What’s the Story?

by CC May 2, 2012 9:13 am • Commentary


US stock index futures added to losses Wednesday, following a rally that helped push the Dow to its best closing level in more than four years, after the ADP employment report showed a much weaker-than-expected increase in private payrolls in April.

Employers in the private sector added just 119,000 jobs in April, according to the ADP report, short of expectations for 170,000. The report is closely watched ahead of the key monthly government jobs report, due at the end of the week. Economists surveyed by Reuters estimate employers added 170,000 jobs last month, following a tepid 120,000 gain in the month prior.

On the economic front, the Commerce Department releases March factory orders at 10:00am ET. Economists told Reuters they expected a 1.6 percent drop, compared with a 1.3 percent rise in February.


In their first comments since last week’s monetary policy-setting Federal Open Market Committee meeting, central bankers appeared in strong agreement that expanding the balance sheet with more bond buying is pretty unlikely.

The policy makers made their remarks in the wake of the FOMC meeting last Tuesday and Wednesday and left in place its current policy regime. Officials reaffirmed their collective view that rock-bottom rates will stay in place until late 2014, and continued forward with a $400 billion effort that sells short-dated bonds from the central bank’s $2.9 trillion balance sheet, to buy a like amount of long-dated securities.


John Williams, president of the San Francisco Fed, joined his counterparts from Richmond, Philadelphia and Atlanta in casting doubt on the need for additional purchases of bonds to push down longer-term interest rates. Three of them are voting members of the rate-setting Federal Open Market Committee.

Thresholds for further action “would be if we see economic growth slow to the point where we’re not seeing further progress in bringing the unemployment rate down,” Williams said, or if inflation dropped “significantly” below the Fed’s 2 percent goal. Those aren’t “the circumstances I currently expect,” Williams said at a conference in Beverly Hills, California.


Comcast [CMCSA  30.60        ] – The parent of NBCUniversal, which is the parent of CNBC and CNBC.com, reported first-quarter profitof $0.45 per share, three cents above estimates, with revenues also above consensus. Comcast credits strong growth in high speed Internet and business services, among other factors.

Time Warner [TWX  37.92        ] – Time Warner earned $0.67 per share for the first quarter, excluding certain items, three cents above estimates. Revenue also beat the Street, with the company crediting strong demand for its content, such as HBO programming.

CVS Caremark [CVS  44.71        ] – The drugstore chain and pharmacy benefits manager reported first-quarter profit of $0.65 per share, excluding certain items, two cents above estimates. Revenue of $30.8 billion came in above analyst forecasts of $30.3 billion. The company also raised its yearly outlook, as sales rise, and CVS continues to win over former patrons of rival Walgreen [WAG  34.72  —  UNCH    ].

Garmin [GRMN  47.49        ] – The maker of GPS devices earned $0.45 per share, four cents above estimates, and also registered a sizable beat in the revenue department with $557 million. Analysts had forecast first-quarter revenues of $520 million. Garmin saw particularly strong growth in fitness and outdoor GPS products.

Herbalife [HLF  56.30        ] – The company says the questions asked by hedge fund manager David Einhorn during an earnings conference call raised no new subjects or concerns, and that the most recent quarter was the best for Herbalife in 32 years. Einhorn’s comments helped slice the stock price by 20 percent in Tuesday’s trading.

Pfizer [PFE  22.78        ] – The U.S. Food and Drug Administration approved Pfizer’s drug Elelyso to treat a form of Gaucher’s disease. Protalix Bio Therapeutics [PLX  6.19        ] is Pfizer’s partner in development of that drug.

Chesapeake Energy [CHK  19.60        ] – Chesapeake is reporting first-quarter profit of $0.18 per share, 11 cents below estimates. Revenue for the energy producer was also short of Wall Street consensus. Investors are particularly concerned about Chesapeake’s exposure to low-priced natural gas.

Chipmaker Broadcom [BRCM  36.706        ] – Broadcom reported first-quarter profit of $0.65 per share, 10 cents above estimates, with revenues also registering a beat. Broadcom did say that acquisition related costs would cut into profit margins for the current quarter.

OpenTable [OPEN  43.68        ] – The company issued current-quarter guidance below analysts’ estimates. The restaurant reservation service did beat consensus by six cents with first-quarter profit of 40 cents per share.

Genworth Financial [GNW  6.15        ] – The insurer’s quarterly profit of $0.06 per share, excluding certain items, was five cents below estimates, and its chief executive, Michael Frazier, has resigned. He’ll be replaced on an acting basis by Chief Financial Officer Martin Klein.

TripAdvisor [TRIP  36.53        ] – TripAdvisor reported first-quarter profit of $0.38 per share, excluding certain items, five cents above estimates. The travel services company saw travel reviews and opinions hit the 60 million mark during the quarter.

Charming Shoppes [CHRS  5.90        ] – The retailer will be bought by women’s apparel retailer Ascena Retail [ASNA  19.075        ] for $890 million, or $7.35 per share. The price represents a nearly 25 percent premium over yesterday’s close for Charming Shoppes shareholders.

Standard Microsystems [SMSC  26.24        ] – The company will be bought by Microchip Technology [MCHP  35.23        ] for $829.2 million in cash. The $37 per share price represents a 41 percent premium over Tuesday’s close.