Markets see another positive close for the week

Even with the looming details on the stress test to be released, the markets are seeing a bit of a buying spree after some reports released today come better than expected.  The 3 major indexes look at closing on a positive note for the 7th straight week, even despite the big sell-off that was witnessed on Monday. As we speak, the Dow is up 130 points, crossing the 8,000 level while the Nasdaq is up 2 1/3 percent. But all this is prior to the release of information on stress test.

Even with a 43% drop in sales contributing to a loss of $1.4 billion (inclusive of one-time charges), automaker Ford beat expectations with a loss of $0.75 vs. much higher $1.23.  The better news is the much improved cash burn rate of the company, a slash of 49%.

  • 3rd Quarter: $7.7 Billion cash burn
  • 4th Quarter: $5.5 Billion cash burn
  • 1st Quarter: $3.7 Billion cash burn

Ford CEO Alan Mullaly sees improvement in the market that he said production will be increased in Q2. The firm’s situation does look much rosier than competitors GM who has announced it might sell or close Pontiac while Chrysler is facing the prospects of a Chapter 11.With such a performance, Ford seems very likely to not need further assistance from the government. From Bloomberg:

“Cash flow appears OK in early 2009, making it more apparent that Ford will make it through 2009 and beyond with a low risk of bankruptcy and no government support,” John Muprhy a Bank of America Corp. analyst in New York, wrote in a note today. He raised his rating to “buy” from “neutral.”

Another good news for the day was the new-home sales report that while dropping by 0.60 percent still beat expectations.  Seasonally-adjusted figures stood at 356, 000 from a 6% upward revision 358,000 in February, some 16,000 houses more than predicted. On an annual basis, from CNBC:

Sales fell 3 percent to an annual rate of 4.57 million in March month from a downwardly revised pace of 4.71 million units in February, the National Association of Realtors said Thursday. The median sales price fell to $201,400, a 12 percent drop from a year earlier. The median price is the midpoint, where half sell for more and half for less.

Bloomberg adds that inventories fell to a 7-year low, which is a positive signal for the homemakers.


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