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 Post subject: February 3rd Tuesday 2009
PostPosted: Tue Feb 03, 2009 9:46 pm 
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Joined: Sat Jan 10, 2009 2:06 pm
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Today's trades that were posted in real-time in #FuturesTrades chat room via my IRC user name NihabaAshi are archived @ http://www.thestrategylab.com/ftchat/forum/viewtopic.php?f=20&t=93

My Trading Performance: +15.75 Emini ES points

Regards,
M.A. Perry

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U.S. Stocks Advance as Merck, Schering Lead Rally in Drugmakers
By Elizabeth Stanton

Feb. 3 (Bloomberg) -- U.S. stocks gained, snapping a three-day drop, as earnings topped estimates at Merck & Co. and Schering-Plough Corp. and Treasury Secretary Timothy Geithner said the government will step up efforts to fight the recession.

Merck climbed 6.4 percent after savings from job cuts boosted profit, while Schering-Plough added 8.2 percent on earnings helped by cost reductions and added sales from an acquisition. A gauge of homebuilders jumped 8.6 percent after D.R. Horton Inc. reported its smallest loss in five quarters and pending home sales increased for the first time since August.

The Standard & Poor’s 500 Index climbed 1.6 percent to 838.51. The Dow Jones Industrial Average added 141.53 points, or 1.8 percent, to 8,078.36. The Russell 2000 Index increased 0.7 percent.

“What we are seeing is not necessarily optimism, but a pullback in the pessimism,” said David Kelly, chief market strategist at JPMorgan Funds, which oversaw $304 billion as of Oct. 8. “We have had an unrelenting deluge of bad news on the economy. When you get a little better news it can cause an exaggerated reaction in the market.”

Benchmark indexes rallied to their highs of the day after Geithner told the Wall Street Journal that White House fiscal policy is “about to get very aggressive” as President Barack Obama’s economic team prepares to address the deepening recession.

U.S. stocks declined for a third day yesterday after consumer spending slumped for a sixth straight month and companies from Mattel Inc. to Rockwell Automation Inc. posted lower-than-estimated profit. The S&P 500 has retraced more than half of its 24 percent rebound from an 11-year low in November.

Merck, Schering-Plough

Stocks in Asia climbed today after governments from Japan to Australia widened efforts to revive economic growth. The MSCI Asia Pacific Index rose 0.8 percent. Europe’s Dow Jones Stoxx 600 Index added 1.9 percent.

Merck, the third-largest U.S. drugmaker, rose $1.81 to $30.24. Income excluding one-time items was 87 cents a share, beating the 74-cent average estimate of 13 analysts surveyed by Bloomberg. Sales fell 3.4 percent to $6.03 billion.

Schering-Plough gained $1.44 to $18.91. The maker of Vytorin and Zetia for cholesterol, for which it shares revenue with Merck, had fourth-quarter profit excluding one-time items of 39 cents a share, topping the 30 cent average estimate of 13 analysts surveyed by Bloomberg.

“It’s the more defensive companies that are producing better earnings,” said Jonathan Armitage, head of U.S. large- cap equities at the American unit of Schroders, the U.K. manager of $259 billion. “Poorer numbers are coming from anything that’s remotely economically sensitive or cyclical.”

Earnings Watch

Fourth-quarter earnings have climbed 9.9 percent at the 30 health-care companies in the S&P 500 that have reported results since Jan. 12, the steeper of only two industry groups posting higher profits. Utilities have reported an 8.5 percent increase in earnings, according to data compiled by Bloomberg.

Profits decreased 37 percent on average for the 237 companies in the index that have released results. Last quarter is projected to mark the sixth straight period of decreasing profits, the longest streak on record.

United Parcel Service Inc. led transportation companies to the biggest gain among the S&P 500’s 24 industry groups, advancing 6.1 percent to $45. The world’s largest package- delivery company said it’s freezing management salaries and suspending retirement contributions after U.S. volume plunged the most in nine years during the fourth quarter.

Housing Improvement

D.R. Horton, the third-largest U.S. homebuilder by revenue, added 21 percent to $7.42 for the biggest advance in the S&P 500. A National Association of Realtors report released today showed more Americans signed contracts to buy previously owned homes in December for the first time in four months, as slumping prices boosted demand. A record 19 million U.S. houses stood empty at the end of 2008, according to Census Bureau data released today.

“There’s a glimmer of a potential bottom in economic activity, and therefore the stock market should keep rising even as the economy continues to deteriorate,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama.

Dividend Concern

Motorola Inc. slid 50 cents, or 11 percent, to $4.04 after forecasting it will lose at least 10 cents a share this quarter, excluding some costs. That trailed the 4-cent average loss estimate in a Bloomberg survey of analysts. The prediction follows a $3.6 billion loss in the previous period amid weak consumer demand for devices such as the touch-screen Krave.

Motorola scrapped its 5-cent quarterly dividend, joining U.S. companies that are reducing payouts at the fastest rate in half a century. Ten companies in the S&P 500 cut their dividends last month to hoard cash as profits dwindled.

SanDisk Corp. slumped $2.62, or 23 percent, to $8.66 after saying first-quarter sales will be as low as $475 million, or 25 percent less than the average analyst estimate in a Bloomberg survey.

PNC Financial Services Group Inc. led declines in banks, falling 7.2 percent to $29.85. The fifth-largest U.S. bank by deposits posted its first loss since 2001 on costs to integrate National City Corp. and build bad-debt provisions.

The S&P 500 and the Dow posted their worst January losses on record as companies reported disappointing earnings and the economy shrank at the fastest pace in 26 years.

Analysts now forecast an average 32 percent drop in fourth- quarter earnings for all companies on the U.S. benchmark, after saying in March 2008 that net income would rise as much as 55 percent, according to Bloomberg data.

Harley-Davidson Inc., the biggest motorcycle maker, added 16 percent to $13.73 for the third-biggest gain in the S&P 500. Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. agreed to buy $300 million of Harley-Davidson debt, adding to holdings of corporate bonds as yields rise.

Tyco International Ltd. climbed 19 percent to $24.27. The world’s largest maker of security systems through its ADT unit posted first-quarter profit that exceeded analysts’ estimates.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
Last Updated: February 3, 2009 16:37 EST


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