Equipment Type

Turbulent Quarter Ends With Rally

Stocks endured their worst quarter in five and a half years, as Wall Street sought to integrate credit woes, high oil prices, job losses, and continued weakness ...

May 12, 2008

Stocks endured their worst quarter in five and a half years, as Wall Street sought to integrate credit woes, high oil prices, job losses, and continued weakness in the housing market. Subprime woes continued to work their way sideways into the economy as the quarter ended March 31, 2008.

Central bankers worldwide coordinated efforts to keep the credit sector meltdown contained as they injected a cash infusion into the global economy, with the Fed injecting over $200 billion into financial markets on March 10. The Fed also cut interest rates 2 full basis points in three separate meetings, with the federal funds rate now at 2-1/4 basis points.

Volume was thin for much of March as investors sat on the sidelines waiting for a spring thaw. The Chicago Purchasing Managers Index came in with a higher number than expected on the last day of the session, thus sparking a rally. "It is a function of the last day and window dressing, but it is being buttressed by the sense that there's going to be this massive realignment of regulation for the markets, which I think most participants would agree is long overdue," said Peter Kenny, managing director at Knight Equity Markets.

The Construction Magazine Index felt the bite of the downturn, and lost 464.45 points, or 15.87 percent, to end the quarter at 2461.49. Cummins had a 2-for-1 stock split effective Jan. 3, 2008. Declining issues easily outpaced advancing issues by a better than 2-to-1 margin.

Steel producers in the United States were up substantially this quarter, with AK Steel marking the top dollar spot with an 8.18-point increase. AK Steel announced a carbon steel price increase for orders shipped May 1 and later. For its fourth quarter, AK Steel swung to a profit of $106.7 million, or $0.95 per share, compared to a loss of $49.3 million, or $0.45 per share for the quarter ended Dec. 31, 2007. AK Steel also reported higher revenues, up 7 percent to $1.69 billion. Analysts surveyed by Thomson Financial were expecting earnings of $0.59 per share on revenues of $1.68 billion. AK Steel was up 17.69 percent, and ended at 54.42.

U.S. Steel, another index component, increased 5.96 points, or 4.93 percent, and closed at 126.87. "U.S. Steel may be the lowest cost, flat rolled steelmaker in the U.S., given its strong iron ore position and major coke-making operations," wrote Soleil Securities Group analyst Charles Bradford in a note to clients. Bradford kept his rating of "hold," but raised his price target to $110, from $105.

Martin Marietta (MLM) tumbled 26.43 points, or 19.93 percent, this session after its fourth-quarter earnings fell 10 percent on higher fuel prices and weaker volumes, and earnings missed analysts' expectations. Martin Marietta reported earnings of $56.5 million, or $1.35 per share, down from $62.5 million, or $1.38 per share, in the quarter a year previous. Revenue was up to $536 million, from $529 million in the comparable year-ago quarter. Analysts polled by Thomson Financial were expecting earnings of $1.55 per share on revenues of $537.2 million. MLM also said its 2008 forecasts would come in below analysts' estimates. Martin Marietta said it will earn between $6.25 per share to $7 per share for 2008; analysts were expecting earnings of $7.14 per share. MLM closed at 106.17, and was the top dollar loser.

Pulte Homes saw its loss widen in the fourth quarter, reported in late January. For the quarter ended Dec. 31, Pulte lost $874.7 million, or $3.46 per share, a broader loss than the $8.4 million, or $0.03 per share reported in the year-ago quarter. However, shares of the homebuilder ended in the positive column and Pulte closed at 14.55 after a 4.01-point, or 38.05-percent, increase. Research firm JMP Securities upped its rating for Pulte in late March to "market outperform" from "market perform."

Although Cummins said its revenue will increase in 2008 by 12 percent, and the company reported a 5-percent increase in its fourth quarter, investors hammered Cummins after the results missed analysts' expectations, sending the stock down 16.87 points, or 26.48. For the fourth quarter, Cummins earned $198 million, or $1 per share, compared to earnings of $189 million, or $0.94 per share, in the year-ago period. However, analysts were expecting that Cummins would earn $1.05 per share. Revenue was up 16 percent for the quarter, to $3.52 billion. Cummins ended the quarter at 46.82 and was the top percentage loser.

Exchange Ticker Symbol Company Name Price 3/31/2008 Price 12/31/2007 Net Change Percent Change 52-Week High 52-Week Low Shares Outstanding Market ($000) Capitalization
NYSE AKS AK Steel Holding Corp. 54.42 46.24 8.18 17.69% 57.19 23.29 111910 6090142.2
NYSE ASH Ashland, Inc. (APAC) 47.30 47.43 -0.13 -0.27% 68.99 39.82 62900 2975170
NYSE CAT Caterpillar, Inc. 78.29 72.56 5.73 7.90% 87.00 59.60 623990 48852177.1
NYSE CTX Centex Corp. 24.21 25.26 -1.05 -4.16% 49.85 17.77 122390 2963061.9
NYSE CVX Chevron Corp. 85.36 93.33 -7.97 -8.54% 95.50 73.38 2080000 177548800
NYSE CNH CNH Global NV 52.03 65.82 -13.79 -20.95% 70.00 35.60 237170 12339955.1
NYSE CMI Cummins, Inc. 46.82 63.69 -16.87 -26.48% 71.72 35.97 202190 9466535.8
NYSE DAI DaimleChrysler AG (Freightliner) 85.55 95.63 -10.08 -10.54% 111.65 68.20 1010000 86405500
NYSE DE Deere and Co. 80.44 93.12 -12.68 -13.62% 94.77 51.59 436040 35075057.6
NYSE DHI D.R. Horton, Inc. 15.75 13.17 2.58 19.59% 24.49 9.78 315150 4963612.5
NYSE EXP Eagle Materials, Inc. 35.55 35.48 0.07 0.20% 52.16 28.21 43390 1542514.5
NYSE XOM Exxon Mobil Corp. 84.58 93.69 -9.11 -9.72% 95.27 74.94 5350000 452503000
NYSE FLR Fluor Corp. 141.16 145.72 -4.56 -3.13% 172.15 89.14 88590 12505364.4
NYSE GT Goodyear Tire & Rubber Co. 25.80 28.22 -2.42 -8.58% 36.90 22.27 240180 6196644
NYSE GVA Granite Construction Ltd. 32.71 36.18 -3.47 -9.59% 74.62 26.64 38950 1274054.5
NYSE HAL Halliburton Co. 39.33 37.91 1.42 3.75% 41.95 30.00 880160 34616692.8
NYSE IR Ingersoll Rand Company Ltd. 44.58 46.47 -1.89 -4.07% 56.66 34.46 272650 12154737
NYSE KUB Kubota Corp. 31.15 33.60 -2.45 -7.29% 48.30 28.34 257550 8022682.5
NYSE VMC Legacy Vulcan Corp. 66.40 79.09 -12.69 -16.05% 128.62 60.20 108370 7195768
NYSE MTW Manitowoc Company, Inc. 40.80 48.83 -8.03 -16.44% 51.49 30.07 129860 5298288
NYSE MLM Martin Marietta Materials, Inc. 106.17 132.60 -26.43 -19.93% 170.25 95.02 41250 4379512.5
NYSE OSK Oshkosh Truck Corp. 36.28 47.26 -10.98 -23.23% 65.83 35.00 74220 2692701.6
NASD PCAR Paccar, Inc. 45.00 54.48 -9.48 -17.40% 65.75 41.14 366670 16500150
NYSE PHM Pulte Homes 14.55 10.54 4.01 38.05% 29.40 8.20 257520 3746916
NYSE SGR Shaw Group, Inc. 47.14 60.44 -13.30 -22.01% 77.30 29.02 83360 3929590.4
NYSE TEX Terex Corp. 62.50 65.57 -3.07 -4.68% 96.94 46.50 101600 6350000
NYSE WFC Wells Fargo & Co. 29.10 30.19 -1.09 -3.61% 37.99 24.38 3300000 96030000
NYSE X United States Steel Corp. 126.87 120.91 5.96 4.93% 127.60 74.41 117800 14945286
NASD RMIX US Concrete, Inc. 3.80 3.33 0.47 14.11% 9.48 2.14 39910 151658
NYSE USG USG Corp. 36.82 35.79 1.03 2.88% 52.75 29.71 99060 3647389.2
Note: Cummins had a 2:1 stock split effective 1-3-08.

Price 3/31/2008 Price 12/31/2007 Net Change Percent Change
Construction Index 2461.49 2925.94 -464.45 -15.87%
Dow Jones Industrial Average 12262.89 13264.82 -1001.93 -7.55%
S&P 500 Index 1322.70 1468.36 -145.66 -9.92%
NASDAQ Composite 2279.10 2652.28 -373.18 -14.07%
$ Gainer AK Steel Holding Corp. 8.18
$ Loser Martin Marietta Materials, Inc. -26.43
% Gainer Pulte Homes 38.05%
% Loser Cummins, Inc. -26.48%
Advancers 39
Decliners 21

Top Dollar Gainers
AK Steel Holding Corp. 8.18
United States Steel Corp. 5.96
Caterpillar, Inc. 5.73
Pulte Homes 4.01
D.R. Horton, Inc. 2.58
Top Percentage Gainers
Pulte Homes 38.05%
D.R. Horton, Inc. 19.59%
AK Steel Holding Corp. 17.69%
US Concrete, Inc. 14.11%
Caterpillar, Inc. 7.90%
Top Dollar Losers
Martin Marietta Materials, Inc. -26.43
Cummins, Inc. -16.87
CNH Global NV -13.79
Shaw Group, Inc. -13.30
Legacy Vulcan Corp. -12.69
Top Percentage Losers
Cummins, Inc. -26.48%
Oshkosh Truck Corp. -23.23%
Shaw Group, Inc. -22.01%
CNH Global NV -20.95%
Martin Marietta Materials, Inc. -19.93%
Source: Trade Trends, Inc., (509) 327-1279

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