Despite some negative news, U.S. stocks and exchange traded funds (ETFs) climbed into positive territory this morning as investors became more hopeful that the economy has already hit bottom and is on its way up.
Chrysler is going to file for bankruptcy after talks with a small group of creditors fell apart one day before a government deadline for the automaker to form a restructuring plan, report Stephen Manning and Tom Krisher for the Associated Press. But that doesn’t mean they’re going to shutdown. President Barack Obama is expected to discuss the country’s auto sector today.
The Commerce Department reported that consumer spending declined more than expected putting a halt on a two-month growth spurt. It declined by 0.2%, exceeding the 0.1% decline economists estimated, after posting gains of 0.2% in the previous month. Additionally, U.S. incomes dropped by 0.3%, yet disposable income remained unchanged, indicating that Americans are paying less in taxes, states Bob Willis of Bloomberg.
On a positive note, inflation talks seem to have cooled off. The price gauge linked to spending patterns rose 0.6% from March 2008, compared with 0.9% for the year ended in February and the Fed’s preferred gauge of prices, which excludes food and fuel, climbed 0.2% in March and was up 1.8% from the same time last year.
More positive news hit the economy on the employment note. The Labor Department said that initial jobless claims fell last week by 14,000 to 631,000. This is great news, considering that the total number of continuing jobless claims is at record levels. This means that it is hard for unemployed job seekers to obtain gainful employment.
- Dow Chemical (DOW) posted a 97% drop in first quarter profit, but blew Wall Street’s expectations out of the water. The company reported earnings of $0.12/share as expected to analyst’s expectations of a loss of $0.21/share. Dow’s chairman and CEO, Andrew Liveris states that the company was able to turn a profit as a result of rapidly cutting costs and tightly managing operations.
- Despite being influenced by the global recession, Proctor & Gamble (PG) was able to beat earnings expectations as well. The maker of Tide detergent and Gillette razors reported earnings of $0.84/share, well ahead of the $0.81/share that analysts forecasted.
- To keep this ball rolling, gold miner Newmont Mining Corporation (NEM) earnings topped forecasts, too. Newmont Mining reported earnings of $0.44/share ahead of the $0.41/share Wall Street expected. Two things that worked in the gold miner’s favor were lower commodity prices and lower-than-expected Australian dollar exchange rates.
On a sour note, Exxon Mobil (XOM) posted a 58% drop in profits and missed Wall Street’s expectations. Declining global demand for crude oil resulted in profits of $0.92/share, short of the $0.95/share analysts expected. This sends shares of the stock down about 2%, however, didn’t have much of an impact on the energy sector overall. The Energy Select Sector SPDR (XLE), was actually up about 0.5% in intraday trading, despite being down about 2% for the year. XOM constitutes 23.2 % of the fund’s assets.
Bank of America (BAC) shareholders voted Ken Lewis out as chairman of the board. He still remains CEO of the company and now has to prove his worth to the board.
The Dow Jones Industrial Average was up about 1.2%, the S&P 500 climbed 1.4% and the Nasdaq jumped nearly 2.1% in morning trading.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.