Caution Key As Dow Touches 12,000 (BA, WMS, JNPR, MIPS, FCFS)
Stocks put together a solid outing, with the Nasdaq regaining some lost ground. The Dow moved above 12,000 intraday but was unable to hold it, while the S&P flirted with 1,300. The Fed’s commitment to continue to keep interest rates low continues to be good news for the equity markets. Nonetheless, after a strong run in the market, we remain cautious in the near term.
The Payday Lender and Pawnshop Stocks Index was the top performing tickerspy Index on the day, led by First Cash Financial Svcs (FCFS) with a 13% gain. The Gaming and Slot-Machine Stocks Index was the day’s worst performing tickerspy Index, with WMS Industries (WMS) down -7%.
Stocks rose on the day, led higher by a 20-point, or 0.7%, increase in the Nasdaq. The Dow edged up 8 points to 11,985, while the S&P advanced 5 points to 1,297. Oil rose $1.14 to $87.33 a barrel, while gold inched up 70 cents to $1,333.00 an ounce.
In economic news, the Fed kept rates unchanged and said it will move forward with its $600 billion Treasury bond-purchase program because economic growth isn’t robust enough to lower unemployment. Elsewhere, the Commerce Department said new home sales surged 17.5% sequentially in December to a seasonally adjusted rate of 329,000 new homes. That number topped economists’ forecasts, but wasn’t enough to mask what was an otherwise dour 2010 in the residential real estate market. The Commerce Department estimates that for all of 2010, just 321,000 new homes were sold. In December, sales jumped in three out of four regions with the Northeast seeing a -5% drop.
In earnings news, shares of Dow component Boeing (BA) fell -3.1% after the largest U.S. aerospace firm lowered its 2011 outlook due to delays in the debut of the 787 Dreamliner jet and possible defense budget cuts from the Pentagon. Chicago-based Boeing said it expects to earn $3.80-$4.00 per share, well below the consensus estimate of $4.55 a share. The company is forecasting 2011 revenue of $68-$71 billion. For the fourth quarter, Boeing earned $1.16 billion, or $1.56 a share, compared with $1.27 billion, or $1.75 a share, a year earlier. Adjusted EPS came in at $1.11. Revenue slumped to $16.6 billion from $18.00 billion. Analysts were expecting a profit of $1.11 a share on sales of $17.00 billion. Forty held Boeing in their portfolios at the end of the third quarter and more than 1,150 tickerspy members own the stock in their portfolios.
Shares of casino equipment maker WMS Industries dropped -7.5% after the company’s fiscal second-quarter sales missed Wall Street estimates. For the fiscal second quarter, WMS posted a profit of $27 million, or 46 cents a share, compared with $26.5 million, or 44 cents a share, a year earlier. Revenue rose 6% to $199.9 million, but analysts were expecting a profit of 45 cents a share on sales of $202.4 million. For the full year, WMS is forecasting revenue of $830-$850 million. Analysts were expecting sales of $842.8 million.
Juniper Networks (JNPR) shares jumped 6.4% after the networking equipment maker posted a fourth-quarter profit of $190.2 million, or 35 cents a share, compared with $22.9 million, or 4 cents a share, a year earlier. Excluding charges, the company earned 42 cents a share. Revenue surged 26% to $1.19 billion. Analysts were expecting an adjusted profit of 37 cents a share on sales of $1.12 billion. Juniper did forecast a lower adjusted profit of 30-33 cents a share on revenue of $1.06-$1.11 billion. Analysts were expecting a profit of 34 cents on revenue of $1.09 billion. California-based Juniper did not detail why it expects to miss first-quarter estimates. Thirteen pros held Juniper in their portfolios at the end of the third quarter and almost 300 tickerspy members own the stock in their portfolios.
MIPS Technologies (MIPS) shares slid -12.6% after the semiconductor designer said its fiscal second-quarter profit rose to $6 million, or 11 cents a share, from $3.3 million, or 7 cents a share, a year earlier. Excluding charges, MIPS would have earned 14 cents a share. Revenue increased by 44% to $21.9 million, but fell just short of estimates. Analysts were expecting a profit of 13 cents on sales of $22.3 million.
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