The Dow Jones Industrial Average inched up 0.11% this week and is still up 9.2% year to date and the S&P 500 climbed 0.32% this week and is up 14% in 2012.
Links Worth Snacking On:
- Chart of the Week – Oil’s been all over the debates…so here’s some info on the strategic oil reserves that keep getting hashtagged
- Blog Maverik – Inspired by the 2nd presidential debate, billionaire Mark Cuban weighs in on some different types of businessmen
- Bloomberg - Remember the dude who wrote the scathing anti-Goldman Sachs piece in the NYTimes last year? (No surprise) He got a book deal and it’s out this week
- WonkBlog – Your friend complaining about his 75-hour workweek? He’s probably lying
- Footnoted – Some more details on the Google earnings slip-up
- StockTwits – On the 25th anniversary of the major “Black Monday” crash, a look back on whether it could have been predicted (if you knew, you should have said something…)
As The New York Post dutifully (and eloquently) reported, while the Yankees were busy getting swept in the playoffs last week, over-paid/under-performing Alex Rodriguez was flirting with babes in the stands behind him. He wasn’t hitting home runs. Or RBIs. Or even any hits at all. So why the boyish charm & confidence? We assume Alex has a profound enthusiasm for the stock market. Stocks rallied early this past week as earnings season kicked into high gear, before falling back to Earth on Friday.
Happy Mid-Earnings Season. To say expectations are low this quarter would be an understatement – analysts believe that, for the 1st time since ’09, most US companies saw their profits drop over the last 3 months. But this week, things started off super fine. Citibank earnings beat estimates after cutting jobs & selling off undesirable assets (like their 49% ownership stake in Smith Barney) – and Johnson & Johnson, Goldman Sachs and Domino’s Pizza all followed their lead, beating analysts’ expectations. Morale was high, investors were joyous. Then later in the week, things stopped looking so pretty. Intel and IBM both reported disappointing earnings as consumer demand for (ugly) computers slowed…And Google added a little salt to the wounds…
…Jay-Z famously had 99 problems. Google‘s earnings report had 2 yesterday (but they were much bigger and more embarrassing). First, profits were down 20% compared to last year as more people access the search engine on mobile platforms – and quarter-inch phone ads just don’t pay as much. Google was also supposed to release the earnings report after the market closed – but someone dropped the ball and released them at noon, filled with missing information. Investors sold off the stock immediately until trading of GOOG shares was temporarily halted to prevent further humiliation.
US econ data enjoyed some fist-pump worthy gains. Construction on new homes rocketed to its highest level in 4 years, a sign that low mortgage rates are encouraging home-buying. The Commerce Department announced that September retail sales rose 1.1% for its 3rd straight increase (electronics stores should be thanking their lucky USB cords for last month’s iPhone 5 release). After weekly jobless claims fell to their lowest level in years last week partially because one state forgot to report its readings, the number of Americans filing for unemployment benefits rose by 46,000 to compensate. The Federal Reserve Bank of NY reported that manufacturing in the Empire State contracted slightly last month, but the Philly branch balanced things out, as business activity in the Mid-Atlantic region expanded.
The big dirt on the week? Citibank. Talk about a diva. After making waves for its aforementioned earnings, Gotham’s hometown financial firm just couldn’t stay out of the spotlight. The very next day, Vikram Pandit resigned from the 3rd biggest US bank by assets. After taking over in 2007, the stock price has dropped 89% – though Pandit is credited with turning profits the last 2 years. But the bank failed the Fed’s March stress test…he tried to write himself a $15-million bonus until shareholders stopped him…and there’s simply been a lot of internal cat-fighting. Citi shareholders welcomed his exit by buying up the stock.
But Friday we finally got what investors have been fearing – some heaping doses of negative earnings reports. McDonalds, GE, and Microsoft all fell on profit and revenues that missed analyst expectations and were largely down versus last year. Microsoft struggled on Microsoft Office products as people go to Google’s free “Docs” on the Cloud, and people generally unplug from their home computers and move to their smartphones. McDonalds suffered as their foreign profits translated to fewer US Dollars because of a strong USD exchange rate, and GE, which makes everything from microwave ovens to jet engines, missed on revenues due to the slowing global economy. On the 25th anniversary of 1987′s Black Monday largest stock market drop ever, the Dow lost over 200 points and erased practically all of the weeks gains.
- Monday – Earnings: Caterpillar, Hasbro, Yahoo…
- Tuesday – The Fed’s Richmond Manufacturing Survey, Earnings: Facebook, 3M, Netflix…
- Wednesday – September New Home Sales & Home Prices, Earnings: AT&T, Snapple, US Airways…
- Thursday – Weekly Jobless Claims, Durable Goods Orders, Pending Home Sales, Earnings: New York Times, Coca Cola, Sprint…
- Friday – 3rd Quarter GDP, Reuters/University of Michigan Consumer Sentiment Poll, Earnings: Merck, Arch Coal, Comcast…
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