Tuesday’s Market Recap: Stocks Start Week With Great Momentum

The markets started off the week with great momentum as the Dow Jones (^DJI) and S&P (^GSPC) were up 2.37% and 2.63% respectively.  The NASDAQ (^IXIC) was up 3.45% closing at 1750.43  led by Apple (AAPL), who was upgraded by Morgan Stanley to overweight.  The 10-year saw prices rise and the yield closed down at 3.547%.  Crude oil and gold headed in opposite directions, oil was up settling at $62.45, and gold down, settling at $953.30.

In earnings news, Take-Two Interactive (TTWO) said that it loss $10.1 million, or $0.13 per share, failing to come close to the earnings they reported the same period the year prior when the reported a profit of $98.2 million, or $1.29 per share.  The company stated that if they had not included onetime charges and option related expenses, they would have only reported a loss of $2.9 million, or $0.04 per share.  Revenue fell 57% to $229.7 million, beating the average analyst estimate of $218.3 million, as the video game company lacked big title game names such as “Grand Theft Auto IV” which they released the same period a year prior.  Take-Two wants to expand its revenue diversity, expanding beyond gaining revenue from its “Grand Theft Auto” franchise.  Take-Two will need to expand its revenue diversity to better compete with companies with better diversity such as Electronic Arts (ERTS) and Activision Blizzard (ATVI).  The video game company is predicting revenues between $1.05 billion and $1.15 billion for the fiscal year, below the street’s estimate of $1.17 billion, as it plans on moving many game releases into the next fiscal year.

General Motors (GM) saw its stock price regain its footing midday as news from the United Autoworkers sent the stock into positive territory for the day.  The UAW and GM came to a temporary deal, which has the UAW accepting a 17.5% stake in the company instead of collecting upon $20 billion that GM owes to the Voluntary Employee Beneficiary Association.  In addition the Canadian Auto Workers accepted an offer to receive a smaller amount of pay and benefits to try to keep the US car company above water.  Despite these recent negotiations the Detroit company still faces a looming June 1 deadline.  The company still heavily relies on the results of the debt-for-equity offer, which recently looks like it will not go through.  The offer is for the company to give 225 shares of common stock to investors for every $1,000 in debt that they hold; currently GM has $27 billion in debt outstanding.  It has been a tumultuous task for the car company to convince its investors to exchange their debt for stock, as many debt holders would rather take their chances in court.

According to the US Conference Board consumer confidence rose from 40.8 in April to 54.9 in May as expectations about future jobs has improved.  The confidence reached its highest in over 8 months, greatly surpassing the 43 mark that economists had predicted.  Lynn Franco, director of the Conference Board, said that confidence is on the rise as many believe that the labor market is improving along with incomes as many believe that we have already gone through the worst of the economic downturn.  Consumer confidence has been severely rattled in the current economy as it is at historical lows.  Confidence has deterred consumers from spending as they believe that the market might get even worse and that they need to spend less as some are afraid that they might lose their job.  As confidence increases, we should begin to see spending start to increase slowly.

Disclosure: None

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