Dow: 13,077, -25 (-0.19%) S&P 500: 1,409, -4 (-0.31%)
We’re already anxious to see how the MarketSnacks bull will look on the new iPad Mini that Apple unveiled yesterday (unfortunately only Oprah and Blue Ivy Carter have one yet). As for the stock market today, corporate earnings from big tech names like Facebook, Zynga and Netflix continued to dominate headlines in a busy trading session. Strong US housing data had stocks up early…until economic growth concerns from the Federal Reserve‘s rate-setting meeting sent them southward. The Dow finished down 25 points after 200+ point drops yesterday and last Friday.
More signs of an improving housing market lift stocks early
In the morning, there was a bright light of trading optimism. And that light came from divine housing data. After dipping slightly in August, “New Home Sales” jumped by 5.7% in September. The sharp increase represents 389,000 newly constructed residences bought–the best annualized rate in 2 years–led by growth in the South. On top of this, the Federal Housing Finance Agency’s monthly home-price index also topped expectations, as US home prices in August rose 0.7%, a 7th straight gain. The numbers lifted homebuilder stocks, like Lennar (LEN) and KB Home (KBH), which each rose nearly 2% on the news. Housing data has been solid over the last few months and investors are seeing signs that the market has bottomed out after 2008′s destruction and has entered improvement mode.
Federal Reserve ends two-day policy meeting, states that economy still needs help
Fed Chairman Ben Bernanke was the opposite of a cheerleader for the markets & economic sentiment today. We’re still growing at a “moderate” rate, says The Bearded One, and the Fed must continue to accommodate economic growth with “QE3,”the 3rd round of quantitative easing since the crisis–$40 billion in monthly purchases of bonds to keep long-term interest rates low and spur the economy. Earlier in the month the sudden unemployment drop to 7.8% and great housing data had economic enthusiasm high; today Bernanke reminded us that 12 million people are still unemployed (in the words of rock band U2, He Stillllllll hasn’t founnnnnd what he’s looking for). The takeaway for investors was that Bernanke won’t rest until the employment situation improves substantially.
Facebook jumps on surprise earnings…
Facebook’s (FB) 1st earnings report was released Tuesday after the market closed and were barely better than expected – revenues increased by 32%, but the company posted an overall loss. But digging deeper into the report, investors were pumped: FB’s starting to make money off of mobile devices. Facebook’s stock price has fallen over 50% since its $38 initial public offering (IPO) last May because analysts doubted Zuck could turn a buck off of a 3-by-3 centimeter iPhone ad. This may only be a baby step, but optimism propelled shares up almost 20% today for FB’s biggest single-day jump yet.
…But other tech stocks fall on disappointing earnings
Apparently other tech stocks didn’t get the Facebook invite to the good-earnings party. Netflix (NFLX) lost nearly 12% after reporting poor subscriber figures because of higher subscriptions costs (it’s now down 88% from this time last year). And (mind-numbing) internet-game-creator Zynga’s (ZNGA) earnings beat (very low) expectations, but the company still suffered a major loss and is cutting jobs (an embarrassment for a developing company that should be growing). Outside the tech world, things were pretty mixed. AT&T (T) revenues were lower than expected, while airplane-builder Boeing (BA) saw its earnings beat forecasts and raised its outlook on future growth. Earnings are everywhere these days…
- Weekly jobless claims in the US & 3rd quarter GDP for the UK
- Earnings: Amazon.com, Coca-Cola, Procter & Gamble…
© 2012 MarketSnacks