The Calm Before The Earnings Storm (WAB, PHG, GSIC, EBAY, URG, CALM)
Stocks gave up earlier gains to finish slightly lower on the day. Consumer spending rose last month, but much of the jump was linked to rising prices due to inflationary pressures. Inflation continues to be a risk, but we think the economic recovery remains solidly on track. Earnings season is just a few weeks away, and we’re expecting it to be a pretty volatile period, as it has been a bit of a hair-trigger market lately.
The E-Commerce Software Stocks Index was the top performing tickerspy Index on the day, led by GSI Commerce (GSIC) with a 51% gain. The Uranium Stocks Index was the day’s worst performing tickerspy Index, with Ur-Energy Inc. (URG) down -8%.
Stocks fell on the day, with the Dow off -23 points to 12,198. The S&P lost -4 points to close at 1,310, while the Nasdaq fell -12 points to 2,731. Oil dropped -$1.42 to $103.98 a barrel, while gold slipped -$6.30 to $1,419.90 an ounce.
In economic news, consumer spending rose 0.7% in February and personal incomes jumped 0.3%, thanks to a tax cut, the Commerce Department said. Adjusted for inflation, incomes fell -0.1% and consumer spending rose just 0.3%. Pending sales of previously owned homes climbed 2.1% in February to a reading of 90.8, according to the National Association of Realtors. Economists were expecting a drop of -1%.
In earnings news, shares of egg producer Cal-Maine Foods (CALM) jumped 7.7% after the company’s fiscal third-quarter results easily beat Wall Street estimates. Cal-Maine earned $33.6 million, or $1.40 per share, compared with $34.5 million, or $1.45 per share, a year earlier as revenue rose 1% to $274.7 million. Analysts were expecting a profit of $1.22 on sales of $230.3 million. The company also said it will pay a third-quarter dividend of 47 cents a share, more than double what it paid in the prior quarter.
Shares of rail parts maker Wabtec (WAB) surged 12.2% after the company boosted its first-quarter and full-year guidance. For the first quarter, Pennsylvania-based Wabtec is forecasting a profit of 77-82 cents a share, and for the full year, the company expects to earn $3.15-$3.25 a share. The company originally forecast a full-year profit of $2.90 a share. Analysts were expecting a first-quarter profit of 69 cents a share and a full-year profit of $2.98. Eight pros held Wabtec in their portfolios at the end of 2010 and more than 80 tickerspy members own the stock in their portfolios.
Dutch electronics maker Philips Electronics (PHG) said its TV business would show a first-quarter loss of -$169 million, more than double the loss posted in the fourth quarter, due in part to increased competition from rivals selling TVs at lower prices. The company said its prior guidance for the TV business to breakeven this year will not be met. Shares of Philips fell -2.3%.
Shares of GSI Commerce (GSIC) soared 50.7% after eBay (EBAY) agreed to acquire the operator of e-commerce websites for various retailers for $2.4 billion. EBay will pay $29.25 a share for GSI, a 51% premium to where the shares closed on Friday. eBay expects the deal to close in third quarter. Shares of EBay fell -4.3%. Forty-four pros held Ebay in their portfolios at the end of 2010, and almost 700 tickerspy members own the stock in their portfolios.
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