February 27th, 2009 by InvestorPoint
An early rally faded on U.S. stock markets Thursday, as the government said unemployment claims topped 5 million for the first time.
The U.S. Treasury Wednesday announced it would allow banks to convert federal bailout funds to common shares, freeing up billions from their balance sheets, giving bank stocks a boost. However, bad job news and slumping home sales Thursday subdued the early rally. Healthcare Stocks and Drug Stocks traded lower after it was announced that President Obama’s $3.55 trillion budget plan for 2010 includes cuts to Medicare and Medicaid. Private insurance plans that serve Medicare seniors would take the biggest hit but home health agencies, hospital and drug manufacturers would also be impacted.
By close, the Dow Jones industrial average lost 88.81 points, or 1.22 percent, to 7,182.08. The S&P 500 fell 1.58 percent, 12.07 points, to 752.83. The Nasdaq composite index lost 33.96 points, 2.38 percent, to 1,391.47.
On the New York Stock Exchange, 1,412 stocks advanced and 1,674 declined on a volume of 8.3 billion shares traded.
The benchmark 10-year U.S. Treasury bond lost 17/32 to yield 2.995 percent.
The euro rose to $1.2731, compared to Wednesday’s $1.2713. Against the Japanese yen, the dollar rose to 98.38 yen, compared to Wednesday’s 97.54 yen.
In Tokyo, the Nikkei average lost 3.29 points to 7,457.93, down 0.04 percent.
In London, the FTSE 100 index gained 66.66 points, 1.73 percent, to 3,915.64.
Rowan Companies (RDC) shares were up 9.5% after their quarterly earnings exceeded Wall Street expectations. For the quarter, the company reported earnings of $94.3 million or 83 cents per share down from $138.5 million or $1.23 per share a year ago. Excluding one time items the earnings would have been $1.28 per share which exceeded the expected earnings of $1.09 per share.
Rowan is a provider of international and domestic contract drilling services. It also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries.
MetroPCS (PCS) shares gained 5.5% after the company reported a better than expected profit and strong subscriber growth and effective cost controls. For the fourth quarter the company reported a profit of $15 million or 4 cents a share compared with a loss of $47 million or 14 cents per share a year earlier. Revenues grew 22% to $724 million.
MetroPCS is a wireless telecommunications carrier that offers wireless phone and broadband personal communication services through its subsidiaries.
Dynergy (DYN) shares rose 16% as the company reported it cut its fourth quarter loss. The company reported a loss of $7 million or a penny per share compared with a loss of $46 million or 6 cents per share a year ago. Revenues rose 10% to $795 million from $724 million. The company said it expects to report a loss this year from $65 million to $140 million, up from the $20 million to $85 million loss the company had predicted in December.
Dynergy is a holding company conducts substantially all of its business operations through its subsidiaries. Its business is the production and sale of electric energy, capacity and electrical services.
General Motors (GM) shares were down almost 7% after the company reported a massive fourth quarter loss and went through $6,2 billion in cash while seeking more funding from the US Government. The automaker reported a quarter loss of $9.6 billion or $15.71 per share compared with a loss of $1.5 billion or $2.70 per share a year ago. Revenues dropped to $30.8 billion from $46.8 billion as the new from the automotive sector reported the worst industry sales in decades.
In the viability plan the company submitted to the US Treasury last week, GM requested up to $30 billion in low cost loans.
General Motors is engaged in the development, production and marketing of cars, trucks & parts. It develops, manufactures & markets vehicles through its automotive region: GM North America, GM Europe, GM Latin America/Africa/Mid-East and GM Asia Pacific.
Integrys Energy Group (TEG) shares dropped over 26% as the company reported earnings of 30 cents per share down from $1.11 per share a year ago well short of the $1.38 that Wall Street was expecting. The company also forecasted 2009 earnings of $2.51 which was far lower than the $3.77 analysts had been predicting.
Integrys through its subsidiaries, operates as a regulated electric and natural gas utility company in the United States and Canada. It generates electricity through coal, natural gas and fuel oil, hydroelectric, nuclear, and wind resources.
Limited Brands (LTD) closed down over 13% after reporting an 86% drop in earnings and gave forecasts that were below analyst’s expectations. For the quarter, the company reported net income of $16.1 million or 5 cents a share down from $388.6 million or $1.10 a share for the same quarter a year earlier. Sales fell to $2.99 billion down from $3.28 billion and same store sales dropped 10%.
To help control costs, the company is reducing home office staff by 400 employees or 10%, has suspended pay increases and is controlling inventory.