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Wednesday, October 08, 2008

Financials Hit As BofA, MetLife Woes Trump Rate Cuts

Greg Morcroft

MarketWatch Pulse

NEW YORK -- The Financial Select Sector SPDR , an exchange-traded fund that tracks the financial stocks in the S&P 500, sank 5% in early trading after a coordinated global interest rate cut failed to inspire investors who focused instead on capital concerns about Bank of America and MetLife. Shares of Bank of America Corp fell 10% after the company priced a $10 billion secondary offering of common stock below its Tuesday closing price and investors worried the sale was less than the firm had hoped for. MetLife , whose stock has fallen sharply in the past five trading days, said it expects to post third-quarter operating earnings in a range of $600 million to $675 million. That would be down from $1.16 billion in the year-ago period. Its shares fell another 10% Wednesday.

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Word of the Day

Same-Store Sales

Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.

So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.

Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.