After initial weakness in early trading, stocks managed a slow creep upwards today, eventually closing up strong, with banks and insurance stocks leading the way.
Traders bought bank stocks, after Treasury Secretary Tim Geithner hinted that the results of the stress tests that the government is conducting on the nation’s banks will be favorable for the large banks.
Tim Geithner told the congressional oversight panel that oversees the government’s $700 billion bank rescue plan that “the vast majority of banks have more capital than they need to be considered well capitalized by their regulators.”
He also told the panel that with a balance of at least $134.4 billion left in the $700 billion rescue fund, there is still enough leftover to stabilize the financial system.
He further bolstered bank stocks when he stated that “Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets.”
Stocks were weak initially, after Dow component Merck (MRK) reported Q1 2009 earnings that were weaker than Wall Street forecasts. The company reported today that in the period, net income amounted to $1.43 billion, translating into $0.67 cents per share, compared to $3.3 billion or $1.52 a share in the same period a year ago. Revenues came in at $5.39 billion, down 7.4% from the $5.82 billion in Q1 revenues a year ago.
Analysts were looking for the company to earn $0.77 per share on revenues of $5.77 billion. Merck shares ended the day at $23.54 down $1.68 for a loss of 6.6%.
DuPont (DD), another Dow component, reported Q1 2009 earnings today, announcing that in the period, it earned $488 million, or $0.54 per share, down from the $1.19 billion, or $1.31 per share that the company reported in the same period last year. Revenue for the period came in at $7.27 billion, a 17% drop from Q1 2008 revenue of $8.77 billion.
DuPont also cut its full-year earnings outlook to a range of $1.70 to $2.10 per share, from prior forecasts of $2 to $2.50 per share. DuPont’s stock closed at $28.08, up 1.32 points for a gain of 4.94%.
The Dow Jones Industrial Average ended the day up 127.83 points or 1.6% at 7,969.56, NASDAQ closed up 35.64 points for 2.2% to finish at 1,643.85 and the S&P 500 settled at 850.08, up 17.69 points for a gain of 2.1%.
Twenty five out of the Dow 30 stocks were up, with AT&T (T), Johnson and Johnson (JNJ), Coca-Cola (KO), Merck (MRK) and Pfizer (PFE) the losers on the day.
The biggest point gainer was JP Morgan Chase (JPM), which rose $2.84 on the day, to close at $32.53, gaining 9.57$, while Merck was the biggest point loser.
Tenet Healthcare (THC) was the biggest percentage gainer among the S&P 500 stocks, after the shares gained $0.63 to close at $2.05, for a 44% gain. The company in an SEC filing, announced that it is raising its 2009 earnings outlook by $25 million.
The New York Times Company (NYT) was the S&P 500’s worst performer, on the company’s Q1 2009 earnings news. The company lost $74.5 million, or $0.52 per share, in the quarter, compared with a loss of $335,000 in the same period last year.
Shares of Aflac (AFL), led insurance stocks higher, after Standard & Poor’s affirmed its ‘A-’ counterparty credit rating on the company and its ‘AA-’ counterparty credit and financial strength ratings on AFLAC’s insurance operations. Aflac shares were up $4.26 for 17.06% to close at $29.23.
