The stock market today is trying to end its three-day slump after further bailouts were approved for ailing Spanish banks.
European finance ministers met in an emergency meeting in Brussels that ended early Tuesday and agreed to inject up to 100 billion euros ($122.6 billion) into Spanish banks, with 30 billion euros ($36.8 billion) to be available by the end of this month.
European finance ministers in June set aside $150 billion to recapitalize Spain's banks. With the yield on the Spanish 10-year bond still above the critical 7% mark the ministers decided it was time to act again.
The deal aims to prevent Spain itself from needing a full bailout and instead puts pressure on the banks. The terms of the deal also give Madrid until 2014 to comply with the budget deficit standards set by the Eurozone finance ministers.
Previously Spain had been told to cut the amount of its budget deficit to within 5.3% of gross domestic product by the end of 2012. But it will now be given until 2014 instead of 2013 to cut its deficit to below 3% of GDP.
In some good news regarding bailouts, it was reported that $351 million more will be paid back to taxpayers from recent transactions involving banks in the TARP (Troubled Asset Relief Program) bailout. In total there is still some $200 billion left to be returned, most of which comes from Fannie and Freddie.
As investors digest the news from Europe, the second-quarter earnings season is causing many bearish sentiments and a nervous market. Alcoa reported earnings yesterday that were mostly in line with what Wall Street expected, but still very disappointing compared to Alcoa's previous year's earnings.
Following the recent trend Applied Materials (Nasdaq: AMAT) and Advanced Micro Devices (NYSE: AMD) issued lower guidance for the upcoming quarter.
Applied Materials (Nasdaq: AMAT) announced Tuesday morning that its revenue and earnings will fall short of expectations for this quarter and its fiscal year ending in October.
The Santa Clara, CA-based company reported that adjusted earnings per share for fiscal 2012 will fall short of its target range of 85 cents to 95 cents. It also expects sales to be below its previous outlook of $9.1 billion to $9.5 billion for the year.
The company said it will provide a new target range for sales and earnings per share during its August 15 Q3 earnings call when it expects to announce lower financial results for the third quarter ending July 29. Applied Materials said it could cut 15 cents to 20 cents off its full-year adjusted EPS outlook.
Today AMAT is down almost 1.5% as of noon.
Advanced Micro Devices (NYSE: AMD) Monday night preceded the lower guidance by Applied Materials when it announced lower expectations for its second quarter.
Advanced Micro will announce its second quarter results on July 19 and the company now expects sales to decline as much as 11% from the first quarter of 2012 compared to previous expectations of a 3% increase.