Bernanke Testifies and Earnings Fall Short: Market Recap

The Federal Reserve stole the spotlight on Wednesday as Chairman Ben Bernanke testified on the U.S. economic outlook before Congress and the minutes from the previous FOMC meeting were released. Morning gains evaporated by afternoon trading as the Fed reiterated its position that it will taper purchases if the labor market continues to improve.

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Gold and Silver Turn Lower After FOMC Minutes: On Wednesday, gold (NYSEARCA:GLD) futures for June delivery, the most active contract, dipped $10.20 to close at $1,367.40 per ounce, while silver (NYSEARCA:SLV) futures for July edged 2 cents higher to finish at $22.47. Both precious metals received knee-jerk movements during the day as Federal Reserve Chairman Ben Bernanke told the Joint Economic Committee in Washington D.C., “A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.”

Bernanke’s Testimony: Is Congress Failing the Economic Recovery? Wherever Bernanke goes, he can’t escape federal fiscal policy. The federal deficit and growing debt crisis have defined the post-crisis political environment in America. Ideological budget warfare has given birth to the sequestration spending cuts, which are arguably the largest drags on U.S. economic growth. Combined with the expiration of tax holidays and explicit tax increases, federal fiscal policy has co-dominated economic conversation in the U.S. alongside the Federal Reserve’s monetary policy, so it’s unsurprising that Bernanke would include it in the highest-level overview of the current economic situation… (Read more.)

Is Austerity Finally Bringing Growth to Britain? After warning Great Britain of dire circumstances last year if it continued austerity, the International Monetary Fund has rolled back the rhetoric this time, omitting its request that the British government slow its budget contraction further… (Read more.)

Here’s your Cheat Sheet to today’s top stock stories:

Hewlett-Packard (NYSE:HPQ) closed the regular session up 0.65 percent and climbed as much as 10 percent higher in post-market trading after reporting fiscal second-quarter earnings that beat expectations. Net revenue declined 10 percent on the year (9 percent after adjusting for currency) to $27.6 billion, beating the average estimate of $28.12 billion. Adjusted diluted earnings declined 11 percent on the year to $0.87 per share, beating the average analyst estimate of $0.81 as well as its own guidance for earnings in a range between $0.80 and $0.82 per share… (Read more.)

Saks Incorporated (NYSE:SKS) closed the day up 13.39 percent after the retailer announced first-quarter results that beat expectations, and reportedly hired Goldman Sachs to explore strategic options that could include a sale. Revenue increased 5.25 percent on the year to $793.2 million, beating the average estimate of $778.53 million. Adjusted earnings were flat at $0.19 per share, in line with expectations.

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Lowe’s (NYSE:LOW) closed the day up 1.22 percent after reporting first-quarter financial results. Revenue fell 0.49 percent on the year to $13.09 billion, missing the average analyst estimate of $13.46 billion. Adjusted earnings increased 11.36 percent to $0.49 per share, missing the average estimate of $0.51 per share.

NetApp (NASDAQ:NTAP) climbed as much as 6 percent in pre-market trading after reporting fourth-quarter earnings that came in ahead of expectations and revitalizing its capital return program. Revenue rose 0.82 percent on the year to $1.72 billion, just missing the average estimate of $1.76 billion, but adjusted earnings increased 4.55 percent to $0.69 per share, beating the average estimate of $0.68 per share. The company also announced that it has doubled the size of its share repurchase program to $3 billion and will pay a dividend of $0.15 per share.

Target (NYSE:TGT) stock was off about 2 percent in pre-market trading after the retailer reported first-quarter earnings that were below expectations. Adjusted earnings of $1.05 per share were down 5 percent on the year. The company commented that “first quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories.” Target issued second-quarter adjusted earnings guidance in a range between $1.09 and $1.19 per share.

Staples (NASDAQ:SPLS) was off about 2.8 percent in pre-market trading after reporting relatively weak first-quarter results. Revenue declined 4.75 percent on the year to $5.81 billion, missing the average estimate of $5.91 billion. Adjusted earnings decreased 13.33 percent to $0.26 per share, missing the average estimate of $0.27 per share.

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Pearson’s (NYSE:PSO) book publishing arm, Penguin Group, has settled antitrust charges related to a deal made with Apple (NASDAQ:AAPL), agreeing to pay $75 million in damages to consumers over the way it priced electronic books… (Read more.)

Will IRS Hearings Spill More Secrets? Lois Lerner, head of the Internal Revenue Service’s tax-exempt division, has invoked her 5th Amendment rights as hearings begin on the IRS controversy. Having been head of the tax-exempt division at a time when they were improperly targeting conservative groups, Lerner told the House Committee on Oversight and Government Reform that, “I have not done anything wrong. I have not broken any laws. I have not violated any IRS regulations. And I have not provided false information to this or any other committee.” She then declined to answer the committee’s questions, on advice of counsel… (Read more.)

Don’t Miss: Bernanke’s Testimony: Is Congress Failing the Economic Recovery?