Markets Catch Breath After Benchmarks Breached

Wall Street closed out its best first-quarter beginning since 1998 as it finished our session that ended March 30. Several positive economic signs marked the month’s passage, but rising gas prices still weighed on stocks and other indications that worldwide growth may be faltering also kept markets in line. The University of Michigan’s consumer sentiment index came in mid-month lower than expected, with high gas prices pressuring consumers and a 6 percent rise in February alone. With the exception of gas prices, however, inflation numbers remained tame, and some economists were increasing their first quarter GDP numbers; Goldman Sachs upped its forecast to 2.3 percent, from an earlier 2 percent.

Although the S&P 500 Index climbed to within 10 percent of its record high reached in October 2007, the exuberance did not persist after warnings about a slowdown in China and in the stronger economic centers in Europe. Market-watchers have been warning about a forthcoming correction, and it may have started in the latter part of March in the guise of slower factory output in China, in Germany and in France. The news kicked energy shares and industrials to the curb, but tech managed to hang onto gains with Apple’s strong showing. Homebuilding sent mixed messages, with permits reaching for a three-and-a-half year high, but the Commerce Department reporting that home sales dropped 1.6 percent in February. Labor news stayed on track throughout the month, but income growth was sluggish.

“While households want to spend and will raid their bank accounts to support that habit, unless income gains start improving, consumption will have to slow, ” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa.

The Business Alabama Stock Index notched a modest growth in March, with local stocks up 9.01 points, or 1.07 percent, to close at 847.50. Advancing issues edged past declining issues at an 11-to-10 count. The Comprehensive Index rose 0.67 points, or 0.07 percent, to end at 923.58. Advancing issues bested declining issues by a 26-to-21 count.

Hibbett Sports climbed 5.60 points, or 11.44 percent, following the release of its fourth quarter earnings results, which surpassed analysts’ expectations.  For the quarter ended Jan. 28, HIBB earnings increased 27 percent, to $15.8 million, or $0.59 per share, compared to $12.5 million, or $0.44 per share, in the same quarter last year. Revenue was up 10 percent, to $190.7 million. Analysts surveyed by FactSet expected earnings of $0.56 per share. Same-store sales increased 7.2 percent, and the company opened 21 new stores during the quarter and closed four. Hibbett ended at 54.55, and was the top dollar gainer in both the Alabama and the Comprehensive Index.

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Walter shed 5.62 points, or 8.67 percent, after the company said that its first quarter would suffer from soft prices and flat volume in sales. However, because of its shift to more profitable mines, it is keeping its previous full-year production. Sales volumes for the first quarter will roughly equal the last quarter, at about 2.4 metric tons. For the full year, its metallurgical coal production will range between 11.5 metric tons and 13 metric tons.  Walter closed at 59.21, and was the top dollar loser in both indices.

Books-A-Million reported its fourth quarter results for the quarter ended Jan. 28. BAMM said that earnings attributable to Books-A-Million were $7.5 million, or $0.48 per share, compared to $6.8 million, or $0.44 per share, in the year-ago quarter. Sales were up 10.7 percent, to $166.9 million, though same-store sales were off 5.7 percent. The company cited costs of closing 21 non-performing stores and opening 41 new ones, but also said that it sold more books in the period. BAMM named Terrance Finley as its new CEO. BAMM added 0.58 points, or 22.14 percent, and was the top percentage gainer in the Alabama Index and the Comprehensive Index. Books-A-Million ended at 3.20.

Raytheon added 2.26 points, or 4.47 percent, after the company announced several new contracts in March. Among them was a $79.2 million contract with the U.S. Army to develop a new rocket defense system. Raytheon said it will produce a demo in 18 months and begin production after that. The company was awarded a roughly $139 million contract for engineering services to the Patriot Air Missile Defense System, the third of four annual options to the base contract awarded in 2009. Work on this project will be provided in part by the Warfighter Protection Center in Huntsville. Raytheon also upped its quarter dividend from $0.43 per share to $0.50 per share. The current dividend will be paid on May 3 to stakeholders of record as of April 4. Raytheon closed at 52.78.

Note: Royal Bank of Canada was removed from the index following the acquisition of its U.S. division by Pittsburgh-based PNC Financial Services Group. PNC was added to “Other Stocks of Interest to Alabama.” BioCryst Pharmaceuticals was changed from “Alabama Companies” to “Other Stocks of Interest to Alabama.” 


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