Tuesday’s Stock Market Recap: Financials Ended The Day As The Worst Performer

Although the final signing of the $787 billion stimulus bill was concluded by President Obama during trading today, investors revisited fears and uneasiness regarding past financial and economic concerns. Financials ended the trading period as the worst performer, marking a -9.8% decrease in the overall sector with particular weakness in consumer finance, which ended down -11.9% today. The Dow Jones Industrial Average (^DJI) fell -3.79% to a close of 7,552.60 while the Nasdaq (^IXIC) and S&P (^GSPC) dropped -4.15% and -4.56% respectively to levels of 1,470.66 and 789.17. Gold experienced an upside today rising $28.50 to a close of $970.70, while copper fell -1.09 cents to a level of $1.44 due to a market reaction of overpriced metals. The signing of this recovery package into law allows and readies a $50 billion proposal to help current homeowners fight off foreclosure and await emergency restructuring plans to failing automakers.

Chrysler LLC (DAI) told the United States government today that they need more taxpayer money than they originally thought while General Motors Corp. (GM) is supposed to release similar requests shortly. Meanwhile, the United Auto Workers (UAW) union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. (F) on modifications to existing labor contracts. General Motors Corp. is expected shortly to release the details of its own restructuring plan in which they have received $13.4 billion in government loans, $4 billion of which they received today.

Wal-Mart Stores Inc. (WMT) released fourth quarter diluted earnigns per share of $0.96, missing analysts estimates of $0.99 earnings per share. During the quarter Walmart was dragged down by a strong dollar and a charge from settling labor lawsuits. Excluding the after-tax settlement on their class action wage lawsuit they earned $1.03 per share. Wal-Mart’s U.S. sales rose 6% percent during the quarter, while business at its Sam’s Club warehouse division was flat. Sales fell -8.4% percent at the international division hurt by the lower value of currencies against the dollar.

Chesapeake Energy Corp (CHK) reported fourth quarter diluted earnings per share of $0.73 after one time expenses missing analysts estimates of $0.74 earnings per share, while they reported a revenue increase of 42.70% year over year at $2.98 billion beating analysts estimates of $2.58 billion. Chesapeake Energy said posted a fourth-quarter loss as tumbling natural gas prices forced the company to record a non-cash charge of $1.7 billion. Because of declining gas prices, Chesapeake Energy has slashed its budgets for drilling and acquiring land. It also has been raising billions by selling some of its rights to a portion of its natural gas deposits or through joint ventures.

The Securities and Exchange Commission charged Texas financier R. Allen Stanford with an $8 billion fraud, alleging in a civil complaint that he lured investors with promises of high returns on certificates of deposit but poured their money into a “black box” of hard to trade assets.

Disclosure: The mutual fund the author manages is long CHK

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