Dow 12,653 (-0.65%) S&P 1,341 (-0.81%)
Grab a Hallmark card, it’s officially corporate earnings season. Every quarter since ’09 has seen leaner/more efficient post-financial crisis firms beat earnings expectations, but everyone who’s anyone knows streaks end (just ask former 5-time Nathan’s hotdog eating champ Kobayashi). Stocks started the morning up today after deadlines for deficit reduction were pushed out to 2014 for the limping Spanish economy that can handle no more painful budget cuts now (so many depend on government spending). Spanish banks also moved closer to receiving a direct bailout from Europe instead of making the Spanish government an awkward bailout middle man. But these positive developments were drowned out by earnings disappointment noise and a drop in small business confidence as the Dow fell 83 points for its 4th straight loss.
Alcoa earnings disappoint, expectations drop for earnings season
Steel firm Alcoa (AA) was the first blue chip to announce earnings yesterday afternoon, posting a slight loss because of dropping aluminum prices. As we described yesterday, investors’ reception to the news released after the market closed Monday was initially positive because Alcoa technically beat expectations. But after brief celebration, we imagine a junior Wall Street analyst turned to his boss, slapped him in the face, and gave the NYSE a wake up call that Alcoa’s earnings were downright bad. Shares of Alcoa plummeted over 4% today as investors came to their senses and realized that just because expectations were low doesn’t mean 6 cents per share is worth popping champagne. Advanced Micro Devices (AMD) brought tech stocks down after cutting its revenue outlook, truck engine-maker Cummins (CMI) hurt industrial firms on its low ’12 sales estimates and retailer JCPenney (JCP) fell nearly 5% on news it’s cutting an additional 350 jobs. Alcoa is the crystal ball for upcoming earnings and the mood on Wall Street is one of dread for the 2nd quarter earnings season.
Barclays CEO already resigned last week, now forfeits bonus pay after interest rate manipulation scandal
You all know the story by now – Barclays (BARC) screwed its customers by manipulating the interest rates they had to pay – what we still want to know is who’s going to pay for it. Well the CEO Robert Diamond, already resigned, but, on his last drive home from the office to his plush Kensington flat in his Aston Martin Vanquish, will he really show any remorse? Well $31 million of lost bonus money says he will regret what he allowed to happen at his bank. It was announced today that he would voluntarily forfeit large sums of deferred pay and benefits as a sign that the bank will change its ways and to ease public backlash against the London-based investment bank. The case isn’t closed yet for the former-CEO and current-scapegoat, he is now being accused of lying to the English parliament in his testimony about the rate-fixing scandal. The stock actually jumped over 2% today when investors learned that they would not have to pay this disgraced CEO boatloads of future cash.
- Be ready for a Wednesday smack full with a serving of econ news as diverse as a food pyramid
- The USDA Crop Report – given the harsh mid-America heat wave burning up corn, more eyes than usual will have the report’s attention
- The release of minutes from the Federal Reserve‘s last meeting in June – investors will be hoping for hints of stimulus
- US Trade Deficit - how much did we take in vs. send out
- Corporate Earnings: Marriott, Charles Schwab, Texas Instruments….
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