Monday’s Market Recap: Mixed Earnings Drive Choppy Market Higher

Mixed earnings reports and economic data were able to drive the market higher at the end of a choppy day of trading.  The Dow Jones Industrial Average ended the day of trading up 0.48% closing at 8,116.03 while the Nasdaq and S&P rose 0.82% and 0.56% respectively closing at 1,489.46 and 836.57.  Among leading commodity movers for the day, gold increased $7.70 closing at $905.4 while copper moved $0.1025 upwards to $1.5745.  Surprising news to come out of the economic sector was existing home sales numbers, which were expected to decline, but instead rose about 6.5% since November.

Within the biggest market movements of the day followed the news of the pharmaceutical giant Pfizer Inc. (PFE), which plans to buy Wyeth (WYE) for a $68 billion.  This represents well over a 60% premium to were Wyeth was trading only two weeks ago.  Among its plans to boost revenue and profit while becoming more diversified in their drug making business, Pfizer has announced news to cut more than 8,000 jobs which constitutes approximately 10% of their workforce in 2009.  They also expect to have to cut about 15% of their potential combined work force, forecasting a cut of almost 20,000 total jobs.

American Express Co (AXP) released earnings after the bell today, reporting diluted earnings per share of $0.15 marking a 79% decrease in quarterly profit.  Excluding discontinued operations on an adjusted basis, they reported diluted earnings per share of $0.21 while analysts expected $0.22.  This marks a total revenue decline of over 11% to $6.51 billion noting cardmember’s spending which fell 10% year-over-year.

Amongst other massive layoffs include Texas Instruments (TXN) which plans to cut 3,400 jobs, 1,800 which will include layoffs and around 1,600 in voluntary retirements and departures.  Another company that must deal with the continuing downturns of the economy at hand is Caterpillar (CAT), whose earnings dropped 32% as total sales rose a minuscule 6%.  Caterpillar plans on cutting around 20,000 jobs this year alone.

Copper made its first big jump of the month leading it to settle around $1.58, miners continue to have seen better days.  Freeport-McMoRan Copper & Gold Inc. (FCX) released earnings today reporting diluted earnings per share of -$36.78, but excluding special items, they released diluted earnings per share of $0.06, beating analysts expectations of  -$1.12.  Among the leading causes in a 50% drop in revenue is the fall of realized copper prices which ranged from $4 to $1.50 during the July till December window.

Other speculation followed the market today as a possible bid may form for Chesapeake Energy (CHK) by oil giant BP PLC (BP).  In other news Fannie Mae (FNM), which is one of the largest home-loan source of money, announced today that it may need more than $16 billion in emergency funds in order to stay alive.  This report follows a three day old claim, when Freddie Mac (FRE) announced its need for more than $35 billion in federal aid.  This news persists as the housing market continues to deteriorate, following unheard of mortgage losses driving both companies net worth below zero this past quarter.

Disclosure: The mutual fund that the author manages is long FCX and CHK.

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