Friday’s Market Recap: Stocks Stage Late Rally, Oil Above $66

The markets enjoyed a late rally to send the three major indexes up for the day, as the Dow Jones (^DJI) closed up 1.15%.  The NASDAQ (^IXIC) and the S&P 500 (^GSPC) were both up closing at 1774.33 and 919.14 respectively.  Prices on the 10 year treasury once again rose over a dollar as the yield declined to 3.465%.  Oil and gold were both up today,  with August gold settled at $980.30 and crude settled at $66.31.

Tiffany & Company (TIF) reported a 62% decline in first quarter profit, as they announced earnings of $24.3 million, or $0.20 per share, declining from $64.4 million, or $0.50 per share the same period the year prior.  Tiffany saw sales decline 22% falling to $523.1 million, with sales dropping 21% in stores who have been open less than a year.  Sales would have fallen only 18% but the high end jewelry company was hurt by currency exchange, as the stronger dollar hurt overseas sales.  In addition the stronger dollar contributed 4% in the downward direction to revenue, which fell 22%, as revenue was $523.1 million for the quarter.  Tiffany has struggled greatly in this economic downturn as many would expect as demand for high priced jewelry has drastically decreased.  Tiffany has tried to combat this by introducing the Tiffany Keys collection, which offers lower priced jewelry, between $150 and $15,000, while also not compromising its upscale name.  Tiffany is expecting earnings for the year between $1.50 and $1.60 expecting sales to decline 11%.

In technology news, Microsoft (MSFT) will not abandon its ambition in search as the software giant announced its new internet search engine, Bing.  The new search engine is scheduled to be released on June 3, with Microsoft dumping between $80 and $100 million in an effort to encourage viewers to use its site.  The ads are supposed to target Google (GOOG) in the same way that Microsoft has been targeting Apple (AAPL) in PC related ads.  Microsoft currently has the third most market share in internet search, 8%, but hopes that Bing’s launch will significantly improve its market share.  Microsoft will face a steep uphill battle trying to reemerge as a significant player in the search market, but the customer will ultimately determine the success of Bing.  Microsoft has been hurt recently as consumers have not accepted their products, the Zune player and Live Search being two examples.  Investors will have to ask themselves what effect this will have on Microsoft’s earnings.

GDP numbers were revised to a decline of 5.7% as opposed to the original decline of 6.1%.  The numbers were revised as new data showed that inventory building was higher with increased exports, but at the same time showed weaker consumer spending.  Despite being revised to a smaller decline, economists believed that the revision would bring GDP’s decline to 5.5%.  Businesses reduced investments, inventories, and got rid of workers in an effort to cut costs and reduce production and the amount of goods on hand to get closer to the economic demand for goods.  GDP fell to an annual rate of $14.01 trillion.

Disclosure: The fund the author is associated with is long GOOG.

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Comment by Donaldo

2009-05-30 23:02:55

Just wonder the late rally was due to institutional investors manipulation…..

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