Stock Market Report - 05/13/09

Wednesday May 13, 2009
Navivest

After an incredible run up since the March 9 lows, that has the S&P 500 index rally 30.65% from the close on March 9 through the close today, stocks were due for a pull back and we got that today.

The Dow Jones Industrial Average lost 184.22 points, a 2.2% decline to 8,284.89, the NASDAQ was off 51.73 points, losing 3% to close at 1,664.19 and the S&P 500 was off 24.43 points for a 2.7% decline to 883.92.

After a week or so in which we have seen noted strength in equities and crude oil, on assumptions that the economy might be bottoming, a report from the Commerce Department, which showed that retail sales fell 0.4% in April, after a revised 1.3% decline in March, was all it took to change sentiment, at least for today.

Economist had been forecasting that retail sales numbers for the month would come in unchanged.

Leading the Dow lower were 3M (MMM), which lost $2.59 to close at $56.94, Caterpillar (CAT), which was off by $1.98, to close at $36.08 and United Technologies (UTX), which was off $2.23 to close at $50.61.

American Express (AXP) $24.09 - $1.36, Boeing (BA) $42.95 -$1.15, Chevron (CVX) -$68.10 - $1.09, Dupont (DD) $26.63 - $1.48, Exxon Mobil (XOM) $69.77 -$1.05, IBM (IBM) $102.26 -$1.68 and JP Morgan Chase (JPM) $34.05 - $1.31 were also all off by more than a point.

Intel (INTC), lost $0.08 to close at $15.13 after it was announced that the European Union was fining the company a record $1.06 billion euros for supposed illegal sales practices with regards to the company’s x86 CPU chips, that have hurt EU consumers. The company plans to appeal within the next sixty days.

Cliffs Natural Resources (CLF) was a big loser on the day, dropping $5.71 to close at $23.18, for a loss of 19.76%, after the company announced a stock offering that should close on May 19, 2009, that will see the company sell 15 million common shares at $21.00 per share.

The company also announced that it is cutting its quarterly dividend to $0.4 per share from $0.875. The new dividend rate will go into effect with the next dividend payout, which is payable on June 1 to shareholders of record as of May 22. The company expects to save $22 million annually on the moves.

Additionally, the company announced that it will cut its CEO’s pay by 10%, cut senior management’s pay by 7% and cut salaried employees wages by 3-5%, as well the suspension of all 401(k) company contributions for salaried employees.

The wage cuts and 401(k) suspension are expected to save roughly $15 million in 2009.

Impacting the markets tomorrow will be the release of the Producer Price Index and Initial Jobless Claims numbers by the Labor Department, before the markets open.

Going on most recently released jobs numbers the rate at which employers are cutting jobs, seems to have tempered somewhat, so there is the possibility we could see better than expected jobs numbers tomorrow, which could send the markets higher as traders once again assume the worst of the economic crisis is behind us, that would be after today’s drop that it isn’t.

May 13, 2009 | Filed Under Stock Market, Stocks | Leave a Comment