocal amount of foreign currency from each country.
According to the survey from the AAA, gas prices dropped for the ninth day in a row, bringing the total decline to nearly 17 cents over that time period. The average price of unleaded regular dropped a further 1.7 cents to $3.68 a gallon, from $3.70 a gallon.
Entergy Corp. (ETR) applied for a license to build and operate a nuclear power generator in Louisiana. Entergy has said 90 percent of the plant's costs would still be recovered only after power generation begins.
Scheduled U.S. Economic Reports (Next Week)
Personal Income & Spending, Chicago PMI, ADP Employment Report, ISM Report, Construction Spending, Motor Vehicle Sales, Factory Orders, ISM Non- Manufacturing Report, Non-Farm Payrolls
In Earnings News
KB Home (KBH) says its third-quarter loss quadrupled from a year-ago period. The company's loss widened to $144.7 million, or $1.87 per share. Analysts had predicted a loss of $1.22 per share on revenue of $734.7 million.
Jabil Circuit Inc. (JBL) said its net income rose nearly fivefold in the latest quarter compared to a year ago. The company said it earned $57.5 million, or 28 cents per share. Analysts expected earnings of 31 cents per share, excluding items, on $3.2 billion in revenue.
American Greetings Corp. (AM) reported second-quarter profit dropped 73 percent on lower margins and higher costs as the greeting card company invested in products to drive sales growth. Profit dropped to $2.3 million or 5 cents per share while analysts expected 10 cents.
GenCorp Inc. (GY) reported results for the third quarter. Net loss for the third quarter of 2008 was $2.7 million, or 5 cents per share. Net income for the third quarter of 2007 was $15.6 million, or 26 cents per share, including a $12.4 million income tax benefit.
Scheduled Earnings Reports (Next Week)
There are very few earnings reports scheduled as we await the third quarter earnings season to begin on October 7th when Alcoa releases its quarterly numbers. Next week look for Family Dollar Stores, Circuit City, Steelcase, Pepsi Bottling, Micron Technology, Constellation Brands, and Marriott International.
Stocks in the News
Research In Motion (RIMM) fell more than 20% in premarket trading after the company reports a surge in second-quarter earnings but spooks investors worried about its growing expense line.
Accenture Ltd (ACN) said that fiscal fourth-quarter net income came in at $434.8 million, up 37% from a year earlier.
Tibco Software (TIBX) reported its third-quarter net income rose to $11.1 million, or 6 cents a share, from $4.6 million, or 2 cents a share, in the same period a year earlier.
Pharmacopeia (PCOP) traded higher after the biopharmaceutical company agreed to be acquired for as much as $70 million of stock by Ligand Pharmaceuticals.
McDonald’s Corp’s (MCD) board approved increasing the quarterly cash dividend by 33% to 50 cents.
Alpharma Inc (ALO) announced it is rejecting a bid from King Pharmaceuticals Inc. because it's inadequate.
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