Tuesday’s Market Recap: Markets Up On Geithner’s Remarks

The markets were up today as Geithner remarked that banks had a sufficient amount of reserves to protect them from losses, resulting with the Dow Jones up 1.63%.  The NASDAQ and S&P were both up closing at 1643.85 and 850.08 respectively.  Gold was down today settling at $882.70, while oil was up settling at $46.51.  The 10-year saw prices fall today as the yield finished at 2.901%.

DuPont (DD) reported earnings today with net income of $489 million, or $0.54 cents a share, better then analyst estimates of $0.53 cent a share.  Sales fell for the same period the year prior coming in at $7.27 billion as opposed to $8.77 billion, with DuPont citing that there was less demand for plastics and other materials.  DuPont saw steady demand from agricultural and pharmaceutical clients, but was hurt in the economic downturn by deteriorating demand for products related to construction and motor vehicles.  DuPont, due to what they view as a worsening economic climate, has put in plans to reduce fixed costs from a proposed $730 million to $1 billion while at the same time cutting capital spending from $1.6 billion to $1.4 billion.   As a result of these worsening conditions, DuPont has lowered their outlook for 2009 from $2.00 to $2.50 to $1.70 to $2.10.

In other earnings news, Caterpillar (CAT) reported a loss of $0.19 a share, or $112 million, as compared to earnings of $1.45 a share the same period the previous year.  The Peoria, Ill. based company lost $558 million due to workforce related reductions; if these charges were negated then Caterpillar would have received a profit of $0.39 a share.  Caterpillar also has a very weak outlook for 2009, predicting sales at around $35 billion, as the excavating and ground moving company sees the credit markets getting tighter and growth slowing in industries that it serves.  Caterpillar needs an economic turnaround, as it cannot sell equipment if there is nothing to build and nothing worth excavating.

In drug related news, both Schering-Plough (SGP) and Merck (MRK) reported earnings today.  These two big drug companies plan on merging later this year.  Merck reported earnings of $0.74 cents a share on revenue of $5.4 billion as opposed to the estimated $0.78 cents per share and revenue of $5.78 billion.  Merck’s revenue fell 8% from the previous quarter due to declining sales on its leading products and a huge gain last quarter from a partnership with AstraZeneca (AZN).  Schering-Plough reported a net income of $805 million, or $0.46 cents a share, far better than the same period a year before when net income was $314 million, or $0.17 cents a share.  Schering-Plough was hurt by a strong US dollar as about 70% of sales are made overseas, negatively affecting sales, which declined 6%.  The merger of these two companies will hopefully make a combined pharmaceutical company that will be able to more effectively weather the economic climate.

Disclosure: None.

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