Monday’s US Stock Market Recap: State Street Raises More Money, Home Builder’s Up

The week started off on a strong note as the major indexes were all up significantly, as the Dow closed up 2.85%.  The NASDAQ and the S&P also had strong days, finishing up 3.11% and 3.04% respectively.  Gold and oil headed in different directions today, as oil was up settling at $59.03, while oil declined to $921.70.  The 10-year treasury saw prices rise finishing with a yield of 3.237%.

State Street Corp. (STT) announced Monday that it has already started selling $1.5 billion worth of common stock and in an additional offering it will sell senior notes, not backed by the FDIC’s Temporary Liquidity Guarantee Program.  Both of these actions were taken as the company plans to use the proceeds to buy back preferred stock and warrants from the Treasury Department.  The buyback has not been approved by the government, but many feel that given the fact that State Street passed the government stress test the go ahead looks probable.  As a result of the announcement today, State Street has changed its estimates for 2009 they estimate operating earnings to be between $4.25 and $4.50 per share with operating revenue falling 12% from the previous year and return on equity being 17%.  In addition to raising capital, the Boston based company has also opted to move its conduits to its balance sheet; both actions will help the company spend more time focusing on its core businesses.  State Street consolidated these conduits and on May 15 assessed their fair market value at $16.6 billion, as opposed to a book value of $22.7 billion.

In earnings news, Lowe’s (LOW) reported a profit of $476 million, or $0.32 per share, beating the average analyst estimate of $0.25 per share.  Profit fell 22% from the same period the year prior as a demand for high priced items declined severely, but fell less than expected as more expense controls were implemented by the company along with an increase in paint and other smaller items.  Same store sales numbers fell 6.6% with Lowe’s saying that these numbers will be between 6% and 8% for the current quarter and fiscal year.  Lowe’s earnings gave investors confidence that the economy may be recovering as the company stated that business was “less bad” across the country and it furthered investor confidence as it raised forecasted earnings to between $0.51 and $0.55 per share for the second quarter and between $1.13 and $1.15 per share for the year.  We will further see how the economy and home-improvement retail tomorrow when Home Depot (HD) reports.

In addition to good home-improvement news, home building news was also positive today as The National Association of Home Builders announced that home-builder confidence about market prospects increased for the second consecutive month.  Confidence was at its highest since September as many home builders believe that the worst is possibly over as many feel that this might be the best time to buy a house for decades.  Home builders DR Horton (DHI) and Centex Corp. (CTX) were both up over 6% on the news as investors positively reacted towards the news.

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