The International Energy Agency lowers its 2009 oil consumption forecast. Wal-Mart profit edges higher, but sales slip because of the stronger dollar. Chrysler wants to close nearly 800 dealerships.
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By Charley Blaine and Elizabeth Strott
Crude oil has been on a tear this quarter, rallying 30% so far, but the commodity pulled back this morning after the International Energy Agency lowered its 2009 demand outlook.
The IEA lowered its demand forecast by 200,000 barrels a day, or about 3%, to 83.2 million barrels a day -- which would be the biggest drop for a single year since 1981.
Crude was down 61 cents to $57.41 a barrel this morning. Its record high was $147.27 set on July 11, 2008.
Stocks were inching higher this morning after tanking on Wednesday. At 11:15 a.m. ET, the Dow Jones Industrial Average ($INDU) was up 46 points to 8,331. The Nasdaq Composite Index ($COMPX) had added 22 points to 1,686, and the Standard & Poor's 500 Index ($INX) had gained 7 points to 891.
It's the ninth consecutive monthly cut the IEA has made to its oil demand forecast since last August, when the IEA had forecast oil demand would reach 87.8 million barrels a day this year.
"While this looks like a dramatic year-on-year change, preliminary data for early 2009 suggest little upside for now in our demand assessment, even if broader market sentiment has become more optimistic," the agency said.
Wal-Mart profit edges up
Wal-Mart Stores (WMT, news, msgs) managed to post first-quarter earnings that were in line with analysts' expectations this morning, but investors weren't impressed.
Wal-Mart earned $3.03 billion, or 77 cents per share, up from 76 cents per share in the same quarter last year.
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Revenue was hurt by the stronger dollar and fell slightly to $94.2 billion from $94.9 billion. Many multinational companies with big presences overseas have been hit by a stronger dollar this quarter.
Shares of Wal-Mart, a Dow component, fell 57 cents, or 1.1%, to $49.46 this morning.
Wal-Mart's results come a day after a disappointing April retail sales report. Retail sales fell 0.4% last month, the eighth monthly decline in the past 10 months. Economists had been expecting an increase of 0.5% to 1%.
'Green shoots' drying up?
Investors are keeping a closer eye on economic data than in the past weeks, carefully scrutinizing it for those "green shoots" that did not appear in the retail sales report.
There weren't many shoots in today's two reports.
Initial claims for unemployment insurance rose by 32,000 last week to 637,000, the Labor Department reported this morning. Economists had expected the number to fall to between 580,000 to 600,000. Claims were the highest since the middle of April because of layoffs related to Chrysler's bankruptcy plans. Continuing claims rose by 202,000 in the week ending May 2 to a record seasonally adjusted 6.56 million.
Initial "claims tend to peak about two months before recession's end," Michael Darda, Chief Economist at MKM Partners, wrote in a note to clients this morning. Darda expects "a significant drop in initial jobless claims by the end of the summer."
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The Producer Price Index, also released by the Labor Department, showed a 0.3% increase in April; economists expected prices to have dropped 1% to 1.2% last month, following a 1.2% drop in March.
The core PPI, which excludes volatile food and energy prices, fell 0.1% in April, in line with expectations.
The increase in wholesale prices was led by a 1.5% surge in food costs, which was the biggest gain in more than a year. The price of fresh eggs jumped 44%, the most since records began in 1992.
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"We have had quite a massive rally in the last two months based on the idea of the green shoots," Vincent Chaigneau, head of foreign exchange and international rate strategy in London at Société Générale, told Bloomberg News. "Now for equities to continue to go up we need signs that actually it's not just the pace of decline that is slowing but the economy is starting to turn around on a sustained basis."
Chrysler to eliminate hundreds of dealerships
Chrysler's bankruptcy is now taking a toll on the company's auto dealerships.
The U.S. automaker is looking to close 789 dealerships across the country, or about 25% of its dealers, according to papers filed in its bankruptcy proceeding.
Troubled rival General Motors (GM, news, msgs) said last week that it plans to cut its dealer network by 42% to about 3,600 dealers as it tries to avoid bankruptcy. On Friday, GM is expected to tell up to 1,200 dealers that their franchises won't be renewed.
Kohl's, Urban Outfitters post profit declines
Two other retailers reported declines in their first-quarter results.
Kohl's (KSS, news, msgs) said net profit fell to $137 million, or 45 cents per share, down from $153 million, or 49 cents per share. But the results beat the consensus estimate by a penny.
Sales at Kohl's rose slightly to $3.64 billion.
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Urban Outfitters
The discount retailer said it expects to earn between 56 cents and 64 cents per share in the second quarter, which is in line with analysts' expectations, and the company raised its full-year outlook to between $2.19 and $2.42 per share. The company's previous forecast was for $2.00 to $2.32 per share; Wall Street is looking for $2.55 per share for the year.
Urban Outfitters (URBN, news, msgs) had a more difficult quarter.
The company, which also owns the Anthropologie and Free People brands, said profit fell 28% to $30.8 million, or 18 cents per share. The company earned $42.6 million, or 25 cents per share, in the same quarter last year. Analysts were looking for 17 cents per share for the quarter.
Sales slipped 2% to $384.8 million.
Shares of Kohl's rose $1.80, or 4.3%, to $43.71, and Urban Outfitters shares were up 40 cents, or 2.1%, to $19.23 this morning.
Whole Foods beats expectations
Whole Foods Market (WFMI, news, msgs) late Wednesday posted better-than-expected second-quarter results.
The company said it earned $27.3 million, or 19 cents per share, a 32% decline from the $40 million, or 29 cents per share, it earned in the same quarter a year ago. The results were a penny ahead of Wall Street's expectations.
Sales at stores open at least one year were down 4.8%, the second straight quarter of negative same-store sales growth. In the same quarter last year, same-store sales had risen 6.7%.
Shares rose 61 cents, or 3.1%, to $20.61 this morning.
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Countrywide's Mozilo to be charged with fraud
Securities and Exchange Commission staff are recommending that the regulating agency bring civil fraud charges against Countrywide Financial co-founder and former CEO Angelo Mozilo, The Wall Street Journal reported late Wednesday.
The charges the SEC is considering include violating insider-trading laws and failing to disclose material information to shareholders, according to the report. Mozilo sold $130 million of Countrywide stock in the first half of 2007 under an executive sales plan, according to filings with the SEC. In the same period a year earlier, Mozilo sold $60 million worth of Countrywide stock.
"We do not believe there is any fair basis for allegations to be made," Mozilo's attorney, David Siegel, said in a statement. "All of Mr. Mozilo's stock sales were made in compliance with properly prepared and approved trading plans and reflected recommendations by his financial advisor over a long period of time."
Mozilo co-founded Countrywide in 1969 and built it into the country's biggest mortgage lender before the subprime mortgage market meltdown sent the stock reeling and the company was sold to Bank of America (BAC, news, msgs) for $2.5 billion last July.
