Merril Lynch loss less than estimate, they plan to cut jobs
Global Market
Merrill Lynch & Co. posted quarterly loss and will cut about 3,000 more jobs after the credit-market crisis forced them to write down debt. The smaller-than-estimated push Merrill shares up 4.7 percent. Analysts predicted $8 billion loss. The first-quarter net loss is $1.96 billion.
They are optimistic about the firm's prospects for the year following a more difficult next couple of months. The comments echo remarks by JPMorgan Chase & Co., who said the credit crisis is more than half over. Lehman Brothers, Goldman Sachs Group Inc. and Morgan Stanley have offered similar assessments. Merrill gained $1.82 to $46.71.
Merril has sold more than $12 billion of equity to bolster capital and overhauled risk-management since they booked $20 billion of credit-market losses. Merrill's stock has fallen almost 50 percent in last year.
Merrill's first-quarter writedowns to account for the plummeting value of mortgage-related bonds including collateralized debt obligations. They also reduced the value of bond insurance contracts and lowered the value of leveraged loans.
The markdowns reflected Merrill's net loss in the value of securities held. Those declines were classified as other comprehensive income.
Analyst said it may cut Merrill's credit rating for the second time, citing deteriorating conditions in the mortgage market and the potential for another writedowns.
Merrill's credit-default swaps have climbed to 166 basis points from 131 basis points.
Merrill's total revenue fell to $2.9 billion. That included a 40 percent drop in investment-banking fees. The company's brokerage was the only major division to post a gain. Revenue in the unit increased to $3.3 billion. Fixed-income trading revenue down $3.38 billion and equity-trading revenue was $1.88 billion. Debt underwriting generated $231 million, while stock underwriting revenue dropped to $199 million. Merrill's first-quarter loss contrasts with earnings at Goldman, Morgan Stanley and Lehman Brothers Holdings Inc.
Merrill will record a $350 million charge related to the reductions, which will save an estimated $800 million a year.
Stock Market
Most U.S. stocks fell after Pfizer Inc.'s earnings trailed estimates, overshadowing better-than-forecast results at International Business Machines Corp.
Pfizer tumbled as competition from generic medicines reduced revenue. Motorola Inc. retreated on profit at Nokia Oyj that trailed analysts' estimates. IBM climbed after their 2008 earnings will top its projection.
The Standard & Poor's 500 Index added 0.85 point to 1,365.56. The Dow advanced 1.22 points to 12,620.49. The Nasdaq Composite Index decreased 8.28 to 2,341.83.
Google Inc. jumped $53.12 to $502.66. Their first- quarter profit is topping estimates, as international expansion countered a slowdown in U.S. advertising spending.
Pfizer lost 70 cents to $20.40. Profit fell and missing analysts' estimates, on generic competition to Lipitor and Norvasc.
Motorola retreated 15 cents to $9.05 as Nokia reported first-quarter profit missed analysts' estimates and global handset market will shrink in euro terms. Nokia American depositary receipts lost $4.74 to $28.95.
EBay Inc. fell $1.11 to $31.01 as slowing U.S. economy may hurt earnings, even after they posted first-quarter profit that rose more than estimated on higher-selling fees and increased revenue from PayPal.
Harley-Davidson Inc. fell 70 cents to $36.09. They predicted 2008 earnings will drop 20 percent as it cuts jobs and reduces shipments to dealers amid declining sales.
United Technologies Corp. is falling $1.84 to $70.79. They said there were early signs of moderating commercial-construction growth in the U.S.
Industrial companies also retreated after the Federal Reserve report that factory activity index fell to minus 24.9. Meanwhile the number of people collecting unemployment insurance benefits climbed to 2.98 million.
IBM added $2.61 to $123.08. Their first-quarter profit topped analysts' estimates as U.S. sales increased 6 percent, while overseas sales surged 16 percent as a drop in the dollar boosted their value.
Altera Corp. climbed $1.66 to $20.86. They said demand for phone-equipment chips fueled a 10 percent increase in sales, resulting in profit that beat analyst estimates.
Procter & Gamble Co. is declining $1.71 to $67.56. They were downgraded to hold. Analyst cited the potential for slower sales based L'Oreal report on slower sales growth.
International Game Technology fell $2.31 to $35.70. Their second-quarter profit dropped more than estimated as casinos delayed purchases amid declining gambling revenue.
Danaher Corp. fell $2.72 to $74.16. They said sales to consumers slowed in the first quarter. MGIC Investment Corp. is climbing $1.99 to $12.49. Their quarterly loss is narrower than estimate.
Merrill Lynch & Co. advanced even they reported quarterly loss and writing down debt. They climbed $1.82 to $46.71. Citigroup Inc. rose 59 cents to $24.03. They sold commercial lending and leasing unit to General Electric Co.
Currencies
The yen decline against the euro on signs financial companies will weather the global credit crisis and set to complete a drop against the dollar after Merrill Lynch & Co. wrote down about $6.5 billion of debt, less than some analysts had forecast. The dollar rose against the euro as ECB said financial markets have misunderstood the Group of Seven's position on currency volatility.
Japan's currency traded at 162.96 per euro. The yen traded at 102.50 per dollar. The dollar gains at $1.5899 per euro.
The yen decline against the pound and against South Africa's rand on speculation investors resumed carry trades.
Merrill Lynch said they optimistic about the firm's prospects for the year. They posted its third straight quarterly loss and will cut about 3,000 more jobs.
JPMorgan Chase & Co. said that the credit crisis is more than half over. Lehman Brothers Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley said the same about the credit crisis.
The dollar extended its gain against the euro after Federal Reserve said they hesitant about lowering interest rates further, warning against inflating the economy out of the credit crisis.
The ECB will assess whether its 4 percent main refinancing rate is high enough to contain intolerably high inflation.
Commodities
Oil
Crude oil was little changed after retreating as the dollar recovered against the euro. The U.S. currency gained after failing to weaken beyond $1.60 and ECB said the euro's advance isn't desirable.
Crude oil for May delivery rose 8 cents to $114.94 a barrel. Brent crude for June settlement declined 23 cents to $112.43 a barrel. The dollar increased to $1.5879 per euro. Investors looking for higher returns have flocked to commodities. Oil surged 82 percent over the past year as the Standard & Poor's 500 Index and the Dow Jones Industrial Average declined.
World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells. The US reports an unexpected decline in U.S. inventories and low refinery operating rate, it showed a bigger-than-expected drop.
U.S. refineries operated at lower capacity because the incentive to process crude oil into product getting lower.
Gasoline for May delivery rose 1.88 cents to $2.9578 a gallon. Futures had touched $2.9749.
Gold
Gold fell as the dollar rebounded against the euro. Silver also dropped, while platinum and palladium gained. The euro declined on speculation ECB may cap the currency's gains.
Gold futures for June delivery fell $5.40 to $942.90 an ounce. Silver futures for May delivery dropped 2 cents to $18.305 an ounce.
Gold's losses limited as crude-oil extended a rally to $115.54 a barrel, boosting the appeal of precious metals as a hedge.
Platinum futures for July delivery rose $24.20 to $2,061.50 an ounce. Palladium futures for June delivery rose $1.20 to $461.20 an ounce.
Platinum earlier reached $2,079.80 on speculation that energy shortfalls in South Africa will disrupt metal output. The country may face power shortages for seven years. South Africa supplies 78 percent of the world's platinum and is the second-biggest producer of gold behind China.
Merrill Lynch & Co. posted quarterly loss and will cut about 3,000 more jobs after the credit-market crisis forced them to write down debt. The smaller-than-estimated push Merrill shares up 4.7 percent. Analysts predicted $8 billion loss. The first-quarter net loss is $1.96 billion.
They are optimistic about the firm's prospects for the year following a more difficult next couple of months. The comments echo remarks by JPMorgan Chase & Co., who said the credit crisis is more than half over. Lehman Brothers, Goldman Sachs Group Inc. and Morgan Stanley have offered similar assessments. Merrill gained $1.82 to $46.71.
Merril has sold more than $12 billion of equity to bolster capital and overhauled risk-management since they booked $20 billion of credit-market losses. Merrill's stock has fallen almost 50 percent in last year.
Merrill's first-quarter writedowns to account for the plummeting value of mortgage-related bonds including collateralized debt obligations. They also reduced the value of bond insurance contracts and lowered the value of leveraged loans.
The markdowns reflected Merrill's net loss in the value of securities held. Those declines were classified as other comprehensive income.
Analyst said it may cut Merrill's credit rating for the second time, citing deteriorating conditions in the mortgage market and the potential for another writedowns.
Merrill's credit-default swaps have climbed to 166 basis points from 131 basis points.
Merrill's total revenue fell to $2.9 billion. That included a 40 percent drop in investment-banking fees. The company's brokerage was the only major division to post a gain. Revenue in the unit increased to $3.3 billion. Fixed-income trading revenue down $3.38 billion and equity-trading revenue was $1.88 billion. Debt underwriting generated $231 million, while stock underwriting revenue dropped to $199 million. Merrill's first-quarter loss contrasts with earnings at Goldman, Morgan Stanley and Lehman Brothers Holdings Inc.
Merrill will record a $350 million charge related to the reductions, which will save an estimated $800 million a year.
Stock Market
Most U.S. stocks fell after Pfizer Inc.'s earnings trailed estimates, overshadowing better-than-forecast results at International Business Machines Corp.
Pfizer tumbled as competition from generic medicines reduced revenue. Motorola Inc. retreated on profit at Nokia Oyj that trailed analysts' estimates. IBM climbed after their 2008 earnings will top its projection.
The Standard & Poor's 500 Index added 0.85 point to 1,365.56. The Dow advanced 1.22 points to 12,620.49. The Nasdaq Composite Index decreased 8.28 to 2,341.83.
Google Inc. jumped $53.12 to $502.66. Their first- quarter profit is topping estimates, as international expansion countered a slowdown in U.S. advertising spending.
Pfizer lost 70 cents to $20.40. Profit fell and missing analysts' estimates, on generic competition to Lipitor and Norvasc.
Motorola retreated 15 cents to $9.05 as Nokia reported first-quarter profit missed analysts' estimates and global handset market will shrink in euro terms. Nokia American depositary receipts lost $4.74 to $28.95.
EBay Inc. fell $1.11 to $31.01 as slowing U.S. economy may hurt earnings, even after they posted first-quarter profit that rose more than estimated on higher-selling fees and increased revenue from PayPal.
Harley-Davidson Inc. fell 70 cents to $36.09. They predicted 2008 earnings will drop 20 percent as it cuts jobs and reduces shipments to dealers amid declining sales.
United Technologies Corp. is falling $1.84 to $70.79. They said there were early signs of moderating commercial-construction growth in the U.S.
Industrial companies also retreated after the Federal Reserve report that factory activity index fell to minus 24.9. Meanwhile the number of people collecting unemployment insurance benefits climbed to 2.98 million.
IBM added $2.61 to $123.08. Their first-quarter profit topped analysts' estimates as U.S. sales increased 6 percent, while overseas sales surged 16 percent as a drop in the dollar boosted their value.
Altera Corp. climbed $1.66 to $20.86. They said demand for phone-equipment chips fueled a 10 percent increase in sales, resulting in profit that beat analyst estimates.
Procter & Gamble Co. is declining $1.71 to $67.56. They were downgraded to hold. Analyst cited the potential for slower sales based L'Oreal report on slower sales growth.
International Game Technology fell $2.31 to $35.70. Their second-quarter profit dropped more than estimated as casinos delayed purchases amid declining gambling revenue.
Danaher Corp. fell $2.72 to $74.16. They said sales to consumers slowed in the first quarter. MGIC Investment Corp. is climbing $1.99 to $12.49. Their quarterly loss is narrower than estimate.
Merrill Lynch & Co. advanced even they reported quarterly loss and writing down debt. They climbed $1.82 to $46.71. Citigroup Inc. rose 59 cents to $24.03. They sold commercial lending and leasing unit to General Electric Co.
Currencies
The yen decline against the euro on signs financial companies will weather the global credit crisis and set to complete a drop against the dollar after Merrill Lynch & Co. wrote down about $6.5 billion of debt, less than some analysts had forecast. The dollar rose against the euro as ECB said financial markets have misunderstood the Group of Seven's position on currency volatility.
Japan's currency traded at 162.96 per euro. The yen traded at 102.50 per dollar. The dollar gains at $1.5899 per euro.
The yen decline against the pound and against South Africa's rand on speculation investors resumed carry trades.
Merrill Lynch said they optimistic about the firm's prospects for the year. They posted its third straight quarterly loss and will cut about 3,000 more jobs.
JPMorgan Chase & Co. said that the credit crisis is more than half over. Lehman Brothers Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley said the same about the credit crisis.
The dollar extended its gain against the euro after Federal Reserve said they hesitant about lowering interest rates further, warning against inflating the economy out of the credit crisis.
The ECB will assess whether its 4 percent main refinancing rate is high enough to contain intolerably high inflation.
Commodities
Oil
Crude oil was little changed after retreating as the dollar recovered against the euro. The U.S. currency gained after failing to weaken beyond $1.60 and ECB said the euro's advance isn't desirable.
Crude oil for May delivery rose 8 cents to $114.94 a barrel. Brent crude for June settlement declined 23 cents to $112.43 a barrel. The dollar increased to $1.5879 per euro. Investors looking for higher returns have flocked to commodities. Oil surged 82 percent over the past year as the Standard & Poor's 500 Index and the Dow Jones Industrial Average declined.
World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells. The US reports an unexpected decline in U.S. inventories and low refinery operating rate, it showed a bigger-than-expected drop.
U.S. refineries operated at lower capacity because the incentive to process crude oil into product getting lower.
Gasoline for May delivery rose 1.88 cents to $2.9578 a gallon. Futures had touched $2.9749.
Gold
Gold fell as the dollar rebounded against the euro. Silver also dropped, while platinum and palladium gained. The euro declined on speculation ECB may cap the currency's gains.
Gold futures for June delivery fell $5.40 to $942.90 an ounce. Silver futures for May delivery dropped 2 cents to $18.305 an ounce.
Gold's losses limited as crude-oil extended a rally to $115.54 a barrel, boosting the appeal of precious metals as a hedge.
Platinum futures for July delivery rose $24.20 to $2,061.50 an ounce. Palladium futures for June delivery rose $1.20 to $461.20 an ounce.
Platinum earlier reached $2,079.80 on speculation that energy shortfalls in South Africa will disrupt metal output. The country may face power shortages for seven years. South Africa supplies 78 percent of the world's platinum and is the second-biggest producer of gold behind China.
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