“Forget econ data – I’m dyin’ for some sexy policy news from the Fed”
Dow: 13,009 (-0.49%) S&P 500: 1,379 (-0.43%)
It looked like investors pounded a 64 ounce, Bloomberg-banned big-gulp Thursday and Friday’s given the big stock rally, but post-sugar high they’re getting fidgety. After dipping 3 points yesterday on the downgrade of JP Morgan stock, the Dow fell 64 more points today despite solid econ data. Investors’ focus is on any stimulus news from the Fed’s policy setting meetings. With few big names reporting earnings, consumer-discretionary stocks (the antithesis of essentials) were the S&P 500 stock index‘s worst performers as designer clothing-maker Coach (COH) missed expectations. It’s not all bad for the Dow – the blue chip index finished July with its 9th monthly increase in 10 months by adding 1%.
Housing, Manufacturing and Consumer econ reports impress
As they say in the mean streets of Seattle, when it rains, it f**ing pours – especially when you don’t expect it. Case in point – today’s econ news. None of it was significant enough to move markets like Friday’s upcoming government jobs report, but together they impressed. The S&P/Case-Shiller home price index showed May home prices rising slightly for the 2nd straight month (investors hope consistency in the housing market will signal a “bottoming-out”). Although consumer confidence rose in June and personal income numbers beat forecasts, consumer spending was actually down, indicating people saved their extra income in higher rates than usual, about 4.4% of income was shoved into piggy banks in June. High savings indicate, well lack of confidence. Clearly economic reports sometimes contradict, but the trend continues to be shrinking consumer confidence. Economists believe a reduction in the unemployment rate is needed for this trend to reverse.
UBS reports poor earnings, points finger at Nasdaq for blowing Facebook IPO
Like most investment banks this quarter, Zürich based UBS (UBS) blamed a poor economy and reluctant investors for poor earnings. UBS’s 58% drop in profit to 425 million Swiss Francs knocked the stock down 6% today, but the CEO made the most of his spotlight by calling out the NASDAQ stock exchange for botching Facebook’s IPO, costing the bank $350 million. While Nasdaq’s computers were glitching on that fateful day, UBS kept putting in more and more “buy” orders. Then, like a faulty printer driving you mad minutes before your term paper deadline, UBS received way more shares than it wanted once the machines finally worked. And we all know what has happened to Facebook (FB) stocks since their IPO (FB hit another record low today of $21.71 from its IPO price of $38).
Deutsche Bank announces earnings half of last year’s and 1,900 job cuts
Frankfurt-based Deutsche Bank (DB) took a beating from the markets too and managed just 600 million euros of profit compared to 1.2 billion in this quarter last year. To appease shareholders, the CEO quickly announced huge job cuts, including 1,500 investment banking jobs. No I-banker at Deutsche is safe from having the dreaded empty cardboard box pushed into their arms.
Tomorrow:
- The ADP jobs report gives us a preview of what to expect from Friday’s official employment announcement from the U.S. government.
- Earnings announcements: Mastercard and Metlife Insurance
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