All the major indices held key support yesterday -- particularly the S&P 500, which held the January closing low of 1310. That's a real positive, but we are still sitting at the bottom of a six-week trading range.
1) Oil and energy company profits will get a little more attention beginning today. That's because ExxonMobil holds its analyst meeting in New York, followed by Chevron and ConocoPhillips in the next several days.
They will of course opine on the big question--where is oil going, but the best response I have seen recently comes from Deutsche Bank analyst Paul Sankey, who said "oil will go as high as the dollar goes low, name your target."
2) Smithfield Foods is selling its beef-processing operations for $565 million to JBS, a Brazilian meatpacking company. JBS is making a play to become the nation's largest beef processor. A major factor helping JBS is the weakness of the dollar and the strength of the Brazilian real, which has appreciated 25 percent in the past year. For Smithfield, the move enables them to concentrate on higher profit businesses. Cattle prices -- which Smithfield does not control -- have been near record levels.
3) Several retailers reported earnings. Big Lots surprised everyone and gave first quarter and full year guidance for 2008 well above analysts' estimates. 2008 guidance is $1.70 to $1.80, estimates were for $1.53 a share. Up 16 percent pre-open.
BJ's Wholesale Club is also up, their earning beat expectations but they did not give guidance. However, they did cite strong January sales.
Saks' earnings were a penny below expectations, no guidance but they expected operating margins to remain flat and noted they were taking a "conservative approach to planning the business for the year."
Costco also posted earnings in line with expectations.
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