Tuesday, May 5, 2009

Wall Street Slips On Bank Worries, Kraft Foods Jumps

. Tuesday, May 5, 2009

By stockOzone team

US stocks edged lower on Tuesday as investors preferred to book profits following a massive global rally in recent weeks. Concerns over the health of banking system also dampened sentiment. The Dow Jones Industrial Average fell 16.09 points or 0.91% to finish at 8,410.65. The S&P 500 retreated 3.44 points or 0.38% to end at 903.80. The Nasdaq Composite declined 9.44 points or 0.54% to 1,754.12.

Among financials, shares of Bank of America (NYSE: BAC) jumped 46 cents or 4.43% to $10.84. Citigroup (NYSE: C) climbed 11 cents or 3.44% to $3.31. JP Morgan (NYSE: JPM) dropped 97 cents or 2.71% to end at $34.82. American Express Co. (NYSE: AXP) lost 69 cents or 2.53% to $26.57. Wells Fargo (NYSE: WFC) tumbled 98 cents or 4.04% to $23.27.

According to the Wall Street Journal, about 10 of the 19 largest U.S. banks being stress tested will be asked by regulators to raise additional capital. However, the report added that American International Group Inc. (NYSE: AIG) may not need further government help. On Monday it was reported that both Bank of America and Citigroup are planning to raise more than $10 billion each in additional capital following preliminary findings of the U.S. stress tests on banks.

Results of the stress tests conducted by government officials, the Federal Reserve on the 19 largest U.S. financial companies will be released on May 7 publicly.

Meanwhile US Federal Reserve chairman Ben Bernanke said today that the recent data suggest that the pace of contraction may be slowing, and include some tentative signs that final demand, especially demand by households, may be stabilizing. The housing market, which has been in decline for three years, has also shown some signs of bottoming, Bernanke added.

The largest US aluminum maker Alcoa Inc. (NYSE: AA) slipped 23 cents or 2.22% to $10.13.

Shares of equipment maker Caterpillar Inc. (NYSE: CAT) finished at $39.41, up 93 cents or 2.42%.

Energy stocks finished with losses. Chevron Corp. (NYSE: CVX) slid 93 cents or 1.39% to close at $65.75. Exxon Mobil (NYSE: XOM) fell 55 cents or 0.81% to $67.65.

Early on Tuesday, Kraft Foods (NYSE: KFT) announced that its first-quarter profit jumped 10% to $660 million, or 45 cents a share, from $599 million, or 39 cents a share, in the prior year quarter. Quarterly revenue declined 6.5% to $9.4 billion from $10.05 billion. Shares of the company rallied 96 cents or 3.96% to end at $25.22.

CVS Caremark (NYSE: CVS) reported that first-quarter net income slipped to $738.4 million, or 50 cents a share, from $745 million, or 51 cents a share, in the year ago quarter. Revenue increased 12% to $23.39 billion from $21.33 billion.

Automatic Data Processing Corp. (NYSE: ADP) rose 82 cents or 2.35% to $35.68 after it said that third-quarter net income dropped to $402.5 million, or 80 cents a share, from $413.6 million, or 79 cents a share, in the year-earlier period. Revenue decreased to $2.37 billion from $2.43 billion.

Shares of Legg Mason Inc. (NYSE: LM) plunged $3.90 or 17.31% to $18.63 after it said its fiscal fourth quarter loss widened to $325 million, or $2.29 a share, from $255.4 million, or $1.81 a share, in the comparable period a year ago. Revenue plunged to $617.2 million, down from $1.07 billion in the same period of 2008.

Archer Daniels Midland Co. (NYSE: AMD) rose 6 cents or 1.41% to $4.32 after it reported that its fiscal third-quarter profit plunged 98% to $8 million, or one penny a share, from $517 million, or 80 cents a share, in the corresponding quarter last year.

According to the Institute for Supply Management, non-manufacturing index improved to 43.7% from 40.8% in March.

European stocks settled mostly lower. The UK FTSE climbed 93.72 or2.21% to 4,336.94. The German DAX and French CAC decreased 1.01% and 0.40% respectively.

Asian stocks finished up. The Nikkei 225 rose 149.11 points or 1.69% to 8,977.37. The Hang Seng index of Hong Kong added 49.03 points or 0.30% to 16,430.08.

NYMEX crude oil for May delivery declined 68 cents or 1.3% to settle at $53.79 a barrel.

Disclosure: Author does not own any of the stocks discussed here.

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