Dow: 13,176 (+0.05%) S&P 500: 1,402 (+0.06%)
Friday’s surprising jobs report kicked off a three-day binge of green in the markets that pushed the S&P 500 up to 1,400 for the first time in months and the Dow back close to 3 year highs. We’re not complaining, but the scene on the New York Stock Exchange was like everyone just finished a marathon and was gasping for air. In today’s slow day investors heard a Federal Reserve president rebut yesterday’s call for more stimulus and a couple blue chips reported earnings: Hewlett-Packard had a better than expected quarter and McDonalds fell as sales on three of the world’s continents were flat. Markets took a breather today as stocks across Europe and in the U.S. barely moved – the Dow inched up a mere 7 points.
Dallas Federal Reserve President responds to Boston Fed’s stimulus comments
MarketSnacks headquarters enjoyed plenty of colorful fan mail from our New England base rebuffing our description of Beantown sports fans in yesterday’s news about the Boston Fed (apparently FUYankees, MDwyerSouthie and LobstahLovah don’t find the Fenway faithful “unnecessarilly” loud). Unlike yesterday’s call by Boston Fed president Eric Rosenberg for more stimulus now (See Yesterday’s Boston-bashing post), today the Federal Reserve President of Dallas, Richard Fisher, said No Mas. Responding directly to Rosenberg’s comments, Fisher argued that adequate stimulus measures are already in place and more would risk unnecessary inflation. If the Fed pumps in more cash to the economy by buying bonds in “QE3″, argues Fisher, the value of the dollar could fall (i.e. inflation) which is not good. Fisher also doubts that a third round of quantitative easing will do much good anyway since interest rates are already at record lows. Investors love some potential stimulus and cheered yesterday to Rosenberg’s words, but weren’t as appreciative of Fisher’s today.
Priceline earnings rise 37%, but executives lower outlook and stock price plummets
The marketing team at Priceline (PCLN) is scrambling William Shatner into action to hit Europe with a “name your own price” commercial onslaught, where business is falling sharply. The internet travel company announced earnings were up 37% last quarter, but the European slowdown is threatening business in a serious way, said the CEO. He lowered his earnings forecast for the next year, which is shocking for the sexy growth company whose stock is up sevenfold in the last 5 years. The stock fell 16% today on this gloomy outlook. Europe is a big part of Priceline’s business and nobody is traveling in the recession ridden continent. Also hurting their earnings is the strong U.S. dollar. A year ago today €1 million of profit in Europe translated to $1.41 million in profits for Priceline ($1.41 FX rate), but today’s weak Euro translates to just $1.23 million ($1.23 FX rate) for the same example. So European business is being hit on two sides. Other internet travel sites sank on this news – Expedia was down 2.7% and Orbitz dropped 19% on similar poor earnings today.
- Starbucks (SBUX) struck a deal with mobile payments company Square. Now you can order a Venti Coffee and flash a bar code image on your smartphone to pay without cash or credit card at any of the 7,000 U.S. locations. Analysts believe this could be the start of a payment revolution. How will investors see SBUX’s trailblazing move?
- Could the German government be more like this crazed discus thrower? Maybe the olympics will inspire the country to accelerate a solution in Europe as Spain’s 10-year borrowing rate hit the dangerous 7% mark again today
- Weekly Jobless Claims
- China reports industrial production, merchandise trade and retail sales (so do Italy, UK and Canada)
- Earnings: Kohl‘s, Wendy’s, AMC Networks
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