Stocks Soar On Japan Interest Rate Decision (MOS, WWW, TLB, TV)
Stocks posted large gains in the U.S., Europe, and Japan, buoyed by Japan cutting interest rates and pledging to keep them there. The Japanese central bank also said it would create a temporary 5-trillion-yen ($60 billion) fund to purchase financial assets such as government debt, commercial paper, and corporate bonds to help stimulate the economy. The moves were largely lauded by economists. Meanwhile, U.S. stocks also reacted positively to a stronger-than-expected U.S. service sector report. The story is that the economy in the U.S. is still showing signs of improvement, while at the same time many central banks around the globe have signaled that they are going to do everything in their power to help grease the wheels of a global recovery. That, together with some still attractive valuations, is a recipe for higher stock prices.
Stocks zoomed higher on the day, led by a 55-point, or 2.4%, increase in the Nasdaq to 2,400. The Dow jumped 193 points to 10,945, while the S&P leapt 24 points to 1,161. Oil climbed $1.35 to $82.82 a barrel, while gold continued its assent, rising $23.50 to $1,340.20 an ounce.
On the economic front, the Institute for Supply Management (ISM) announced that its Non-Manufacturing Index, or services index, registered a reading of 53.2% in September, coming in above estimates of 51.9% and rising 1.7% from August. The index has shown growth for nine consecutive months now.
In earnings news, shares of Mosaic (MOS) moved up 3.4% after the fertilizer maker reported a boost in its Q1 profit, but its earnings still fell short of expectations. For the three months ended August 31st, the company earned $298 million, or 67 cents a share, up from $101 million, or 23 cents a share, a year ago. Analysts were looking for EPS of 70 cents. Revenue spiked 50% to $2.19 billion, which topped the $1.96 billion consensus. For Q2, Mosaic said it expects to sell between 3.3-3.6 million tonnes of phosphate and 1.6-1.9 million tonnes of potash. A total of 14 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 1,619 tickerspy members held the stock in their portfolios.
Footwear maker Wolverine World Wide (WWW) lifted its outlook for the full year and also said its Q3 net income rose 27%. The stock rose 3.5%. For the quarter ended September 11th, the maker of Merrell and Hush Puppies earned $34.1 million, or 70 cents per share, which topped estimates by three cents. Last year, the company earned $26.8 million, or 54 cents per share. Revenue jumped 12% to $320.4 million. Looking forward, the company raised its FY10 outlook to EPS of $2.04-$2.08 on revenue of $1.2-$1.22 billion from its prior view of $1.98-$2.04 per share on revenue of $1.19-$1.22 billion. Analysts are looking for EPS of $2.08 on revenue of $1.21 billion. A total of two Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 41 tickerspy members held the stock in their portfolios.
Shares of Talbots (TLB) sank -14.6% after the women’s clothing retailer lowered its Q3 sales forecast, saying it now expects sales to drop in the low-single-digit percentage range instead of increasing. For the full year, the company guided for a 1% sales increase, somewhat lower than the low-single-digit percentage increase it had previously forecast. Talbots also reaffirmed its Q3 and full-year outlooks, saying it still expects Q3 EPS of 22-28 cents, compared with estimates of 27 cents, and full-year EPS of 84-92 cents, versus the 90-cent consensus.
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