BetterTrades Stock Market Daily Report - October 1, 2008

With many investors and analysts alike not quite sure how the markets would react today after the unheard of volatility over the past two days, and ahead of the Senate vote later this evening to hopefully approve a revised version of the failed bailout plan that the House rejected on Monday. By the sound of the closing bell today, the Dow Jones Industrial average retreated modestly, slipping 19.59 points, or 0.18%, to end the session at 10,831.07, after falling earlier in the day by nearly 220 points. Meanwhile, the broader market indicators declined as well, as the S&P 500 Index gave up 5.30 points, or 0.45%, at 1,161.06, while the NASDAQ composite index dropped 22.48 points, or 1.07%, to conclude the day at 2,069.40.

A handful of economic reports are due out today, and one of the first that were released was a reading from the Institute for Supply Management (ISM), which measured the activity of U.S. manufacturing. In their findings, it showed that the index posted a reading of 43.5 for September, down from August’s reading of 49.9, showed that new orders from the manufacturing sector has diminished dramatically. Within the index itself, a reading of 50 or above signals growth, while anything below that number signifies contraction.

Another economic release, this time the report relating to construction activity, was reveled by the Commerce Department, which showed that doings within the industry remained unchanged for August, a slight victory in lieu of the current condition of the housing industry. Analysts were looking for the construction figures to post a decline of 0.5% for the month. Within the report, it was also reveled that residential construction actually posted gains, advancing 0.3%, its first increase since March of 2007.

With the earnings season winding down a bit, there are only a handful of companies that are reporting today, one being Actuant Corp. (ATU), which announced early Wednesday morning that results from their 4Q came in higher than the same quarter for last year. Actuant, headquartered in Milwaukee, Wisconsin, is a diversified industrial company with operations in 15 countries. Actuant offers products under such established brand names as Enerpac, Gardner Bender, Milwaukee Cylinder, Nielsen Sessions, Power-Packer, and Power Gear. For the quarter, ATU recorded net income of $34.2M, or $0.54 per share, compared to last year’s tally of $31.4M, or $0.50 per share. Throughout the period, overall sales increased from $390M to $405M, a 4% jump. Analysts, in the meantime, were anticipating that the company post earnings of $0.54 per share on $425.8M in total revenues. For the upcoming 1Q, Actuant believes the company will be able to manage sales between $405M and $415M, while earnings per share should be between $0.48 and $0.52. Analysts have a different view of the company’s upcoming performance, as they thing the company should earn $0.56 per share on total sales of $437M, well above what Actuant predicts. In addition to offering 1Q projection, the company also gave guidance for fiscal 2009, in which, they believe that earnings will come in between $2.25 and $2.35 a share, on $1.72B to $1.75B in sales. In the meanwhile, experts are projecting that ATU will post yearly results of $2.31 per share on $1.77B in overall sales. With the sound of the closing bell, shares of Actuant plunged on the day, giving back $3.27, or 13%, to end at $21.97 a share.

The other company, which reported earnings before the market opened, was Wolverine World Wide Co. (WWW), which made it known that profits for the quarter increased year-over-year. Wolverine designs, manufactures, distributes and markets various brands and styles of footwear. The wide variety of footwear sold by the company includes casual shoes, slippers, moccasins, dress shoes, boots, uniform shoes and work boots and shoes, and is a domestic tanner of pigskin as well. In the company’s release that showed results from the 3Q, showed that WWW posted earnings of $31.2M, or $0.62 per share, versus last year’s total of $29.5M, or $0.54 per share. In addition, revenues increased during the quarter as well, climbing from $310.2M to $318.9M, nearly a 3% increase. Analysts, in the meantime, were anticipating that the shoe apparel company post earnings of $0.60 per share on overall sales of $323.8M. In lieu of a strong 3Q showing, Wolverine revised their full-year outlook and adjusted their guidance, from $1.83 to $1.90 per share, upwards to $1.87 to $1.92. Revenues, were also adjusted, previously stated at $1.23B to $1.26B, the company now anticipates those figures to come in between $1.22B and $1.24B. Despite a positive earnings release, and upward projections, investors remained leery of the company’s expected performance, which pushed its shares lower by the close, falling $0.01, or 0.04%, to end the session at $26.45 a share.

However, two additional companies reported their quarterly results after the market’s close on Tuesday evening. One of those, Xyratex Ltd. (XRTX) confirmed that results for their 3Q profits increased from the prior year as revenues surged year-over-year. Xyratex Limited is a leading provider of enterprise data storage subsystems and network technology. They design and manufacture enabling technology that provides their OEM and disk drive manufacturer customers with data storage products to support high-performance storage and data communication networks. For the recent quarter, XRTX posted net earnings of $7.8M, or $0.26 per share, compared to last year’s tally of $4.3M, or $0.14 per share, an 81% increase. Additionally, revenues also advanced, jumping from $$234.2M last year to $280.8M, a 20% jump. Although the company managed to record better results than the previous year, they fell short of analyst’s projections of $0.38 per share on total revenues of $285.2M. For the upcoming 4Q, Xyratex anticipates earnings per share to come in between $0.32 and $0.44 on total sales in the range of $287M and $307M, while analysts predict earnings of $0.49 per share on $316.2M in sales. In after market trading, shares slipped, and continued their decline in today’s session, falling $1.13, or 10.2%, to close out at $10.00 per share.

The final company to report their earnings after the bell yesterday was Landec Corp. (LNDC), which made it known that the company’s 1Q profits retreated from last year’s results, due in large part to an increase in their income tax expenses. Landec designs, develops, manufactures and sells temperature-activated and other specialty polymer products for a variety of food products, agricultural products, specialty industrial and medical applications. This proprietary polymer technology is the foundation, and a key differentiating advantage, upon which they have built their business. Results for the quarter showed that Landec posted net earnings of $2.8M, or $0.11 per share, compared to $3.1M, or $0.11 per share a year ago. Despite profits declining, the company did manage to post higher revenues as they increased from $62.7M a year ago to $71.8M, a 15% improvement. During this time, analysts were looking for the polymer producer to record earnings of $0.10 per share on overall sales of $66.8M. As the markets took another hit in trading today, so did shares of Landec, which slipped by the close, falling $0.34, or 4.2%, to end the session at $7.85 per share.

In the government’s weekly inventory report, the Energy Information Administration (EIA) released results for the week ending September 26th, which reveled that crude stockpiled advanced by 4.3M barrels to 294.5M barrels, while gasoline supplies increased by 900K barrels, up to 179.6M barrels. Finally, inventories of distillates, those being diesel fuel and heating oil, retreated by 2.3M barrels to close the week at 123.1M barrels.

With an overall advancement in fuel-related supplies, today’s reading pushed the price of crude lower by the close, as the price for a barrel of light, sweet crude for November delivery declined $2.11 to close at $98.53 a barrel. The price of crude has fallen as low as $95.95 a barrel before moving to its settlement price. In additional NYMEX trading, heating oil futures declined $0.0478 to $2.8469 a gallon, while gasoline prices fell $0.0977to $2.36 a gallon. Natural gas for November delivery advanced $0.29 to $7.728 per 1,000 cubic feet.

On news from across the pond today, the Euro-nation unemployment rate inched forward for August, which now sits at 7.5% collectively, as the European economy is showing similar signs that the U.S. economy has been engrossed in. With nearly 12 million people looking for work within the Euro-zone, Spain is at the forefront of the unemployment rate, possessing an 11.3% rate and the heels of a collapsing housing market. In the meantime, the Netherlands posts the lowest rate, which is currently at a putrid 2.6%.

With the unemployment rate in Europe coming in today, those figures helped push the Dollar higher, as the 15-nation Euro declined to $1.4061 from Tuesday’s price of $1.4083, and fell as low as $1.3974. The British pound as retreated from yesterday’s price, slipping from $1.7784 to $1.7753 against the greenback. However, the Dollar lost value against the Japanese yen, falling to 105.84 from 106.37, along with retreating against the Swiss franc, from 1.1240 to 1.1226, and against the Canadian dollar, falling to 1.0618 from 1.0645.

With investors looking for the approval of the Senate’s vote on the bailout plan, the Treasury markets benefited from the uncertainty, as the benchmark 10-year note advanced 22/32 to 102 4/32 as its yield dropped to 3.75% from yesterday’s 3.85%. Additionally, the 30-year also increased, adding 1 22/32 to 104 25/32 as its yield slipped to 4.22% from Tuesday’s 4.36%, while the 2-year note trekked higher, adding 8/32 to 100 10/32 with its yield falling to 1.85%.

For more information on the stock and options markets check out the wealth of information at BetterTrades.