Countrywide Lays off Staff

Elena
20 Aug, 2007
New York City

Wall Street opened higher, extending gains from Friday rally. Market benefited from continuous relief that the Fed Reserve cut its discount rate and optimism of further interest rates reduction. Investors tried to assess the real impact of the Fed''s moves, as most of the gains Friday were due to hedge funds buying shares to cover their positions.

[R]09:45AM Wall Street extended recent gain on optimism of further rate cuts.[/R]

Wall Street opened higher, extending gains from Friday rally. Market benefited from continuous relief that the Fed Reserve cut its discount rate and optimism of further interest rates reduction. Investors tried to assess the real impact of the Fed's moves, as most of the gains Friday were due to hedge funds buying shares to cover their positions. Shortly after market opening, the Fed announced it injected it supported the banking system by injecting another $3.5 billion.

The financial sector moved generally lower, with Goldman Sachs Group ((GS)) and Citigruop ((C)) falling about 1% each. Among Dow components, American Express Co. ((AXP)) reversed from earlier gains on speculations that the company had put its private banking business on the block. Countrywide Financial ((CFC)) was in the spotlight after reports that it began laying off staff involved in originating loans. Company's shares traded up 3.4%.

Nasdaq Stock Market ((NDAQ)) rose 3.6% after the U.S. exchange said it will put its 31% stake in the LSE for sale. Separately, the largest electronic exchange is trying to acquire Nordic exchange operator OMX.

Among the very few companies posting quarterly results, Lowe's Cos. ((LOW)) reported Q2 profit increase which surpassed analyst projections. The company said it will open 40 new stores during the current quarter, and expects 6% higher sales for the year. The company supported retail stocks with 6% advance in its shares.

In the first hour of trading, the Dow Jones industrials fell 10.48, or 0.08%to 13,089.56. The Standard & Poor's 500 index fell 2.13, or 0.15%, to 1443.81; the Nasdaq composite index rose 5.33, or 0.21%, to 2,510.36. Bonds continued to move higher. Yields on the benchmark 10-year Treasury bond fell to 4.66% from 4.68% late Friday.


[R]09:00AM U.S. stock futures plunged, dragged by weak housing data and Countrywide Financial.[/R]

U.S. stock futures predicted higher opening Monday, boosted by the favorable effect of the Fed Reserve''s move last week to cut its discount rate, hinting that it could reduce its key interest rate, too. Among companies in focus, Countrywide Financial ((CFC)) reportedly began laying off staff involved in originating loans. Company''s shares traded up 6% in pre-open trade.

Thornburg Mortgage ((TMA)) rose 9% after it said it stabilized its financing platform. It sold about $20.5 billion in mortgaged-backed securities and said it will take a $930 million capital loss on its mortgage securities for the September quarter.

In other corporate news, the Nasdaq Stock Market ((NDAQ)) put its entire 31% holding in the LSE for sale. The Nasdaq said it would use the first $1 billion from any proceeds to cut debt and the rest for stock buybacks.

On the earnings news front, home improvement retailer Lowe''s ((LOW)) gained 6% in pre-market trading after it reported a better-than-expected 9% earnings increase in Q2. The company also cut its full-year earnings outlook.

Crude oil will also be in the spotlight. Crude oil fell 69 cents to $71.13 a barrel as Hurricane Dean is likely to avoid key installations in the Gulf of Mexico. S&P 500 futures rose 3.6 points at 1,452.30 and Nasdaq 100 futures rose 4.75 points at 1,897.00. Dow industrial futures advanced 40 points. Yields on 10-year Treasury notes edged up to 4.68%.


[R]08:00AM Lowe’s Cos posted 9% profit increase in Q2 on higher revenue.[/R]

Lowe''s Cos. ((LOW)), the U.S. second largest home improvement chain, announced 9% profit increase in Q2 on higher overall revenue. The retailer earned $1.02 billion, or 67 cents a share, higher than $935 million, or 60 cents a share a year earlier. Quarterly revenue rose to $14.17 billion from $13.39 billion last-year same period. Lowe’s Q2 financial results beat estimates for net income of 61 cents a share on revenue of $14.13 billion. However, the company’s same-store sales declined 2.6%, as the home improvement market has been slowing amid a slump in the housing sector.

Looking ahead, Lowe’s projected Q3 per-share earnings of 43 cents to 45 cents, with sales up 7% to 8% from a year earlier. For the fiscal year, the company expects per-share earnings of $1.97 to $2.01, down from its prior view of $1.99 to $2.03 a share, and expects sales to rise 6% from the prior fiscal year. The stock jumped 6.5% in pre-market trading.