Dow: 13,565 (+0.09%) S&P 500: 1,459 (-0.13%)
It’s so stormy in New York right now that the Yankees game is already cancelled and The Weather Channel has disposable interns outside interviewing commuters. Inside the New York Stock Exchange, trading wasn’t as crazy as the weather. The lone economic report showed that home builders’ confidence rising, but corporate news dominated the slow trading day, headlined by more unpromising commerce news from economic bellwether FedEx. The blue chip-heavy Dow managed to edge up 12 points, while the S&P 500 ticked down on a day when over 55% of US stocks finished negative.
FedEx earnings beat expectations, but global growth forecast officially lowered
Remember when FedEx jumped into the news earlier this month for lowering its earnings forecast? Com’on, of course you do – don’t sell yourself short (here’s a reminder). Well the purple-orange delivery firm’s earnings were released today and although FedEx reported a profit and revenues topped expectations, they officially cut their full-year earnings outlook. Their concerns are diminishing demand in economies like China and Europe combined with a slowdown in world-wide manufacturing. With all the good stuff FedEx ships around this great planet, investors look to the firm as an indicator of the state of global commerce (this is known as a “bellwether” company). FedEx (FDX) shares dropped over 3% on the announcement, while competitor UPS (UPS) couldn’t run & hide, losing 1%.
Manchester United Has bad first quarter as a public company, Apple hits $700
Manchester United (MANU) announced a huge loss in its first earnings period since this summer’s IPO. Losses are beating profits: one – nil. The loss was right in line with expectations, though, as analysts can pretty easily gauge the club’s profitability for the April – June period based on how many home playoff games it played. Man U was bloody awful this summer and bowed out of the playoffs early, so TV broadcast and stadium gameday revenues were down over 35%. The real reason the stock fell is because Man U could not give a good outlook for its earnings since it all depends on how well their team plays and how far into the playoffs they go. Barring the second coming of Pele in a Man U uniform, managers will never know how good they will be or what next year’s income statement will look like. Investors are averse to risk, generally, and the lack of outlook on profits scared many into selling today. About 6,000 miles from Manchester, Apple (AAPL) HQ in Cupertino, California celebrated the stock’s first day closing above $700. The stock remains red-hot after its 1-hour sell-out of 2 million iPhone 5s available for pre-order. Apple’s up 73% in 2012.
National Association of Homebuilders Index hits highest level since 2006
Limiting losses in stocks was a positive report on the all-important housing market. An index of business confidence of homebuilders measured the highest level since 2006, just before the housing bubble popped and home prices plummeted. Confidence in homebuilders is a good sign, indicating fewer vacant homes and some demand for new houses. Houses are assets, and consumers rely on their value as collateral for loans, an estate to pass on to children, or an asset that can be sold for cash (when the kids move out, when you retire, whatever). Any positive report on the battered housing market is good for the whole economy because it makes Americans wealthier and more likely to spend money.
- A day packed with enough housing data to fill one of Mike Tyson’s homes (before he had to sell them all): Housing Starts, Building Permits and Existing Home Sales for August…
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