Ultimate Market Recap: Oil Companies Leaking Value, Alcoa Climbs Despite Dow

Friday Morning’s Top Stories

Chevron Corp. (NYSE:CVX) dropped almost 2 percent in early trading. The company reported a decrease in fourth quarter profits to $5.12 billion ($2.58 per share).  The oil company recorded a loss of $553 million due to compensation and benefits.  Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) also traded lower on the news.

Shares of DR Horton Inc. (NYSE:DHI) jumped 1.84 percent after announcing a profit of $27.7 million (9 cents per share), compared to a loss of $20.4 million in the previous year.

Starbucks Corp. (NASDAQ:SBUX) declined more than 1 percent, despite reporting a 10 percent jump in first quarter profits.  The company gave guidance of $1.78 to $1.82 per share for the full year, just short of analyst expectations of $1.83.  Shares of McDonald’s Corp. (NYSE:MCD) edged lower, while Dunkin Brands Group Inc. (NASDAQ:DNKN) climbed 1 percent higher.

Don’t Miss: Chevron To Be Sued in Brazil For 2011 Oil Spill.

Ford Motor Co. (NYSE:F) shares stalled 5.25 percent this morning.  The company reported its largest full-year profit in 13 years, but noted slowing sales in Europe.  Ford made an accounting adjustment in the fourth quarter worth $12.4 billion that increased its 2011 earnings to $20.2 billion, the second-highest total ever for the car-maker.  Shares of General Motors Co. (NYSE:GM) fell 4 percent, while Tata Motors (NYSE:TTM) jumped 2.18 percent.

After reporting that fiscal second-quarter earnings fell 49 percent, shares of Procter & Gamble (NYSE:PG) decreased 1.5 percent.  The consumer goods company also cut its full-year earnings forecast.

Shares of Altria Group Inc. (NYSE:MO) edged lower after reporting a 9 percent slip in fourth quarter earnings.  The tobacco company reported a profit of $836 million (41 cents per share).

Investor Insight: Should Apple Buy Gold?

Friday Morning Hot Stocks

Bank of America Corporation (NYSE:BAC): The European Commission will tell Treasury Secretary Timothy Geithner that the so-called “Volcker rule,” which would restrict U.S. banks from making bets with their own capital, could increase funding costs for the region’s governments and worsen its crisis, according to an interview with Michel Barnier, the European commissioner for the internal market, reported The Wall Street Journal. Shares of Bank of America Corporation are trading 0.27% lower today.

JP Morgan (NYSE:JPM): JPMorgan chief Jamie Dimon has again claimed that the bank stayed in the eurozone periphery for “social reasons” and that they are not motivated solely by profit, according to the Telegraph.

Morgan Stanley (NYSE:MS): Atlantic Equities believes Morgan Stanley has seen little improvement since Q4 and views valuation as stretched. Price target is $18.

Toronto-Dominion Bank (NYSE:TD): Toronto-Dominion Bank thought to be one of several banks to have bid on BankUnited (NYSE:BKU), may have to wait before it gets another opportunity after BankUnited CEO John Kanas said the bank isn’t planning on a sale anytime soon, after ending an auction process last week, reports the Globe and Mail.

U.S. Bancorp (NYSE:USB): Atlantic Equity upgraded UBS citing improved loan growth. Price target is $30.

Friday’s Trending Stocks

The Procter & Gamble Company (NYSE:PG): On its Q4 earnings conference call, Proctor & Gamble (NYSE:PG) said in reference to the planned divestiture of it Pringles brand to Diamond Foods (NASDAQ:DMND), that “we’re just at this point following Diamond’s public representations that they’re going to have concluded the internal investigation in the middle of February and we’ll obviously be able to talk with them in more detail about that at that time.” An analyst noted that the company “kept in the gain from the divestiture by fiscal year end” but the company did not give guidance as to when it expected any sale to close. Shares of The Procter & Gamble Company are trading 0.86% lower today.

Solutia Inc. (NYSE:SOA): Eastman expects the transaction to be immediately accretive to earnings, excluding acquisition-related costs and charges. Eastman has identified annual cost synergies of approximately $100M that are expected to be achieved by year-end 2013. Further, Eastman expects to realize significant tax benefits from Solutia’s historical net operating losses and other tax attributes that are expected to contribute to free cash flow of approximately $1B through 2013. The transaction, which was approved by the Boards of Directors of both companies, remains subject to approval by Solutia’s shareholders and receipt of required regulatory approvals as well as other customary closing conditions. The transaction is expected to close in mid-2012. Shares of Solutia Inc. are trading 39.57% higher today.

Infinity Pharmaceuticals Inc. (NASDAQ:INFI): Infinity Pharmaceuticals announced interim data from its double-blind, randomized, placebo-controlled Phase 2 study comparing saridegib in combination with gemcitabine to placebo plus gemcitabine in 122 patients with previously untreated, metastatic pancreatic cancer. The primary endpoint of the Phase 2 study is overall survival. While the final analysis is not complete, a preliminary analysis of data from the study that was completed yesterday showed a difference in survival favoring the placebo plus gemcitabine arm due to a higher rate of progressive disease in the saridegib plus gemcitabine arm. The median survival for patients receiving saridegib plus gemcitabine was less than the historical median survival for single-agent gemcitabine of approximately six months, as compared to a median survival for the placebo plus gemcitabine arm of greater than six months. The adverse events observed in both arms were consistent with the known safety profile of each agent, with no unexpected toxicities. Based on this interim analysis, Infinity is voluntarily stopping the trial. The company expects to present the final data after the analyses are complete. Shares of Infinity Pharmaceuticals Inc. are trading 39.64% lower today.

Inergy, L.P. (NYSE:NRGY): For the twelve months ended December 31, Inergy generated distributable cash flow of approximately 68% of the total cash distributions paid for the period. Market conditions, primarily in its propane operations and to a lesser extent in the Texas gas storage market, remain challenging. Although there are a number of factors that may impact its operations through the remainder of this fiscal year, a material improvement in distribution coverage is not expected. In light of these factors, management is conducting an evaluation of the operating businesses at Inergy, and is in the process of a major cost reduction initiative in its propane operations. In addition, management and the board of directors of Inergy are evaluating a reset of the quarterly distribution to a level that is supportable by the cash flow expected to be generated from Inergy’s businesses in the near term. Shares of Inergy, L.P. are trading 23.1% lower today.

Ford Motor Company (NYSE:F): Sees 675K units production in North America, 100K in South America, 410K in Europe, and 215K in Asia Pacific/Africa. Guidance from slides for Q4 earnings conference call. Shares of Ford Motor Company are trading 4.08% lower today.

Eastman Chemical Company (NYSE:EMN): Eastman expects the transaction to be immediately accretive to earnings, excluding acquisition-related costs and charges. Eastman has identified annual cost synergies of approximately $100M that are expected to be achieved by year-end 2013. Further, Eastman expects to realize significant tax benefits from Solutia’s historical net operating losses and other tax attributes that are expected to contribute to free cash flow of approximately $1B through 2013. The transaction, which was approved by the Boards of Directors of both companies, remains subject to approval by Solutia’s shareholders and receipt of required regulatory approvals as well as other customary closing conditions. The transaction is expected to close in mid-2012. Shares of Eastman Chemical Company are trading 4.65% higher today.

Market Recap

Markets closed mixed on Wall Street today: Dow -0.58%,S&P -0.16%, Nasdaq +0.4%, Oil -0.13%, Gold +0.64%.

On the commodities front, Oil (NYSE:USO) fell slightly to $99.57 a barrel. Precious metals rose with Gold (NYSE:GLD) climbing to $1,737 an ounce while Silver (NYSE:SLV) climbed 0.4% to settle at $33.9.

Hot Feature: Leaked: Facebook Revenue and Operating Profit.

 

Today’s markets were mixed because:

1) GDP. The Commerce Department’s monthly report on theU.S. gross domestic product showed the economy to have grown in the three months ended in December at its fastest pace since the second quarter of 2010, but a strong rebuilding of stocks by businesses and weak spending on capital goods signaled an impending slowdown in early 2012. While the U.S. economy grew at a 2.8 percent annual rate, it was slower than the 3.0 percent rate analysts had expected, and excluding inventories, the economy grew just 0.8 percent in the fourth quarter, a sharp step down from the previous quarter’s 3.2 percent pace.

2) Greece. As the Greek government continues talks with private creditors on restructuring its debt, its bailout lenders — the European Union, International Monetary Fund, and European Central Bank — are asking Greece to push through more budget cuts and implement a series of long-agreed austerity measures before they will release a 130-billion euro bailout package the struggling country desperately needs if it is to avoid a disorderly default when a 14 billion-euro debt payments comes due on March 20. Without an agreement with private creditors, Greece also jeopardizes its access to bailout funds, without which it would be next to impossible for the country to avoid default.

3) Earnings. Chevron (NYSE:CVX) was the worst-performing stock on the Dow today after the company posted its biggest drop in quarterly earnings in two years, widely missing Wall Street’s estimates. Procter & Gamble (NYSE:PG) was also a big decliner on the blue chip index after the company lowered its outlook for the year. DeVry (NYSE:DV) led the S&P 500′s slide after announcing that earnings plunged 90 percent in the last quarter as the for profit educator’s undergraduate enrollment continued to decline. Starbucks (NASDAQ:SBUX) weighed on the Nasdaq after issuing an underwhelming profit outlook, while Ford (NYSE:F) shares declined after earnings missed forecasts.

BONUS: With Friends Like These Does Gold Need an Official QE3?

After Hours Radar Stocks

Shares of Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) received a boost today after news broke that Facebook may file its IPO on Wednesday. The two banks are considered to be the top picks to complete the IPO deal. GSV Capital Corp. (GSVC) shares surged almost 18 percent today on the news as well.  The firm made a private investment in Facebook back in November.

Ford Motor Corp. (NYSE:F) dropped more than 4 percent on Friday.  Fourth quarter profits were lower than expected.  Commodity costs also led to the diminished quarter.  Profit margins fell from 6.1 percent to 5.4 percent, while commodity costs came to $2.3 billion over the company’s forecast of $2.2 billion.  Shares of General Motors Co. (NYSE:GM) also declined 1.4 percent on the news.

Leaked: Facebook Revenue and Operating Profit

Chevron Corp. (NYSE:CVX) closed 2.47 percent lower today.  The company reported a decrease in fourth quarter profits to $5.12 billion ($2.58 per share), and recorded a loss of $553 million due to compensation and benefits.  Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) also closed lower on the news.

The best performer in the Dow (NYSEARCA:DIA) on Friday was Alcoa Inc. (NYSE:AA). Shares managed to climb .68 percent while the Dow fell 74 points.  The aluminum maker and other commodity plays have received a boost from the Federal Reserve’s pledge to keep interest rates low until late 2014.

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To contact the reporter on this story: Stella Mariz at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com