There was no rest for investors in traditionally sleepy August as Wall Street struggled valiantly to weather the volatility brought on by the subprime meltdown and subsequent credit woes. Although the Fed injected cash into the system to keep it from seizing up, frantic markets worldwide scrambled to adjust. As our session ended August 31, 2007, President Bush outlined ways to help beleaguered homeowners weather the crunch, and the Fed vowed to act as needed to contain the effects of the crisis.
“It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions,” said Fed chief Ben Bernanke. “But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.”
The PCI Suppliers’ Index was pressured by the downturn in equities, and lost 20.47 points, or 1.69 percent, to close at 1187.97. A quick look at net changes in index components reveals the volatility that has been the nature of the stock market in the last month and a half. When the dust settled, declining issues edged past advancing issues at an 18-to-16 count.
Shares of Air Products jumped this session after the company reported a 36-percent increase in earnings for its third quarter, ended June 30. APD reported a record net income of $284.9 million, or $1.28 per share, up from $210.3 million, or $0.92 per share earned in the same quarter a year ago. Included in the results was a positive tax adjustment of $27 million, or $0.12 per share. Sales were up 16 percent, to $2.6 billion, also a record. Air Products said the upswing was due to in part to higher pricing and volume in its merchant division. The company also boosted its guidance for the year, upping it to range between $4.30 and $4.35 per share. Previously it had forecast yearly earnings between $4.12 and $4.20 per share. Air Products increased 9.64 points, or 11.99 percent, and was the top dollar gainer. APD closed at 90.01.
Cabot crumbled after fiscal third quarter earnings missed analysts’ expectations. Cabot’s net income fell to $20 million, or $0.30 per share, from $25 million, or $0.37 per share in the comparable year-ago quarter. Revenues were off 2.6 percent, to $649 million. Analysts surveyed by Thomson Financial were expecting profit of $0.45 per share and earnings of $679 million. Cabot slipped 7.34 points, or 15.39 percent, and was the top dollar loser, closing at 40.34.
Lyondell moved ahead this session after its net income rose 10 percent, on robust refining and fuels outcomes in its second quarter. Lyondell reported net income of $176 million, or $0.66 per share, versus net income of $160 million, or $0.62 per share earned in the same quarter last year. Sales were up 59 percent, to $7.48 billion. The results bested estimates from analysts. Those polled by Thomson Financial were expecting earnings of $1.25 per share, with sales of $6.54 billion. Lyondell agreed to a $12.1 billion acquisition by Basell in July.