Tuesday’s Market Recap: American Express’ Earnings Not As Bad As Expected

Stocks remained stable and continue minor jumps up as financial came in at levels better than expected.  The Dow Jones Industrial Average finished up 0.72% closing at 8,174.73 while the Nasdaq and S&P increased 1.04% and 1.09% respectively closing at 1,504.90 and 845.71.  Crude oil was up today $0.59 to $42.17 as crude inventories are expected to rise for the fifth straight week as imports increased again and seasonal maintenance cut refinery demand. The financial sector was boosted 3.70% as firms like American Express Company (AXE), who reported earnings yesterday, and even though they released sub par earnings this announcement  gave light to the industry as their earnings weren’t as terrible as originally thought.

The Consumer Confidence Index released it worst report in the history of the Index falling to a level of 37.7, signaling a further drop in consumer spending in 2009.  State figures were also released today showing a unemployment across all states in the U.S. The Fed’s Open Market Committee is expected to keep its benchmark interest rate as low as zero percent tomorrow.

United States Steel (X) reported earnings of $308 million, compared to $35 million a year before.  The company noted that their stellar earnings were due to strong pipe sales and an acquisition-related gain, although they did see an operating loss in the current quarter due to the global economic slowdown.  American Express Company (AXP) also posted earnings yesterday, proving that it was possible to make a profit in an industry downturn.

The steel industry helped the overall materials sector as Rohm & Hass (ROH) also was a relative leader due to hopes of a DOW (DOW) buyout remaining alive.  DOW, however, still has yet to close the buyout deal and is incurring fines for not closing and may soon experience a dividend cut.  Industry peer, Dupont (DD) released worse than expected earnings of a loss of $629 million and also lowered its earnings forecast for the rest of 2009.  They noted that dips in consumer spending, construction, and motor vehicle sales led to a progressive decline in demand for the end of 2008.

The Telecom sector lagged falling  -3% even though Verizon (VZ) posted a 15% earnings increased as falling consumer demand did little to lessen their profits.  Verizon added 1.4 million subscribers during the fourth quarter of 2008.  However, AT&T Inc. (T), will announce earnings tomorrow and traded lower today and expected weakness.

Thanks for catching up with us today, please join us again tomorrow.

Disclosure: The mutual fund that the author manages is long T.

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