BetterTrades Stock Market Summary - September 19, 2009

With the recent news that the government is in the midst of supplying central banks with much needed funds in order to secure those institutions from accumulating any further debt, the markets surged from the opening bell. By the close of Friday’s trading, the Dow Jones Industrial average climbed 368.75 points, or 3.35%, to 11,388.44 after having been up as much as 463 points. Even with today’s gains, stocks ended the week essentially flat for the week. The markets took part in a massive loss Monday, a rebound on Tuesday, another drop Wednesday, and the rally on Thursday. The Dow has logged moves of more than 400 points every day except Tuesday. The broader stock indicators also advanced by the close as the S&P 500 index gained 48.45 points, or 4.02%, to 1,254.96, and the NASDAQ composite index added 74.80 points, or 3.40%, to 2,273.90.

As what has been perceived as one of the worst financial crisis’ in decades, the Treasury Department and the Federal Reserve announced early Friday morning that the two government agencies will take actions, separately, to help secure more than $2 trillion worth of the nation’s assets in money market funds. The Treasury stated that they would have the opportunity to tap into a Depression-Era fund, the Exchange Stabilization Fund, in order to retrieve some $50B in capital to help secure money market mutual funds. The fund was established back in 1934 in order to help protect the value of the Dollar. Additionally, today’s move should help bring some confidence back to the markets and help alleviate concerns from investors that are worried about the ability of mutual funds to withstand losses.

Speaking of investor’s confidence, early this morning the Securities Exchange Commission (SEC) took necessary steps to help ensure the financial sector by temporarily restricting short selling against some 800 financial stocks. With traders cashing-in the demise of financial companies, much of the downfall from big names such as Bear Stearns, Lehman Brothers, and Merrill Lynch, short-sellers have been one of the biggest contributing factors to the recent market woes. Today’s action trails yesterday’s announcement from the U.K. Financial Services Authority that put into place a similar ban on short selling with their financial stocks.

With no companies reporting their earnings today, a few big names released their company’s performances after the close Thursday evening. One of them, Oracle Corp. (ORCL), which announced that their 1Q profits soared as overall revenues increased year-over-year. Oracle is one of the world's leading suppliers of software for information management. The company develops, manufactures, markets and distributes computer software that helps corporations manage and grow their businesses. The company's software products are categorized into two broad areas: Systems software and Internet business applications software. For the quarter, ORCL posted earnings of $1.08B, or $0.21 per share, compared to last year’s results of $840M, or $0.16 per share. Revenues, meanwhile, jumped some 18% from last year’s figure to come in at $5.33B. The main catalysts to the company’s increased sales was new software license sales which jumped 14%, and software updates and product support sales surged 23% from last year. The company expects the previously mentioned revenue generators to still post close to double-digit percentage gains and is looking for the upcoming 2Q earnings to be in the range of $0.35 to $0.36 per share, with analysts looking for $0.35 per share. After hours trading saw shares of ORCL surge nearly 6%, and Friday’s trade brought the stock an 8% gain, adding $1.50 to end the week at $20.25 a share.

Palm Inc. (PALM), a leader in mobile computing, strives to put the power of computing in people's hands so they can access and share their most important information. The company's products include smart-phones, under the Treo brand; mobile managers, under the LifeDrive brand; handheld computers, under the Tungsten and Zire brands; as well as software and accessories. Palm products are sold through select Internet, retail, reseller and wireless operator channels throughout the world, and at Palm Retail Stores and Palm online stores. In their 1Q earnings report, the company confirmed that they posted a loss for the quarter that was larger than expected and greater than last year’s 1Q results. For the quarter, PALM recorded a loss of $41.9M, or $0.39 per share, compared to last year’s loss of $841,000, or $0.01 per share. Despite revenues increasing to $366.9M, the company’s results were weighed down by restructuring costs and impairment charges for various securities. Analysts, on average, were expecting the company to post a loss of only $0.18 per share on total revenues of $352.2M. In after hours trading, shares of PALM jumped nearly 18%, but Friday’s session brought about different results, as shares of PALM slipped $0.56, or 6.6%, to end the week at $7.93 per share.

IHS Inc. (IHS) is one of the leading global providers of critical technical information, decision-support tools and related services to customers in a number of industries including energy, defense, aerospace, construction, electronics, and automotive through two operating segments, Engineering and Energy. Engineering and Energy segments each represent approximately one-half of IHS' total revenues. Customers served range from governments and large multinational corporations to smaller companies and technical professionals. Customers rely on offerings to facilitate decision-making, support key processes and improve productivity. Announced after the markets closed Thursday, IHS stated that the company’s 3Q results came in just shy of last year’s results. For the quarter, the company posted net income of $21M, or $0.33 per share, versus last year’s tally of $21.7M, or $0.35 per share. Revenues, in addition, advanced some 13%, from last year’s $183.4M to $207.4M this quarter. The company’s results were affected by a restructuring charge of $12.5M, which took away $0.14 per share, but benefited from a tax break that gave back $3.1M, or $0.05 per share. Once again, after hours trading helped the stock, but Friday’s trading session saw shares of HIS plummet 18%, giving back $10.90 to close out at $49.60 per share.

Harris Stratex Networks, Inc. (HSTX) is the world's leading independent supplier of turnkey wireless transmission solutions that offers reliable, flexible and scalable wireless network solutions, backed by comprehensive professional services and support. Harris Stratex serves all global markets, including mobile network operators, public safety agencies, private network operators, utility and transportation companies, government agencies and broadcasters. HSTX is recognized around the world for innovative, best-in-class wireless networking solutions and services. Late Thursday, the company made it known that the company recorded a larger-than-expected loss for the quarter, despite posting higher revenues. For the4Q, HSTX recorded a net loss of $13.7M, or $0.23 per share, compared to last year’s loss of $7.2M, even though revenues increased from $174.1M last year, to $186.6M this year, a 7% jump. The major blow to quarterly results came from a $21M charge for various operating expenses, and in addition, analysts were anticipating that the company post earnings of $0.06 per share on $188M in total sales. If not for the charges HSTX would have beaten expectations and posted a per share gain of $0.08. In light of a less-than-stellar earnings release, the company did offer guidance for the upcoming 1Q for fiscal 2009, in which the company is expecting overall revenues to be in the range of $185M to $195M, up from previously anticipated figures of $175M to $185M. On the backs of increased projections, despite the quarterly loss, shares of HSTX ended the session in the green, adding $0.58, or 7.3%, to conclude the week at $8.50 a share.

Finally, the last major company to report their earnings after the close of Thursday was Cintas Corp. (CTAS). Cintas provides a specialized service to businesses of all types from small service and manufacturing companies to major corporations and is divided into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms in which it rents to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers as well as the sale of ancillary services including sanitation supplies, first aid products, and clean-room supplies. In the company’s 1Q earnings report, Cintas stated that they earned $78.6M, or $0.51 per share, compared to last year’s total of $81.1M, or $0.51 per share, as revenues for the quarter advanced 3%, from $969.1M to $1B this year. Analysts, in the meanwhile, were looking for the corporate uniform supplier to post earnings of $0.52 per share on overall revenues of $1.01B. "The current difficult economic conditions are certainly impacting our customers, causing them to respond with head count reductions and facility consolidations," said President and Chief Executive Scott D. Famer, in a statement. "When combined with the significant increases in our energy and other commodity costs, our results clearly have been impacted." After market trading saw Cintas shares slip and Friday’s trading was the same from last night. By the close of the markets today, shares of CTAS were down more than 5%, falling $1.62 to end the week at $30.09 a share.

For the third consecutive session, the price for a barrel of crude advanced as light, sweet crude for October delivery added $2.64 to $100.52, after briefly touching $103.64 a barrel. Since reaching its all-time trading high over $147 a barrel back in July, the price for crude has retreated some $50. In additional NYMEX trading, heating oil futures gained $0.0223 to $2.8057 a gallon, while gasoline prices added $0.005 to $2.4885 a gallon. Natural gas for October delivery slipped $0.065 to $7.861 per 1,000 cubic feet.

With the markets continuing their surge, investors poured their capital back into equities, which in turn, pushed the bond markets lower by the close. At the conclusion of trade, the benchmark 10-year note gave back 1 25/32 to 101 25/32 as its yield advanced to 3.78% from 3.53%, while the 30-year note retreated by 2 26/32 to 102 7/32 as its yield jumped to 4.37% from 4.28%. The 2-year note slipped 28/32 to 100 11/32 and its yield climbed to 2.19% from yesterday’s 1.65%.

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