This post was written by CNBC producer, Robert Hum
Meet the latest half off sale!
Following yesterday’s plunge the Dow is now 50% off its October 2007 high while the S&P is trading 53% below its high from that month too. Yesterday’s declines brought those two benchmark indices to their lowest close since the spring of 1997.
However, today traders will keep their eyes on the S&P’s 741.02 November intraday low, which was not breached yesterday.
Despite the Wall Street sell-off yesterday, global markets haven’t fared as badly overnight and throughout the morning. European markets are only down about 1%, while Asian indices were off 1% to 3%. While off the highs of the morning, futures are still indicating a slightly higher open ahead of Fed Chairman Ben Bernanke’s semi-annual testimony in front of the Senate Banking Committee.
The S&P Case-Shiller Home Price Index showed record home price declines. The report showed that the index fell 18.2% year-over-year during Q4 2008 – the largest drop in the index’s history. Home prices are now at their lowest levels since the third quarter of 2003.
JPMorgan is trading up 7% pre-open following its announcement that it will slash its quarterly dividend by 87% to 5 cents per share. The company expects to preserve $5 billion in capital from the dividend cut. Citigroup regarded this cut positively, as it believes the dividend cut will help JPMorgan repay the $25 billion of capital it received from the TARP program more quickly that other banks.
Citigroup also raised its Q1 earnings estimate for JPMorgan, as it expects stronger investment banking operations. For its part, JPMorgan said that it was “solidly profitable” so far in the current quarter and expects this quarter’s earnings to be “roughly inline” with the street’s consensus.
Other banks are stronger today for the second day in a row: Bank of America up 2%, Citigroup up 4%.
A Mixed Bag of Earnings for Retailers
Home Depot is up about 7% pre-open following its Q4 earnings beat. Excluding charges, the home-improvement retailer earned 19 cents per share in the quarter vs. analysts’ expectations of 15 cents per share. However, the company noted that transactions fell 10% and that the average amount spent per transaction was down 7.4%. It also remains cautious for the year – as earnings and sales guidance for the year both fell short of analysts’ estimates.
Macy’s Q4 earnings fell 59% from last year, but came in ahead of the street’s expectations. The company reported Q4 EPS of $1.06 (excluding items) vs. the consensus forecast of $1.01. The retailer reaffirmed its full-year earnings guidance of 44 cents to 55 cents, inline with the street’s 53-cent forecast. The stock is up 6% in pre-market trading.
Target is trading down 2% after announcing that its Q4 earnings missed analysts estimates by a couple of pennies. It saw weaker margins due to higher markdowns at its stores. The company also noted that the current consumer buying patterns spurred “faster sales growth in non-discretionary, lower margin-rate categories.”
Shares of Radio Shack are down 20% pre-open. The company experienced weaker revenues, as it saw disappointing new wireless activation sales. Additionally, weaker margins, which fell from 44.8% to 41.8%, helped push earnings lower. The company’s Q4 EPS significantly disappointed the street, coming in at 50 cents per share vs. estimates of 73 cents per share.
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