Yikes! The Mortgage Bankers Association reported that 30-year fixed rate mortgages jumped a quarter point to 5.31 percent (!!) last week, the highest level level since August. Little wonder the volume of mortgage applications fell 11 percent.
1) Family Dollar rises 4 percent after its Q2 earnings and full-year outlook were above expectations. The discount retailer reported Q2 earnings of $0.81 (vs. $0.78 consensus) on improving margins and a 3.6 percent rise in same-store sales as a result of higher store traffic.
Earnings guidance for both the current quarter and full year exceeds the current consensus estimates too. The company sees comps rising 6 percent-8 percent this quarter, thanks in large part to a very strong start in March, when comps rose 11 percent.
Other retailers will report their March sales tomorrow morning, with optimism on the Street for strong comps.
2) CKE Restaurants (think Carls Jr., Hardees) rises 6 percent on word that it has received another offer, possibly leading to a potential bidding war for the company. The fast food giant had agreed to a $619 million deal with private equity firm Thomas H. Lee Partners pack in February. The bidder's name and terms of the new competing offer were not disclosed
3) Monsanto falls fractionally after Q2 earnings missed estimates ($1.70 vs. $1.73 consensus). As traders had expected, earnings were pressured by continued pricing pressures in herbicides, causing disappointing sales and lower margins.
Looking ahead, the seed provider warned that its full-year earnings would be towards the low end of a previously announced range and that it wouldn't meet its long-term goal of doubling profits over the 5 years ending in 2012.
4) Australian miner Macarthur Coal rejected a $3.27 billion raised bid by U.S. coal miner Peabody Energy saying it undervalues the firm. Unless Peabody raises its bid again, Macarthur will likely proceed with a shareholder vote on its own offer to acquire a smaller Australian miner Gloucester Coal.
5) Reality check: bank stocks have had a huge run this year, with the Bank Index (BKX) up 25 percent, but it's getting tougher to get outperformance...Dick Bove of Rochdale Securities, on our air this morning: "In the 1st quarter you are going to see weak loan volume, you are going to see stress margins, you are going to see continuous problems with the loan loss provision and i think you are even going to see problems with non-interest income, so this is not going to be a good quarter earnings wise"
Yesterday Wells Fargo upgraded the entire banking sector, citing "greater clarity on asset-quality trends, less fear of pending regulatory changes, and still-reasonable valuation for most of our coverage compared to "normalized" multiples."
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