Stocks Post Sharp Weekly Gain on Solid Earnings
Published on Friday, 27 April 2012 18:10 Written by Christopher Lynn
New York, April 27th (TradersHuddle.com) – Stocks gained for the fourth straight session, posting a sharp weekly advance, with the Dow turning positive for the month. A healthy dose of encouraging corporate results, coupled with better than expected consumer sentiment data boosted sentiment despite a weak first quarter GDP reading.
The Dow Jones Industrial Average gained 23.69 points, or 0.18%. The S&P 500 index added 3.38 points or 0.24%, while the NASDAQ climbed 18.59 points, or 0.61%.
For the week, the Dow jumped 1.53%, while the NASDAQ rallied 2.29%, and the S&P 500 gained 1.80%.
The market started on positive ground after futures recouped losses, which came after a downgrade to Spain’s credit rating and after a disappointing GDP reading, which showed the U.S. economy grew at 2.2% in the first quarter. Better than expected earnings from Amazon (NASDAQ: AMZN) and Expedia (NASDAQ: EXPE) spurred a strong start for the NASDAQ.
Stocks received a shot of positive news after the University of Michigan survey showed consumer sentiment inched up slightly to 76.4 in April from 76.2 in March. The data helped stocks to log their fourth straight win in the week. The positive streak comes amid solid quarterly results, particularly a stellar report from Apple (NASDAQ: AAPL) and after the Fed Federal Reserve Chairman Ben Bernanke reiterated that the central bank remains prepared to take action.
Stocks in the News
Amazon.com (NASDAQ: AMZN)
The largest online retailer rallied more than 15% to $226.85, trading at levels not seen in the stock since last October. The retailer posted quarterly results that were significantly better than expected. Amazon said it earned $0.28 per share, $0.21 better than consensus, on sales that jumped 33.8% from a year ago period to $13.19 billion. The online retailer was able to better control costs, while selling more digital products, through its Kindle Fire tablet. The stock received several upgrades, like Bank of America Merrill to a Buy, and numerous boosted their price target on the stock.
Apple (NASDAQ: AAPL)
The maker of iPads and iPhones fell 0.77% to $603, ending the week with a gain of more than 5% following a stellar earnings report on better than expected iPhone shipments. Rival Samsung Electronics posted record $5.2 billion profit for the quarter, helped by the strength of smartphone shipments. The Korean electronics company sold 44.5 million smartphones in the quarter, making it the largest smartphone maker in the world and giving it 30.6% share, while Apple, which sold 35.1 million iPhones has a 24.1% share. Yesterday, Hillard Lyons raised its target price on the stock to $740 from $660, and earlier in the week numerous brokerage houses raised their target prices for the tech giant.
Chevron (NYSE: CVX)
The second largest U.S. energy producer fell 0.02% to $106.20. The company beat earnings expectations by $0.05 per share on revenues that climbed 0.8% from a year ago period to $58.9 billion, well below consensus. Chevron raised its dividend by 11% to $0.90 per share. Raising oil prices and increased refining margins made up for the decline in oil and gas production in the quarter.
Expedia (NASDAQ: EXPE)
The owner of Expedia.com and Hotels.com surged 23.54% to $40.31, posting the biggest gain in the broad market index after its adjusted earnings and revenues handily topped expectations, thanks to an increase in its international hotel revenue. The company said its adjusted earnings were $0.26 per share, $0.10 better than consensus, on revenues that climbed 12% from a year ago period to $816.5 million. Gross bookings increased 15% for the first quarter of 2012 compared with the first quarter of 2011. Expedia received an additional boost after numerous brokerage houses boosted their price target on the stock. Rival Priceline (NASDAQ: PCLN) gained 3.94% to $762.13 on the news.
Ford (NYSE: F)
The maker of the Fusion, and F150 vehicles fell 2.27% to $11.60 after gapping higher at the open following quarterly results that were better than expected but still slipped from the same period in the prior year. Solid results in North America helped offset some of the weakness from its European operations, which reported a loss for the quarter. Ford said it earned $0.39 per share, $0.03 better than consensus, on revenues of $31 billion.
Merck (NYSE: MRK)
The maker of Singulair and Zocor slipped 0.03% to $38.46 after the company beat earnings expectations despite falling sales. Merck beat earnings expectations by $0.01 per share on revenues that were inline with consensus. The company reaffirmed fiscal 2012 EPS guidance.
Procter & Gamble (NYSE: PG)
The global consumer products company tumbled 3.63% to $64.44, posting the biggest percentage decline in the Dow Jones Industrial Average, after the company reduced its guidance for the year as it continues to feel pressures from higher commodity costs. Procter earned $0.94 per share, excluding non-recurring items, $0.01 better than consensus, on revenues that climbed 1.5% from a year ago to $20.19 billion.
Starbucks (NASDAQ: SBUX)
The largest coffee shop chain in the world tumbled 5.3% to $57.43 after its quarterly results and guidance failed to impress heightened expectations. Starbucks beat earnings consensus by a penny on revenues that were inline with consensus, while its global comparable store sales increased 7%, driven by a 6% increase in traffic and a 1% increase in average ticket. Starbucks provided inline EPS guidance for the current quarter and downside earnings guidance for fiscal fourth quarter, while raising its fiscal 2012 revenue guidance.
Western Digital (NYSE: WDC)
The maker of hard drives for computers and entertainment systems plunged nearly 14% to $37.93, posting the biggest percentage decline in the S&P 500 index. The company posted strong results and issued upside guidance but provided disappointing commentary during its conference call, as it said that it could now meet customer demand. The stock was downgraded to a Neutral at Bank of America Merrill, while Barclays raised its target price to $49 from $45. Rival Seagate Technologies (NASDAQ: STX) tumbled 4.9% on the news and as the stock was also downgraded to a Neutral at Bank of America Merrill. Seagate announced a $2.5 billion share repurchase program, which provided very little support in the day.