A Weak Summer Begins To Unfold (CASC, PAY, DMND, WMT, IPSU, DQ)
After a hot start on Tuesday, stocks closed down for the fifth week in a row, an outcome that was virtually assured once the government released a dismal jobs report this morning. The bad numbers were not a total surprise given the weak reading from ADP earlier in the week, but that was little solace. With earnings season largely done there also wasn’t much compelling in the way of corporate news to stem the negative sentiment. We’ve said for sometime we expected a fairly weak summer and so far that is proving to be the case.
The Confectioners and Sugar Stocks Index was the top performing tickerspy Index on the day, led by Imperial Sugar (IPSU) with a 11% gain. The Chinese Solar Stocks Index was the day’s worst performing tickerspy Index, with Daqo New Energy (DQ) down -10%.
Stocks ended the week lower, with the Dow shedding another -97 points to finish at 12,151 and the S&P 500 off by -13 points to 1,300. The Nasdaq lost -41 points to 2,733. Crude oil closed down -18 cents to $100.22 per barrel. Gold rose $9.70 to $1,542.40 per ounce.
In economic news, the Labor Department said employers added just 54,000 new jobs in May, the lowest total in nine months and well below the 125,000 new jobs economists were forecasting. The unemployment rate rose to 9.1%, the highest level since December. The Institute for Supply Management said its services index rose to 54.6% in May from 52.8% in April. Economists had forecast a reading of 54%.
Shares of equipment maker Cascade (CASC) soared 22% after the company said its fiscal first-quarter profit jumped 16% to $16.4 million, or $1.46 per share, from $5.7 million, or 51 cents per share, a year earlier. Net sales soared 40% to $136.2 million. Analysts were expecting a profit of 89 cents a share.
VeriFone Systems (PAY), a provider of electronic payment systems, said its fiscal second-quarter profit rose to $25.2 million, or 27 cents a share, from $20.2 million, or 23 cents a share, a year earlier. Revenue climbed to $292.4 million from $240.7 million. Excluding one-time items, VeriFone earned 46 cents a share. Analysts were expecting a profit of 43 cents on revenue of $284.8 million. The company expects to report a fiscal third-quarter profit of 45-46 cents a share on revenue of $295-$300 million and full-year EPS of $1.80-$1.83 on revenue of $1.17-$1.18 billion. Shares of VeriFone fell -2%. Nearly 20 pros held VeriFone in their portfolios at the end of Q1 and nearly 140 tickerspy members own the stock in their portfolios.
Snack maker Diamond Foods (DMND) posted a fiscal third-quarter profit of $7.7 million, or 34 cents a share, compared with a loss of -$4.3 million, or -22 cents a share, a year earlier. Revenue surged 61% to $223 million. Analysts were expecting a profit of 48 cents on sales of $216.6 million. California-based Diamond raised its full-year profit guidance to $2.48-$2.52 a share from previous guidance of $2.45-$2.51. Analysts are expecting $2.52 a share. Shares of Diamond Foods fell nearly -3%.
Dow component Wal-Mart (WMT), the world’s largest retailer, said it will repurchase $15 billion of its own shares, replacing a $13 billion share buyback plan announced last year. The new buyback plan is equal to 8% of the company’s $189 billion market cap. Wal-Mart boosted its annual dividend to $1.46 a share from $1.21 in March. Nearly 200 pros held Wal-Mart in their portfolios at the end of Q1 and more than 2,200 tickerspy members own the stock in their portfolios. The stock ended slightly higher on the news.
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