Tag Archives: Gross domestic product

The Best Damn Wall Street “Week in Review” Anywhere…

29 Apr
asdvadv

“This GDP growth doesn’t look good, Walt”

Week of April 22th – April 26th:
Dow: 14,713 (+1.3% last week, +12.3% YTD)
S&P 500: 1,582 (+1.8% last week, +10.9% YTD)

Links Worth Snacking On:

  • Chart of the Week - Gold by the numbers (visually)
  • Wall Street Oasis - Some solid advice on the GMAT
  • Bloomberg - The top 10 countries for hackers (following last week’s Wall Street tweet scare)
  • Businessweek - A Pinterest investor describes his worst deal ever
  • The Economist - Check out McDonald’s “University”
  • Slate - Forget earnings, what’s Apple’s next big thing?
  • The Atlantic - How little math do Americans actually use at work?
  • WSJ - How many recent grads are choosing start-ups over finance?
  • Apple Trailers - Syrup, the new comedy on the power of sex in the ad industry

April showers bring May flowers (…and really cold weather this year…and some Wall Street volatility).  Quarterly earnings headlines, corporate drama, and rogue tweets yanked stocks up and down all last week for a bumpy ride.

#1. Stock Winners…

Stream this – Netflix enjoyed a revenues increase from its new original programming and customized content changes.  Apple stock may be down over 20% so far in 2013, but investors liked news that Cupertino is increasing the firm’s iDividends and iShare-buyback program.  Plus, JCPenny and Microsoft got some love on news they received some major recent investments by big-time hedge fund bosses. 

#2. …Stock Losers

Yum Brands managed to top analysts’ (low) earnings expectations even though that freaky Asian Bird Flu caused a 20% drop in Chinese quarterly sales.  Zynga‘s struggling with the age-old transition to mobile, losing 13% of its monthly users who are finally bored by stupid social network games.  And the 10% drop in revenues from disappearing land lines over the last year smacked AT&T‘s balance sheet.

#3. US GDP Growth Didn’t Impress

Stocks barely budged at the end of the week after US GDP data ruined investors’ TGIF mojo.  The largest measure of an economy’s size, the gross domestic product, measured that the US economy grew 2.4% in the first quarter of 2013.  An improvement on Q4 2012′s weak 0.4%, but still the frustrating slow-growth that won’t reduce our unemployment rate anytime soon.  The highlights were reduced defense spending from the budget cuts.

#4. Glitches & Hackers Shook Investors

The Tweet heard ’round the floor.  The AP’s erroneous tweet that the White House was attacked sent markets into a short tizzy.  Traders’ knee-jerk reaction shot stocks down on fear from the disaster that was quickly corrected when the news was learned to be false.  Then Thursday a trading floor glitch in the Chicago Board Option Exchange showed that software has made Wall Street soft.

What MarketSnacks Is Checking Out This Week:

  • Monday - Pending Home Sales, 1st Quarter Earnings Reports: Las Vegas Sands, Orbitz…
  • Tuesday - Consumer Confidence, Earnings: Denny’s, Starwood Hotels…
  • Wednesday - The Fed’s 2-Day Meeting Ends, Earnings: Facebook, Yelp…
  • Thursday - Weekly Jobless Claims, Earnings: General Motors, Skullcandy…
  • Friday - The March Non-Farm Payrolls Jobs Report, Earnings: Adidas, Madison Square Garden…

MarketSnacks Fact of the Day:  Although supermarket juggernaut Trader Joe’s is a privately-owned company, its over $8 billion in annual sales is roughly the same as Whole Foods’ (and greater than Bed, Bath & Beyond’s).

 

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“Surprising Services Sector Data Lifts Stocks”

5 Jun
"Adam Sandler values the American services industry"

“Adam Sandler values the American services industry”

Dow 12,128 (+0.22%)        S&P 1,286 (+0.57%)

It may be spring outside, but traders sure haven’t been seeing much green on their screens.  After 4 straight down days in the wake of negative economic data readings though, stocks reversed course today when a report on non-manufacturing, service-sector business activity beat analysts’ expectations.  With positive news State-side, reports from the “Group of Seven” major economies that central banks and finance departments would work together like a synchronized swim unit to help Greece and Spain get back on their financial feet secured a positive day.  The MarketSnacks team checked and this wasn’t some kind of freak mirage – the Dow finished positive 26 points.

Non-manufacturing business activity grows in May, easing fears of slowing US economy

If your job involves making goods that can be wrapped up in a bow, given to someone for Christmas, then disappointingly returned to a retail store, then you work in manufacturing. Everything else belongs to the service sectors – desk jobs, farming, and construction to name a few.   Non-manufacturing businesses, which account for about 90% of American gross domestic product (GDP), continued to chug along at a strong pace in May, according to the Institute of Supply Management (ISM).  The ISM index jumped to 53.7 in May (anything above 50 indicates an expanding economy).  The healthy reading from such a broad economic thermometer popped investors out of their seats to buy American stocks across the board, erasing yesterday’s losses from the negative manufacturing report.  Financials led, but all S&P sectors except one finished in the green. Nice.

Starbucks drops after investment announcement, Facebook shares slide to new low price

In the world of major corporate headlines, Starbucks (SBUX) lost nearly 3% after a highly anticipated announcement yesterday evening flopped – the coffee juggernaut shelled out $100 million in cash for San Fran-based Bay Bread and La Boulange Bakery in an effort to increase their food offerings.  Either shareholders are collectively jumping on the gluten-free diet fad or simply don’t think this is an impressive investment worthy of that much money.  Facebook (FB) continued its slide after a recent Reuters poll indicated that only 1 out of 5 Facebook users have ever bought something from its ads or comments and 34% are spending less time on the site than 6 months ago – not the kind of news revenue-hungry shareholders want to hear.  FB shares hit a fresh intraday low of $25.81 and have now fallen in 8 of the 11 trading sessions (over 30%) since its IPO.

Tomorrow:

  • Have a complete breakfast handy in preparation for some significant global economic releases….
  • The European Central Bank sets key interest rates - Investors are looking to see if bank President Mario Draghi will drop historically low rates even more to make the cost of borrowing easier than it already is given persistent growth issues throughout Europe
  • The Federal Reserve’s Beige Book - Our own central bank’s eight-times-a-year report on econ data from all the regions of the land.

© 2012 MarketSnacks

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“Poor Pile of US Econ Data Caps Worst Month in Years”

31 May
"Houston, we have an econ data problem"

“Houston, we have an econ data problem”

Dow 12,393 (-.21%)        S&P 1,310 (-.23%)

There’s an old British saying kicked around Wall Street that investors should “sell in May and go away.”  The idea here is to pocket what you’ve made in the market and take the summer off.  With both the Dow Jones Industrial Average and the S&P 500 stock indices losing 6% this month (the Dow’s biggest monthly declines in 2 years) it looks like investors chose to aggressively hit the beach on May 1. A heavy serving of US econ data broadly disappointed today, sending markets down early.  Although more Greek polling results showed pro-Eurozone parties gaining before their June election clawed stocks back up in the afternoon, the Dow still finished down 26 points to end a bloody May.

ADP reports fewer jobs added in May than expected, weekly jobless claims rise

Morning jobs news was an unwelcome 8:30am punch to breakfast-filled guts.  Payroll tracking company ADP reported that the US added 133,000 private sector jobs in May, below expectations of 150,000.  ADP’s calculation (usually released on Wednesday, but moved to Thursday because of this shortened Memorial Day week) is closely watched as a preview to the official Labor Department Employment Report on the first Friday of every month (tomorrow).  Although the ADP number is usually off from the government’s measurement, last month’s was right on target, so analysts are paying close attention.  On top of this, weekly jobless claims rose by 10,000 to reach 383,000 total.  This measurement of Americans filing for unemployment won’t have an impact on tomorrow’s major employment report, but does further indicate a slowdown in the recovering labor market.

US Commerce department announces 1st Quarter GDP growth was 1.9%, down from earlier 2.2% estimate

Investors were already concerned about slowing economic growth in the US when the Commerce Department estimated in April that Gross Domestic Product (GDP) grew 2.2% for the January – March 1st quarter period, but today the federal government erased the 2.2 and penciled in 1.9%.  GDP is the broadest measure of economic activity, comprised of all the purchases and sales of goods and services occurring in a country (excluding drug and other illegal transactions Uncle Sam doesn’t know about) and today’s smaller growth number further stoked fears that the US economy is relapsing to its dark recession days (the Marketsnacks team is deciding a time/place for an intervention – we hope you’ll be there for your economy).  Historically, American GDP grows around 3%, but economists and politicians alike are targeting higher rates to climb ourselves out of the deep economic hole dug during the financial crisis.

Tomorrow:

  • The US Government Non-Farm Payroll report releases at 8:30.  Investors are locked and loaded to act on any surprises…analyst consensus predicts 150,000 jobs were added to the economy in May, up from 115,000 in April.  The official unemployment rate is also announced, can it drop south of the current 8.1%?

© 2012 MarketSnacks

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“Pain in Spain Sends Markets Down Into Long Weekend”

25 May
"Zorro does the downgrade dance and slashes Spanish bank ratings."

“Zorro does the downgrade dance and slashes Spanish bank ratings”

Dow 12,455 (-.60%) S&P 1,318 (-.22%)

Whip out the grill tongs, dry rub and seersuckers – and remember to thank every veteran in your proximity. US markets will be closed Monday for Memorial Day, but the jolly prospect of the upcoming 3-day weekend wasn’t enough to finish this notably up-and-down week on a positive note. Investors shrugged off surprisingly positive results from a major consumer confidence poll today and instead shifted their gaze to a series of negative economic developments in Spain. The Dow lost 75 points today, though the blue chip stock index did register its first overall weekly gain of this month.

Spanish Bank Bankia gets bailed out by government for $24 billion, S&P downgrades Spanish Banks

Spanish news went down investors throats like two very flaming shots of tequilla. Bankia is a large Spanish bank that was cobbled together from six smaller banks after the financial crisis. The bank has struggled mightily since the infamous Spanish property bubble (Spaniards were building houses on land they didn’t even own. Seriously) that saw housing prices absolutely free-fall, resulting in a growing number of home foreclosures and defaults on mortgages. The bank had to be bailed out by the Spanish government for 19 billion euros ($24 billion) today before it started to miss payments of its own and declare bankruptcy. The Spanish government is broke itself, so investors were not thrilled to see one beggar giving the contents of his tin can to another. S&P also downgraded 5 Spanish banks today, fearing that they, too, could fail to meet their financial obligations. Banco Popular was one of them, which officially no es popular.

Reuters/University of Michigan consumer-sentiment index reaches highest level since 2007

The latest Reuters/University of Michigan consumer-sentiment index revealed that domestic consumers are more upbeat about the US economy than they have been since before the recession. Based on a poll of how good ol’ regular folks feel about the economy, what they’re buying and why, the index climbed to 79.3 out of 100, up from 76.4 last month and the highest level since 2007. Economists of little faith expected the index to remain flat. These households based their optimism on lower gas prices, steadily decent jobs numbers and an improving housing market. The key takeaway from the report is how the fundamentals of the American economic recovery are still embraced by consumers, despite the painfully poor performance of stocks in May.

Next Week:

  • The 4-day holiday week is going to put even more emphasis on the major upcoming US econ data reports – Gross Domestic Product (GDP) numbers and the official government non-farm payroll employment numbers for May.
  • Facebook (FB) marked the 1-week anniversary of its troubled initial public offering (IPO) by dropping 3.4%. FB and Morgan Stanley (MS) have been sued by investors for a misleading valuation, the Nasdaq stock exchange has admitted messing up trades and shares have dropped 17% from their opening price of $38 in just the first 6 trading sessions – what fun news will next week bring?
  • Mark your/his calendar….JP Morgan (JPM) CEO Jamie Dimon will officially be testifying before the Senate Banking Committee on June 7th to explain the firm’s $2+ billion trading loss from two weeks ago.

© 2012 MarketSnacks

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“Markets Finish Slightly Down, But The Dow Barely Keeps 7th-Straight Monthly Gain Alive”

30 Apr

"Stocks may be falling, but I'm clenching my abs to keep this monthly winning streak going, dammit"

Dow 13,214 (-.11%)        S&P 1,398 (-.39%)

After quality corporate earnings kept stocks up last week for their biggest weekly gain in a month, we assume a little extra green was rolling between holes at golf courses across the country over the weekend.  But today, growing concerns over Spain’s slowing economy clouded over the New York Stock Exchange.  Some negative, but minor, economic data in the US, that business activity in the Midwest and Texas expanded at its slowest rate in two years, also helped pull the Dow down 15 points on the last day of the month.  Although finishing negative today, the Dow was able to end April slightly up (a mere 1.59 points) for its seventh-straight monthly gain, while the S&P 500 stock index‘s 4-month advance regrettably came to a close.

Spain announces technical recession, continued political tension

The Spanish government announced today that the country’s Gross Domestic Product (GDP) shrank by .3% in the first quarter of 2012.  This throws Spain into the group of 7 other Eurozone countries in recession (technically defined as 2 consecutive quarters of GDP contraction).  Official news of a recession is more ammunition for an angry tapas-munching population to protest the austerity measures being implemented.  This week, Spaniards are organizing widespread protests against the government policy they believe is sacrificing the people to appease banks and investors, by increasing taxes while reducing services and support for the people to reduce the debt.  While a fire burns in Europe, investors on Wall Street fear the political tension as pro-growth politicians are rising in opposition against the absolute austerity policies that have been dictated by Germany (“nein, nein, nein!”) to fix the European debt problem.

Apple falls following NYTimes Report, Microsoft invests big in Barnes & Noble

A major New York Times muckraking report over the weekend detailed how Apple (AAPL) aggressively reduces its tax burden through legal tax loopholes (FYI, worldwide iTunes purchases are recorded in the hand-sized, but tax-friendly Luxembourg).  After shares jumped last week following great quarterly earnings, the stock dropped over 3% today on the bad press.  Barnes & Noble (BKS) shot up 50% after announcing Microsoft (MSFT) was investing $300 in the company’s digital book business, Nook.  Nook is temporarily being renamed “NewCo” (pretty creative) and will aim to catch up and compete with Amazon (AMZN).

Tomorrow:

  • Bloomberg News reports that the Occupy Wall Street movement is calling for a global day of disruption on the first day of May (mañana) – will this affect affect trading or just traders’ commutes?
  • Capital IQ research indicates that 126 of the S&P 500 stock index’s representative companies are reporting 1st quarter corporate earnings this week: Stay tuned tomorrow for Pfizer (PFE), CBS (CBS) and Motorola (MOT)….

© 2012 MarketSnacks

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“Four-Day Corporate Earnings Rally Continues Into The Weekend”

27 Apr

"All hail Amazon.com! Thou hath made a pretty fortune in this quarter"

Dow 13,228 (+.18%)        S&P 1,403 (+.24%)

The 2012 first quarter earnings season has brought more excitement than the thrill of dusting off our grills from their long winter hibernation.  Over 80% of companies in the S&P 500 stock index beat analysts’ consensus estimates and today Wall Street investors were once again drooling over Amazon and Expedia‘s dynamite profits.  The two online retailers generated enough optimism in the stock market for investors to shrug off disappointing news on the US Gross Domestic Product (GDP) numbers and push the Dow up 23 points.  This fourth straight positive day for the Dow Jones Industrial Average and the S&P 500 concludes the biggest weekly advance in over a month, with the Dow gaining 1.5% over the last 5 trading sessions heading into a BBQ-worthy weekend.

Amazon and Expedia earnings beat expectations, propel shares over 20%

Amazon (AMZN) shares led stocks with a nearly 16% jump after the online retailer announced first-quarter revenues increased by a hefty 34%.  Virtual travel agent Expedia (EXPE) also enjoyed a notable 24% gain on better-than-anticipated earnings, reaching an all-time stock price high of $40.31 per share.  While other recognizable companies, like Starbucks (SBUX), Ford (F) and Proctor & Gamble (PG), slumped after missing earnings estimates, Amazon and Expedia’s numbers proved enough of a highlight to lift overall markets.  The combined positivity of their earnings results guided other consumer-discretionary stocks, like eBay (EBAY) and Groupon (GRPN), higher as investors interpreted the increased revenues as an indicator of consumer strength for online retail.

American GDP growth slows in first quarter

American Gross Domestic Product (GDP) in the first quarter grew at a disappointing 2.2% rate.  After GDP increased by 3% in the last quarter, economists crunched the numbers and were expecting 2.5% this time.  While investors were not impressed by this news, the silver lining was that consumer spending was the real driver of growth this past quarter, as opposed to the previous quarter when businesses where loading up on inventory, but products weren’t flying off shelves.  Car sales were a major part of that spending as consumers are buying more fuel-efficient vehicles to adapt to higher gas prices.  The positive jobs market is also encouraging consumers into finally upgrading older vehicles after a long period of holding out during the recession.

“Week in Review”

After last week’s up-and-down headaches, this week we welcomed a little consistency into our lives as the corporate earnings season kicked into full gear.  Goldenboy Apple (AAPL) set the tone early on Tuesday with first quarter earnings that smacked analysts’ low expectations in the face thanks to increased sales in China.  Despite nearly doubling in price over the last year, Apple stock has struggled recently and the impressive first quarter performance sparked investor enthusiasm for the rest of the week.  Solid earnings from some attractive-but-not-quite-as-sexy companies like 3M (MMM) and AT&T (T) and a serious uptick in sales of existing homes helped prop the Dow up for three days in a row.  Concerns over some important European elections and political cat-fighting had started the week down, but traders managed to keep calm and carry on.

Next Week:

  • S&P Ratings Agency downgraded Spain to BBB+ from A.  The country’s unemployment rate hit an 18-year high of 24.4%.  No es bueno in Spain, where even their beloved FC’s Real Madrid and Barcelona lost to Germans and Brits in the Champion’s League semifinals – How will bond investors react to this declaration that Spain is a riskier investment?
  • All eyes are once again on the first Friday of the month when April’s official government labor report is released - Will the unemployment rate continue on its gradual decline below the current 8.2%?

© 2012 MarketSnacks

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“Markets Finish Barely Up After Key Economic Data Revisions”

29 Mar

"Look closely at the revised 'Jobless Claims' and 'GDP' numbers. Look closelier. Look more closelier."

Dow 13,146 (+.15%)        S&P 1,403 (-.16%)

That was close.  Too close.  After mediocre reports on the American consumer resulted in back-to-back negative days, the Dow Jones Industrial Average was down by as much as 70 points for most of today on more mixed economic news.  With an hour left before the New York Stock Exchange closed at 4pm, we could feel the third bruising day in a row breathing down investors’ reasonably hairy necks.  But bullish investors and fund managers, confident in the stock market’s 2012 rally, bought back falling stocks in the last hour of trading, creating an eruption in the Dow that pushed the stock index to finish 20 points into the green.

“Weekly Jobless Claims” report and revised US Gross Domestic Product (GDP) reports are mixed

359,000 Americans applied for unemployment benefits last week, failing to sink below the 350,000 that many economists were hoping for.  Investors basically shrugged at the news.  But looking deeper into the report by the Labor Department, investors realized that the prior week’s number was revised up by 16,000 to 364,000, so this week’s report was actually an improvement of 5,000 from the week before.  This confusing data left traders scratching their balding heads.  Another “revision” was announced when the US Commerce Department said that, after a third recount, the 3% 4th quarter GDP growth first reported last month was correct.  Good for you, Commerce Department! This disappointed analysts who expected a correction up to 3.2%.  US GDP is such an important figure (it stands for almost a fourth of the world’s economic activity) that the government spends a ton of resources to make sure it’s calculated precisely each quarter.

Research in Motion and Best Buy earnings both fall beyond expectations

If we had a dollar for every time Research in Motion (RIMM) disappointed shareholders over the last year, we would probably have more cash than they do.  The Blackberry maker and most recognizable Canadian company behind the Toronto Maple Leafs, RIMM announced its sales dropped 25% last quarter and now controls only 8% of the smart phone market it dominated just a couple years ago.  RIMM has lost market share to Apple and Google‘s more advanced and cheaper options and just recently replaced its CEO after its shares free-fell 75% last year.  In addition to its own poor quarterly earnings numbers, technology mega-chain Best Buy (BBY, -6.95%) released plans to cut 400 back-office jobs (non-customer facing roles) and close 50 stores in order to better compete with online retailers like Amazon (AMZN, no surprise, up nearly 2% today).

Tomorrow:

  • An independent auditor found “serious and pressing” human rights violations at the infamous Foxconn plant, where most Apple, Dell and Hewlett-Packard products are made - Apple CEO Tim Cook is coincidentally visiting the very same factory this very same week, how will his company react?
  • “Consumer Spending Data” – the final US consumer-related report of the week.
  • The last trading day of the first quarter of 2012 – how will this three month rally finish its final official trading session?

© 2012 MarketSnacks

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