Investors Starting to See Future Recovery Gains in Japan Aftermath (ADBE, GIS, SONC, BAC, MGH, YONG)
Stocks rebounded from early losses, spurred on by gains in commodity names. Investors are starting to look at the Japan disaster and see all the wood, steel, copper, and other materials needed to help rebuild the country. Japan’s rebuilding effort could also help offset what was starting to look like a possible hard landing in China. Still, there are plenty of risks out there, including tension in the Middle East, inflation, European debt woes, the end of quantitative easing, etc. We continue to think the market will be volatile in the near term, but remain upbeat over the long term.
The Gold and Silver Stocks Index was the top performing tickerspy Index on the day, led by Minco Gold (MGH) with a 13% gain. The Chinese Agriculture Stocks Index was the day’s worst performing tickerspy Index, with Yongye International (YONG) down -10%.
Stocks rose on the day, with the Dow up 67 points to 12,086. The S&P advanced 4 points to 1,298, while the Nasdaq jumped 14 points to 2,689. Oil rose 78 cents to $105.75 a barrel, while gold climbed $10.40 to $1,438.00 an ounce.
In economic news, February new homes sales fell -16.9% to a seasonally adjusted pace of 250,000 units, according to the Commerce Department. February’s number is the third consecutive month of declines and well below the 700,000 rate that economists typically view as positive. New homes sales are accounting for just 5% of total home sales this year, according to the Associated Press.
Software maker Adobe (ADBE) said its fiscal first-quarter profit rose to $234.6 million, or 47 cents per share, from $127.2 million, or 24 cents per share, a year earlier as sales climbed 20% to $1.03 billion. Excluding one-time items, Adobe earned 58 cents a share. Analysts were expecting a profit of 57 cents on revenue of $1.03 billion. Adobe pared its fiscal second-quarter revenue outlook by -$50 million to $970 million-$1.02 billion due to the natural disasters that struck Japan. The company expects an adjusted profit of 46-54 cents a share. Analysts were expecting a profit of 56 cents on revenue of $1.03 billion. Shares of Adobe fell -3.7%.
General Mills (GIS), the second-largest U.S. food company, said its fiscal third-quarter profit rose to $392.1 million, or 59 cents per share, from $332.5 million, or 48 cents per share, a year earlier. Revenue increased 2% to $3.65 billion. On an adjusted basis, General Mills earned 56 cents a share, matching Wall Street estimates, but analysts were expecting sales of $3.7 billion. The company still expects full-year adjusted earnings of $2.46-$2.48 a share and a revenue increase in the low single-digits. Analysts were forecasting a profit of $2.48 a share. Shares of General Mills fell -1.8%. Thirty-one pros held General Mills in their portfolios at the end of 2010 and almost 500 tickerspy members own the stock in their portfolios.
Shares of drive-in restaurant operator Sonic (SONC) rose 1.4% after the company posted a fiscal second-quarter profit of $4.3 million, or 7 cents per share, compared with a loss of -$600,000, or a -1 cent per share, a year earlier. Revenue came in at $113.5 million. Excluding one-time items, Oklahoma-based Sonic earned 2 cents a share. Analysts were expecting a profit of 3 cents on sales of $114.5 million.
Shares of Bank of America (BAC), the largest U.S. bank by assets, slipped -1.7% after the Federal Reserve rejected the bank’s plan to raise its dividend in the second half of this year. Bank of America, which has been paying a quarterly dividend of a penny a share for the last two years, said in a regulatory filing that it has another chance to submit a plan to the Federal Reserve so that the decision may be reconsidered. More than 180 pros held Bank of America in their portfolios at the end of last year and almost 6,600 tickerspy members own the stock in their portfolios.
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