Flirting With $120
FLIRTING WITH $120
The headline: Oil Jumps 1.6% To A Record $119.37 After Climbing As High As $119.86.
The Dow dropped about 1 percent on Tuesday as record oil prices fed concerns about how higher energy costs will affect the economy, while disappointing earnings outlooks also dampened the mood, explains Becky Quick who’s in for Dylan Ratigan.
Oil prices pushed further into record high territory Tuesday with crude nearing $120. At the pump, the national average price of a gallon of regular gas rose 0.8 cent Tuesday to $3.511, according to a survey of stations by AAA and the Oil Price Information Service. Gas prices are nearly 66 cents higher than last year, when they peaked at a then-record of $3.23 in late May.
The other part of this story is the dollar, explains Karen Finerman, which hit an all time low as compared to the euro. I don’t think there’s anything to stop oil’s march higher, right now.
If you’re in oil take profits, says Jeff Macke.
If you want to play energy I think you should take a look at Apache (APA), Chesapeake (CHK), Devon (DVN) or XTO Energy (XTO), counsels Pete Najarian.
AFTER HOURS ACTION: YAHOO
The headline: Yahoo adjusted profit tops Wall Street average
Yahoo on Tuesday posted quarterly profit, excluding one-time items, at the top end of Wall Street's range of lowered forecasts, as it sought to bolster its case that Microsoft Corp's takeover bid undervalues it.
This is all they came up with? It doesn’t bode terribly well as they try to get more from Microsoft, says Karen Finerman.
I would bet Steve Ballmer drops the bid just out of spite, exclaims Jeff Macke.
AFTER HOURS ACTION:VM WARE
The headline: VMware Expects To Maintain Growth Pas ‘08
Business software maker VMware reported a higher first quarter profit on Tuesday as its revenue rose a better-than-expected 69 percent. The company also reiterated its forecast for 2008 revenue growth of about 50 percent, reassuring investors who had worried that increased competition from companies like Oracle would hurt growth.
Look for EMC Corp. to have a big day on Wednesday, says Pete Najarian.
I think the play is Microsoft (MSFT), adds Guy Adami.
The headline: McDonald's Earnings Easily Top Estimates, But Shares Fall On Domestic Sales Picture.
Strong international sales helped McDonald's post a 24 percent gain in first-quarter profit, but investors seemed nervous about the company's first monthly decline of U.S. same-store sales in five years.
The fast food behemoth easily topped Wall Street forecasts Tuesday when executives said it earned $946.1 million, or 81 cents per share, during the January-to-March period. That's up from $762.4 million, or 62 cents per share, during the same period last year. Revenue climbed 6 percent to $5.6 billion.
But a 0.8 percent dip in U.S. comparable store figures for March -- an important metric for retailers -- kept McDonald's stock from rising Tuesday, despite assurances from the Oak Brook-based fast-food chain that same-store sales were on track to rebound in April.
McDonald’s has never been a North America story, says Guy Adami. I think it’s cheap on a valuation basis.
Don’t rush in, but I think you can buy it on a dip, adds Jeff Macke.
I prefer Burger King long-term, adds Pete Najarian, because they have more room to grow.
The headline: DuPont Earnings Beat Estimates, But Shares Fall On Cautious Outlook.
Chemicals company DuPont said Tuesday that profits increased 26 percent in the first quarter, boosted in part by higher selling prices and the weak dollar.
The company's performance continues to be driven by growth outside the United States, with overseas sales accounting for almost two-thirds of total sales for the quarter. Volume in the U.S. was down 5 percent, while volume increased 4 percent in Europe and 6 percent in the Asia-Pacific region, the company said.
Among the company's five business segments, only agriculture and nutrition and electronics and communications technologies reported volume growth, which combined with higher selling prices to produce double-digit sales growth in both segments.
The headline: CME Group Shares Plunge 10% On Lower-Than-Expected Profit.
Financial exchanges operator CME Group . said Tuesday its profit more than doubled in the first quarter as volume increased by a third, but it fell short of expectations and its stock sank, explains Becky Quick.
The largest U.S. futures exchange operator has benefited from volatility of the shaken capital markets. As investors shift positions, the exchange takes a fee for each move.
Average daily volumes rose sharply in each month during the period compared with a year ago, leading to a 32 percent gain in the full quarter.
This story is about margin compression, says Guy Adami. The amount of contracts trading per day is up but what they’re making per day is going down.
Forget the exchanges, says Pete Najarian. Instead look at Ameritrade and Schwab .
HELL IN A HANDBAG
The headline: Coach Profit Meets Estimates, But Shares Fall On New Reporting Method.
Shares of Coach dropped Tuesday, after the luxury handbag and accessories maker reported fiscal third-quarter results above expectations, but said it would not provide financial forecasts for 2009.
Coach's quarterly profit of 46 cents per share topped analysts' average estimate by a penny, and revenue of $744.5 million also came in ahead of expectations. In addition, Coach issued strong fourth-quarter guidance and reiterated its fiscal 2008 outlook.
However, the company said it would no longer break down same-store sales between retail and factory outlet stores, and declined to give guidance for fiscal 2009 at this time.
This only happens when retailers know the numbers are going to be bad, says Karen Finerman.
Wanting to say less about what’s ahead is never, ever good, Jeff Macke exclaims.
RAISING THE BAR
The headline: AT&T Profit Surges 22% On Strong Growth In Wireless Division.
AT&T first-quarter earnings rose 22 percent as its wireless division saw continued strong growth and the enterprise services division reversed a slide, the company said Tuesday.
Chief Financial Officer Rick Lindner said that apart from some "softness" in local phone lines, there was little sign of the weakness in the U.S. economy affecting the company.
I think this stock will go higher, speculates Guy Adami.
I prefer Millicom International , counters Pete Najarian.
The headline: Royal Bank Of Scotland Tumbles On New Write-Downs, Plan To Raise Capital.
Royal Bank of Scotlandsaid it suffered $11.7 billion in additional losses and was forced to raise $23.9 billion in new capital to cover exposure to toxic U.S. loans, explains Becky Quick.
I actually like this write-down, says Karen Finerman.
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Trader disclosure: On Apr. 22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (YHOO), (MSFT), (INTC); Finerman Owns (GS); Finerman's Firm Owns (DAI), (MSFT), (NYX), (TSO), (VLO), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY),(COF); Najarian Owns (AAPL), (ENER), (NOK), (TSO), (XLF), (YHOO), (EMC); Najarian Owns (BHI) Calls, (DD) Calls, (MSFT) Calls, (POT) Calls, (CHK) Calls; Charles Schwab Is A Sponsor Of "Fast Money"