Market Recap: FOMC Leaves Rates Unchanged, Boeing Delays 787 Flight, Monsanto’s Profits Decrease Further

The market closed at mixed levels as the NASDAQ and S&P 500 closed up 1.55% and .065% respectively to 1,792.34 and 900.94, while the Dow Jones traded down 0.28% to 8,299.86.  Oil continued to fall today as it dropped $0.57 cents to $68.67 per barrel.  Natural Gas followed suit by dropping $0.10 down to $3.91.  Precious metals increased today as Gold ended $10.10 higher than the beginning of the trading session at $934.40 an ounce and Copper was up 3.17% to $2.28 an ounce.  Yields on the 10-Year increased 0.04% to 3.68% as bond prices fell 15/32 to 95 9/32.

Monsanto Co. (MON) released earnings today of $694 million, or $1.25 per share.  This represents a decrease in profits of 14% of $811 million, or $1.45 per share from the same quarter a year earlier.  Their shares traded down 4.06% today after they announced earnings and the elimination of 900 jobs.  The restructuring and layoffs are expected to lower Q4 revenue by $0.41-$0.47 per share and that FY earnings will be at the low end of their $4.40-$4.50 per share guidance.  The restructuring costs are expected to be between $350 and $400 million, but will save almost $180 million in future costs.  Monsanto anticipates releasing one or two new strains of seeds per year, which will give the company an addition of $300 million to its revenue.

Rite Aid Corp. (RAD) released earnings of  negative $0.11 per share this quarter, or a loss of $98.4 million.  Management also lowered guidance to a range of  negative $0.59 to negative $0.33 for fiscal year 2010 as the company struggles to pay of over $6 billion in debt.  Rite Aid expects to save money in the future by eliminating 117 stores by the end of the year.  The company was also burdened $68 million this quarter of lease termination charges.

Boeing Co. (BA) fell 5.81% by the market’s close after management announced a postponement of the first flight of the highly anticipated, much delayed 787 Dreamliner.  The hype for the 787 builds as Boeing keeps pushing back the plane’s release date, but customers have to be getting impatient.  Some investors are afraid that managements inclination and disregard for schedules will hurt sales in the future if customers switch over to Boeing’s big rival Airbus.

The FOMC held a meeting today and decided to target the Federal Funds Rate at the same range of 0.00% to 0.25%.  This did not come as a surprise to investors, although the Fed Funds Rate has been closing in on the upper end of the range more recently compared to the past month.

Good news in the housing market, the weekly MBA Purchase Applications jumped 7% from 261.2 to 280.3, however, new home sales was at the low end of consensus range at an annualized rate of 342K, 23K lower than consensus.  This represents a 0.6% decrease in May.

Disclosure: The fund the author manages is long MON.

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