Fed Move Great for High-Yield Stocks (BA, GLW, YHOO, ILMN, RKT)
After a weak opening, stocks rallied after Fed Chief Ben Bernanke said the Fed does not plan to increase interest rates until late 2014. The Fed previously said it did not expect to raise rates until mid-2013. An accommodative Fed was enough to keep the market in full bull mode, and is particularly good news for traditionally high yield stocks such as MLPs and agency mortgage REITs (assuming they are well protected on the prepayment front).
The Genetic Analysis Stocks Index was the top performing tickerspy Index on the day, led by Illumina (ILMN) with a 46% gain. The Paper Stocks Index was the day’s worst performing tickerspy Index, with Rock-Tenn (RKT) down -9%.
Stocks climbed on the day, led by a 32-point, or 1.1%, increase in the Nasdaq to 2,818. The Dow jumped 83 points to 12,759, while the S&P climbed 11 points to 1,326. Oil rose 45 cents to $99.40 a barrel, while gold advanced $35.60 to $1,700.10 an ounce.
In economic news, the National Association of Realtors said pending home sales fell -.5% last month. Economists had expected a decline of just -0.1%.
In earnings news, Dow component Boeing (BA) forecast a 2012 profit of $4.05 to $4.25 per share on revenue of $78-$80 billion. Analysts were expecting EPS of $4.96. Boeing said its forecast is attributable to pension expenses. The company posted a fourth-quarter profit of $1.4 billion, or $1.84 per share, compared with $1.2 billion, or $1.56 per share, a year earlier. Revenue rose to $19.6 billion from $16.6 billion. On an adjusted basis, Boeing earned $1.31 a share, beating the consensus estimate of $1.01. Boeing plans to deliver 585-600 commercial jets this year. Shares of Boeing rose 0.6%.
Shares of Corning (GLW) slumped -10.7% after the company said its fourth-quarter profit slid -53% to $491 million, or 31 cents per share, from $1.04 billion, or 66 cents per share, a year earlier. Revenue rose 7% to $1.89 billion. On an adjusted basis, the company earned 33 cents. Analysts had expected a profit of 33 cents on revenue of $1.85 billion.
Internet firm Yahoo (YHOO) said its fourth-quarter profit fell -5% to $296 million, or 24 cents per share, from $312 million, or 24 cents per share, a year earlier. Revenue dropped -13% to $1.32 billion. Minus advertising commissions, Yahoo posted revenue of $1.17 billion. Analysts had expected a profit if 24 cents on revenue of $1.19 billion, excluding traffic acquisition costs. The stock fell -0.8%. Forty pros held Yahoo in their portfolios at the end of Q3 and nearly 1,440 tickerspy members own the stock in their portfolios.
Shares of diagnostics company Illumina surged 46.3% after the company received a $5.7 billion hostile takeover bid from Swiss pharmaceuticals giant Roche. Roche’s offer represents an 18% premium to where shares of Illumina closed on Tuesday. Illumina’s board asked shareholders not to take action on the tender offer until it reviews the proposal and makes a recommendation. Thirteen pros counted Illumina among their top holdings at the end of Q3 and more than 250 tickerspy members own the stock in their portfolios.
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