U.S. Stocks Surge

123jump.com Staff
16 Apr, 2008
New York City

U.S. stocks edged higher after March inflation and industrial production increased 0.3%. Housing starts in the month fell 12% to a level last seen in 1991. Separately, earnings from Wells Fargo, JP Morgan, Coca Cola, CSX, and Intel lifted sentiment. Wells Fargo and JP Morgan hinted that credit market turmoil may be near end. Intel surged after it reported healthy sales and met earnings expectations. Talbots trades sharply lower on lack of bank credits.

[R]12:30PM New York – U.S. stocks rallied on earnings report from banks and benign inflation.[/R]

U.S. stocks surged on earnings from Coca Cola, Wells Fargo and JP Morgan, Intel and among others.

S&P 500 index rose 1.3%, Nasdaq increased 2.1% and Dow Jones Average increased 1.3%. The broad rally was sparked after JP Morgan reported earnings that met analysts’ expectations.

Economic news

U.S. new homes starts in March fell to annualized 947,000, 16-year low according to the data reported by the Commerce Department. Building permits in the month fell 40% from a year ago to 927,000 or 6% lower from February. Housing completions in the month declined 24.5% to 1.25 million or fell 2.7% from February.

The Federal Reserve reported industrial production increased 0.3% after decreasing at a revised ate of 0.7% in February. In the first quarter, output declined at annual rate of 0.1% after gaining 0.4% in the fourth quarter.

Bureau of Labor Statistics reported seasonally adjusted consumer price index in March increased 0.3% after staying flat in February. For the first three months the annual rate was 3.1% compared to 4.1% rise in 2007.

U.S. crude oil inventories declined 2.3 million barrels to 313.7 million barrels, gasoline inventories fell 5.5 million barrels and distillate fuel inventories rose 0.1 million barrels at the end of the last week.

Stocks surge on earnings

JP Morgan ((JPM)) stock added $1.77 to $43.89, Wells Fargo ((WFC)) increased $1.61 to $29.43, Intel ((INTC)) edged higher $1.24 to $22.16 and Coca Cola traded up 8 cents to $61.02. CSX added $2.60 to $60.42 after it reported first quarter earnings of 85 cents per share.

Steel stocks rallied.

Steel stocks rallied after Arcelor Mittal was reported to plan to increase steel prices in the U.S. by $250 million tons. Bloomberg news cited an internal memo talking about price increase.

123jump.com first reported that the European automakers ad Chinese companies expect steel price hikes, yesterday. International Steel Institute and Chinese industry group expect steel consumption to rise in 2008.



Earnings releases

JP Morgan reported first quarter 2008 net income of $2.4 billion or 68 cents per share compared to $4.8 billion or $1.34 per share a year ago. Net revenue in the quarter declined 9% to $17.9 billon.

Noninterest revenue of $8.5 billion was down $3.7 billion, or 31%, due to lower principal transactions revenue, which reflected markdowns on prime and Alt-A mortgages and markdowns on leveraged lending funded and unfunded commitments.

Wells Fargo & Company reported record revenues in the first quarter ended March 2008 of $10.6 billion, 12% or $1.1 billion higher from a year ago.

For the quarter net income was $2.0 billion or $ 0.60 per share compared with $ 2.20 billion or 0.66 per share in the same quarter last year and $ 1.36 billion or $ 0.41 per share for the fourth quarter 2007.

Average loans for the quarter were $383.9 billion increased $62.5 billion, or 19%, from a year ago. Average core deposits of $317.3 billion increased $26.7 billion, or 9%, from a year ago.

Net interest income increased $750 million, or 15%, from first quarter 2007 and non-interest income rose to $4.8 billion, up 8% from first quarter 2007 and up 7% annualized.

Wholesale Banking average loans up 29% from prior year. Community Banking reported net income of $1.4 billion in first quarter 2008, down $72 million from a year ago. Revenue increased $944 million.

Intel Corporation semiconductor chip maker reported first quarter revenue was $9.7 billion an increase of 9% or $ 8.8 billion a year ago.

Net income for the three months ended March 29 was $1.44 billion, or 25 cents per share, which 12% lower than a year earlier, compared with $1.64 billion, or 28 cents per share a year-ago on asset impairment charges related to a division that was spin-off.

Paul Otellini, Intel president and CEO said """"Our first quarter results demonstrate a strengthening core business and a solid global market environment.""""

Operating income for the quarter $ 2.1 billion compared with increased 23% or $ 1.8 billion same quarter last year. Intel estimates second quarter 2008 revenue was $ 9.0 billion compared with $ 9.6 billion for the same quarter last year.

The Coca-Cola Company beverage company today reported first quarter net operating revenue increased 21% to $7.38 billion from $6.1 billion from a year ago.

For the quarter net income was $1.5 billion, or 64 cents a share, up from $1.26 billion, or 54 cents a share, in the same quarter last year. Operating income in the quarter increased 15% or $1.87 billion and increased 19% after considering items impacting comparability.

President Muhtar Kent, slated to become chief executive in July, said “Our performance in the first quarter further builds on our success in 2007 in every respect. Our International business once again led the way, with both sparkling and still beverages contributing to our results.”

Unit case volume increased 6% in the quarter.

The Africa Group’s unit case volume decreased 1% in the quarter, compared to 17% growth in the prior year quarter. The Eurasia Group’s unit case volume increased 13% in the quarter, cycling 16% growth in the prior year quarter. The Latin America Group continued to deliver strong unit case volume growth of 9% in the quarter, up from 7% growth in the prior year quarter.

Unit case volume in the North America Group was even in the quarter, reflecting a difficult U.S. economic environment. Net revenues for the quarter increased 13%, reflecting a 2% increase in concentrate sales, positive pricing, mix of finished goods businesses and an increase from acquisitions.

The Pacific countries increased unit case volume 10% in the quarter. Net revenues increased 7%, reflecting an 8% increase in concentrate sales, positive pricing and a low double-digit favorable currency, impact, partially offset by unfavorable country mix. Operating income increased 4%.

Inter-segment revenues for the three months ended March 28, 2008 were $12 million for Africa, $30 million for Eurasia, $230 million for European Union, $57 million for Latin America, $14 million for North America, $91 million for Pacific and $22 million for Bottling Investments.

Operating income before income taxes for the three months ended in March decreased $76 million for corporate and $2 million for North America primarily due to asset write-downs and restructuring costs.

The Coca-Cola Company ((KO)) shares were up 81 cents at $61.75.