Tuesday’s Market Recap: Stocks, Gold And Crude Oil Head Lower

The markets had a rough day, with the Dow Jones down 0.97% to close at 8447.00.  The NASDAQ (^IXIC) and S&P (^GSPC) closed at 1835.04 and 919.32 respectively, down 0.49% and 0.85%.  Gold and crude oil both headed to lower prices today, with gold settling at $927.40, and oil down $0.91 to settle at $69.89.  The 10-year saw prices fall with the yield ending at 3.537%.

H&R Block (HRB) released earnings yesterday, reporting a profit of $706.9 million, or $2.09 per share, better then the earnings of $543.6 million, or $1.66 per share, released the same period the year before.  H&R Block missed on revenue, reporting that revenue fell 2.9% to $2.47 billion as opposed to the average analyst estimate of $2.52 billion, H&R Block however did beat earnings estimate of $2.05 per share.  The company’s tax unit was hurt as it saw a weak tax season, with revenues falling 3.2% in tax service revenue.  The company has noticed this fall in revenue, and as a result H&R Block’s CEO Russ Smyth said that it would be combining its tax and corporate structures into one unit in an effort to cut costs.  This is another move by H&R to cut down its management structure to make the company more efficient.  These actions follow its recent elimination of its brokerage and loan services.  H&R Block expects to see fiscal 2010 earnings between $1.60 and $1.80 per share, with the street estimating earnings of $1.66 per share.

In health care news, a federal jury in Texas ordered Abbot Laboratories (ABT) to pay rival Johnson & Johnson (JNJ) $1.67 billion for patent infringement on J&J’s arthritis drug, Remicade, which was infringed upon with Abbot’s Humira.  Humira is Abbot’s leading drug and accounts for $4.5 billion in revenue last year, or 15% of total revenue.  Johnson & Johnson was thrilled with the news and were happy that the court recognized its intellectual property with its arthritis drug.  Abbot said that they are disappointed with the verdict and are going to appeal the findings of the jury.  Abbot has seen great success recently, with a good part being attributed to Humira, it will be interesting to see how Abbot will handle and move on from this.

The Conference Board announced that its index of consumer confidence in June fell to 49.3 from May’s 54.8.  This is bad news, especially as economists believe that confidence below 50 following a month when it was above 50, indicating economic growth, changes the general feeling that the economy was starting to bottom out.  This is bad news as consumer spending is tied to consumer confidence and with these poor numbers this could severely affect GDP, as spending accounts for about 66% of GDP.  Economist and investors alike are looking for consistent economic data to indicate if the market is bottoming or not, and they have been presented with data that is mixed and therefore makes it hard to tell.

Disclosure: The fund the author is associated with is long ABT and JNJ.

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