Government Moves Weigh on Markets

• By the tickerspy.com Staff
• On 4:54 pm EDT, Wednesday October 21, 2009

A downgrade of Wells Fargo (NYSE: WFC - News); a price cut announcement at Wal-Mart (NYSE: WMT - News); and perhaps most of all, the Obama administration requiring the top-25 executives at firms that received "exceptional assistance" from the government to take -90% pay cuts (and about -50% cuts in other compensation and bonuses) caused a late-day sell-off in the market. While none of the executives will starve and it only affects seven firms, the market still doesn't like this type of government meddling. The fear, whether justified or not, is that this is just the top of the iceberg, and government interference could spread.

The Industrial Equipment Wholesale Stocks Index was the top performing tickerspy Index on the day, led by MSC Industrial Direct (NYSE: MSM - News) with a 5% gain.

Stocks reversed course late in the day to finish lower. The Dow ended down -92 points to 9,949, while the S&P fell -10 points to 1,081. The Nasdaq dropped -13 points to 2,151. Oil jumped $2.25 to $81.37 a barrel, while gold rose $5.90 to $1,064.50 an ounce.

On the economic front, the Fed Beige Book said "many sectors" of the economy have either stabilized or shown some improvement in the last six weeks. Only two of the 12 Fed Regions - St Louis and Atlanta - showed weaker economic activity.

In earnings news, tobacco company Altria Group (NYSE: MO - News) announced a Q3 profit of $882 million, or 42 cents per share, up 2% from $867 million, or 42 cents per share, a year ago. Adjusted EPS came in at 48 cents, 2 cents ahead of the Wall Street consensus. Revenue excluding excise taxes fell -11% to $3.73 billion, below the $4.66 billion analysts were expecting. The stock fell -2.4%. Thirty-six Pro investors counted the stock among their top-15 holdings at the start of Q3.

Shares of Morgan Stanley (NYSE: MS - News) rose 4.8% after the investment bank posted its first profit of the year. For Q3, the company earned $498 million, or 38 cents a share, down from $7.7 billion, or $7.38 a share, a year ago when it booked a number of one-time gains. EPS from continuing operations rose to $757 million. Analysts were looking for EPS of 26 cents. Revenue fell -52% to $8.7 billion. Fifty-four Pro investors counted the stock among their top-15 holdings at the start of Q3.

Drug maker Eli Lilly (NYSE: LLY - News) reported Q3 earnings of $941.8 million, or 86 cents a share, versus a loss of -$465.6 million, or -43 cents a share, a year ago, when the company recorded -$1.66 billion in charges. Adjusted EPS rose to $1.20 from 98 cents last year. Sales climbed 7% to $5.56 billion. Analysts were looking for EPS of $1.02 on revenue of $5.41 billion. Looking forward, the drugmaker raised its full-year adjusted EPS outlook to $4.30-$4.40 from $4.20-$4.30. The stock fell -4.5%.

Airplane maker Boeing (NYSE: BA - News) posted a -$1.6 billion, or -$2.23 per share, Q3 loss, compared to a profit of $695 million, or 96 cents per share, a year earlier. The company recorded -$3.59 per share in charges related to delays with its Dreamliner and 747-8 programs. Revenue rose 9% to $16.69 billion. Analysts were looking for a loss of -$2.12 on sales of $17.16 billion. As a result of the loss, the company reduced its full-year EPS view to $1.35-$1.55 from a prior outlook of $4.70-$5.00. The stock dropped -2.4%.

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