Tag Archives: Morgan Stanley

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

22 Apr
vsfbv

“Come check out these 1st quarter earnings, man”

Week of April 15th – April 19th:
Dow: 14,865 (-2.1% last week, +11.0% YTD)
S&P 500: 1,589 (-2.1% last week, +9.0% YTD)

Links Worth Snacking On:

  • Chart of the Week - Gold by the numbers
  • New Yorker - 6 conspiracy theories about why the price of gold is dropping
  • Wall Street Oasis - 7 tips for 1st year analysts
  • Bloomberg - 12 must-know images about the growing US domestic oil industry
  • Wall Street Journal - Forget gold, the gourmet cupcake market is crashing (sorry, Crumbs)
  • DealBreaker - Why are there penguins and otters running around the New York Stock Exchange trading floor?
  • Businessweek - Chipotle’s earnings are banking on a fancy new margarita drink
  • The Economist - An economic look at the market for soccer players

Someone stick us with an EpiPen before we overdose on earnings reports.  Wall Street suffered major market swings all week long as the 1st quarter earnings season kicked into high gear with some marquee corporate headlines.

#1. Gold Took A Pounding

After doubling to over $1,500 an ounce over the financial crisis, the price of gold plummeted 9% last Monday for its biggest single-day drop since 1983 (Michael Jackson was black then).  Why?  Econ data showed China’s economy is slowing, which could equal less demand.  And with stocks rallying, investors are preferring riding the stock market.  Either way, gold got punched in its pretty, little gut.

#2. Stock Winners…

Salsa, anyone?  Growth in Latin American demand helped Coca-Cola earnings surge.  Johnson & Johnson checked-in with a healthy quarterly performance thanks to some new “sponge-worthy” medication launches (#GreatSeinfeldReference).  And a jump in ad revenues boosted Google as their new Chromebook operating system gets more street cred.  Plus SeaWorld lept like a young Free Willy on its IPO.

#3. …Stock Losers

EBay lost bidders (psychologically and literally) as the economic slowdown in Europe weighed on  international sales.  Over on Wall Street, huge drops in trading revenues hurt Morgan Stanley‘s performance last quarter, while low interest rates resulted in less cash for Bank of America.  Plus Apple took a hit on pre-earnings report rumors that last quarter wasn’t up to “Jobs” standards.

#4. The Fed’s Beige Book Was “Glass-Half Full”

Congratulations on the “moderately improving.”  That’s how the Federal Reserve graded the US economy again in its “Beige Book” report.  Investors don’t have super low expectations, but they were pleased – the Fed governors vowed to keep their stimulus pledges until unemployment finally falls from 7.7% to 6.5%.  Stimulus is always a good time.

#5. Another Mixed Bag of Econ Data

Hey, you can’t win them all.  While housing starts jumped 7% last month for its best annualized rate of home construction in 8 years, manufacturing data didn’t bring its A-game.  The Fed’s regional “business activity” reports in the NY and Philly areas showed industrial production in both areas wasn’t running all cylinders at the end of the winter.

What MarketSnacks Is Checking Out This Week:

  • Monday - 1st Quarter Earnings Reports: Caterpillar, Six Flags Entertainment…
  • Tuesday - March New Home Sales, Earnings: Apple, Delta Airlines…
  • Wednesday - March Durable Goods Orders, Earnings: Ford, Zynga…
  • Thursday - Weekly Jobless Claims, Earnings: Harley-Davidson, NYTimes…
  • Friday - 1st quarter GDP reading, Earnings: Chevron, Burger King…

MarketSnacks Fact of the Day:  China’s economy grew 7 times as fast as America’s over the last decade — but China’s GDP per capita is the 91st lowest in the world.

Tags: , , ,

“IBM Earnings Report Pulls Stocks Up”

19 Jul

“Big Blue” IBM announcing the freakish quarterly earnings 

Dow: 12,943 (+0.27%)        S&P 500: 1,377 (+0.27%)

Technology stocks stole the show and rallied high today, pushing the tech-heavy NASDAQ stock index up 0.8%.  At first we assumed it was excitement over the gadget wizardry of the new flying Batmobile debuting in The Dark Knight Rises tomorrow – turns out it was thanks to a solid earnings report from tech big-boy IBM.  Second quarter corporate earnings continue to beat analysts’ expectations (even if those are low expectations), pushing the Dow up 35 points today.  But a smorgasbord of uninspiring economic reports, including housing, job and manufacturing data, held stocks from venturing any higher.

IBM, Microsoft jump on stronger profits, Morgan Stanley misses expectations

The fundamental value of a stock is a shareholder’s claim (as owner of the company) to dividends from the company’s profits.  IBM (IBM) makes $400M dollars/day in sales, equaling a monster $3.9 billion in profits last quarter, or $3.51/share.  With that kind of cash rolling in investors bought up the stock 3.8% higher on expectations that “Big Blue” will have plenty more to send home to the owners of the company (i.e. dividends).  IBM’s strategy of shifting to software has been killing it and the value of the company is close to the record high set in April ($225B).  They still manufacture servers pretty well, but those old, poorly built, black IBM laptops that look like a crudely put-together jigsaw puzzle are things of the past.  As some analysts noted, a big driver of profit was cost cutting, which can only go on so long before you need to create new business.  Microsoft (MSFT) also had strong earnings as companies are upgrading to Windows 7 and Microsoft Office (Word, PowerPoint, and the mind-numbing…Excel) software.  Only investment bank Morgan Stanley (MS) disappointed, falling over 5% on its weakening trading business.

Weekly Jobless Claims spike back up, Existing Home Sales and Mid-Atlantic Manufacturing dip

After dropping the most in 4 years last Thursday, the number of Americans filing for unemployment jumped right back up by 34,000.  Weekly jobless claims usually move in smaller increments, but seasonal factors (like temporary summer auto factory closures) accounted for the big jumps you’ve seen the last two weeks in your MarketSnacks.  Economists focus on the total amount of jobless claims, now at 386,000, hoping it won’t move above 400,000 – a psychological threshold between an economy that’s adding jobs and one that ain’t.  July manufacturing activity in the Mid-Atlantic region has so far contracted for the 3rd month in a row, though at a slowing rate.  And despite improving housing data this month, sales of existing homes surprisingly fell in June to the lowest level in 8 months.  Overall, investors are looking at the recent combination of both positive and negative economic news as a sign of the slowing pace the economy’s recovery has hit.

Tomorrow:

  • Google (GOOG) smashed earnings expectations after the market closed with a 35% increase in revenues from last year – we’ll be following the stock tomorrow…
  • More earnings reports, baby: Xerox, General Electric, Schlumberger…

© 2012 MarketSnacks

Tags: , , , , , , , , ,

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

15 Jul
July 9th-July 13th

July 9th-July 13th

We hadn’t seen this much red on our screens since the opening scene of Gladiator (those Germanians were no match for the Romans).  Stocks fell 6-straight days coming into last Friday…The culprits?: The 2nd quarter earnings season kicked off with unimpressive results from metal producer Alcoa on Monday and the release of the Fed “minutes” (a transcript of the central bank’s meeting last month) that didn’t show stimulus policies coming anytime soon.  The market redeemed itself on Friday after a surprising earnings report from JP Morgan powered financial stocks and sent the Dow up 204 points to end the down week on a happy note.

The main noise out of Europe was actually music to our ears – Spain’s Prime Minister made a bold Coach-Al-Pacino-in-Any-Given-Sunday style speech urging his countrymen to sacrifice to get through their debt crisis.  The new budget cuts (7% slash to public employee wages) and higher taxes (21% value added tax) also excited investors, bringing down Spanish borrowing costs.  And in China, a slight dip in nation’s GDP growth had investors hoping for stimulus news in the Far East.

The amount of purchases made with US plastic (consumer credit) increased to its highest point in a year, a healthy sign of confidence, while the number of Americans filing for unemployment (weekly jobless claims) dropped by the most since ’08, but mostly for seasonal reasons.  The price of corn bounced up after the USDA cut production forecasts big because of the droughts scorching the Midwest like a sunscreen-less belly in the summer sun.

And in corporate-land, pharmaceutical company Merck jumped on the trial success of a new osteoporosis drug and Procter & Gamble rose after activist investor Bill Ackman bought a 5+% stake in the firm.  And the Barclays‘ CEO also forfeited his bonus after he resigned in disgrace last week following the interest rate manipulation scandal.

The Dow Jones Industrial Average nudged up 0.04% this week and is up 4.6% this year while the S&P 500 managed a 0.17% gain this week and 7.9% this year.  

Links Worth Snacking On:

The Street: Why Amazon is not crazy by entering the Apple-dominated smartphone market

Washington Post:  Investors are dying to loan money to the USA.  Record low bond yields mean cheap money for the US government

Dealbook: Indian-giving at JP Morgan.  Why managers are having their bonuses taken back after the $4.4 billion trading losses

Graphic: Political debate over Obamacare has a lot of people hanging in the balance – 50 million uninsured Americans

This Week:

  • Monday –  June Retail Sales (Citi earnings)
  • Tuesday – July NAHB Housing Market Index, Fed Chairman Ben Bernanke LIVE! in front of Congress (Goldman Sachs, Yahoo, Coca-Cola earnings)
  • Wednesday – June Housing Starts, June Building Permits (IBM, eBay, Bank of America earnings)
  • Thursday – June Existing Home Sales, Weekly Jobless Claims (Morgan Stanley, Microsoft, Google earnings)
  • Friday – Reactions to the week’s major earnings reports
© 2012 MarketSnacks

Tags: , , , , , , , , ,

“Stocks Finish Up Despite Bank Downgrades”

22 Jun

“Investors did their own analysis, Moody’s, and they don’t mind a downgrade or fifteen”

Dow 12,641 (+0.53%) S&P 1,335 (+0.72%)

Would you like a water? Gatorade? Advil? The mountain of news moving markets this week was relentless (and mostly painful) – Greece actually formed a pro-Eurozone government, the Federal Reserve announced its policy decision to boost the US economy, investors expressed disappointment that the Fed didn’t do more, and yesterday’s poor econ reports from across the globe dropped stocks for their 2nd worst performance of the year. The headline story today was credit ratings agency Moody’s downgrade of 15 international investment banks. However, investors feared the downgrades would be even worse and in relief pumped the Dow up 67 points after yesterday’s plunge (the blue chip stock index did finish the overall week down 1%, though).

Financial stocks rally after Moody’s downgrades 15 banks

Concluding a 4-month study, Moody’s downgraded 15 major investment banks after the market closed on Thursday, with notable giants Bank of America (BAC) and Citigroup (C) pushed to the brink of “junk” status (both were downgraded to Baa2 (S&P equivalent rating is BBB)). The credit ratings agency assigns letters based on a firm’s financial health and the recent global growth slowdown and debt crises have affected banking businesses. Swiss sweetheart Credit Suisse (CS) got hammered with a 3-notch downgrade while most dropped merely 2-notches. But instead of tissues, elite bankers at firms like Morgan Stanley traded high-fives (seriously), celebrating 2 notch downgrades because most were prepared to get 3. JP Morgan (JPM), Morgan Stanley (MS) and Wells Fargo (WFC) all gained nearly 1.5%, leading markets higher for putting to rest fears of even greater downgrades.

German Soccer team defeats Greece in Euro Cup quarterfinals

The Merkel game face…where’s the eyeblack?

Is that a vuvuzela in your pocket, or are you just excited about the Greece/Germany Euro Cup game today? This highly anticipated match-up of underdog/bailed-out Greece vs. soccer/economic powerhouse Germany was true David vs. Goliath. Political relations between the two have been tense with Greece blaming Germany for the austerity measures demanded for bailout funding. Sports historians compared today’s game to the 1969 Olympic ice hockey battle between Czechoslovakia and the USSR in which the Czechs sought revenge for the Soviet invasion of Prague a year before. Deutschland beat the Greeks 4-2 in front of their Chancellor Angela Merkel – fortunately for TV viewers, a PR team restrained her from downing the various tempting sausage snacks at the stadium’s concession stands. She wasn’t shy to celebrate though, pumping fists after each of Germany’s 4 goals that sent Greece packing. The Germans played like they “owned” their opponents, and Greece didn’t step it up for this cultural battle.

Next Week:

  • Thursday’s EU summit in Brussels – will the rest of the European Union embrace the new Greek government and give it break? Or will the standoff continue?
  • US Econ data: May home sales, University of Michigan/Reuters Consumer Confidence Poll for June, 3rd and (hopefully) final reading of US 1st quarter GDP
  • Earnings reports: General Mills, Nike and Research In Motion…

© 2012 MarketSnacks

Tags: , , , , , , , , , , , , , , ,

“Stocks Down Again on Disappointing US Factory Orders”

4 Jun

“Singing doesn’t look like it’s going to help Willy Wonka and his Chocolate Factory Orders”

Dow 12,102 (-0.14%)        S&P 1,278 (+0.01%)

The first summer weekend affected by thunderstorms in the Big Apple seemed disturbingly appropriate after Friday’s dismal market performance – stocks capped last week with their worst losses of 2012 so far after the Labor Department’s grim monthly employment report significantly missed expectations.  Investors could have used a break and a Corona Extra, but instead disappointing factory order numbers in the US edged the Dow down 17 points today for its 4th straight loss.  Another day in the red was not what the doctor prescribed, but at least it was one of relative calm after Friday’s global sell-off.

Factory Orders for April miss analysts estimates for 2nd straight drop

Orders for factory made goods dropped .6% in April compared to the prior month and March figures were revised from a 1.5% drop to a 2.1% drop.  Consecutive monthly decreases of orders have not happened since March of ’09, the scariest days of the recession, when people were less focused on orders and more on prayers to Jesus, Buddha, Ronald Reagan or the Monopoly guy for better days.  This data suggests businesses are investing less in equipment and households, holding off on those big-ticket purchases.  This Factory Orders report is data from the past, but it tells us what to expect from the manufacturing sector today and in the future.   As orders for goods in the March/April period drop, we expect factories to be less busy in current and coming months as they have fewer orders to fill.  This depressing news amplified fears of a global slowdown and caused a sell-off of Caterpillar (CAT, -2.26%) and JPMorgan Chase (JPM, -2.91%), two blue chips highly dependent on economic growth.

Facebook falls to new low after critical Bernstein research report

Facebook (FB) shares stumbled 2.96% to reach a new low of $26.90, down nearly 30% from its tormented $38 IPO price.  News leaked that Zuckerberg’s site is working to allow young kids fresh from touch-typing class to plug into the social network with parental supervision.  But that creepy (and clearly soon to be controversial) initiative isn’t what hit FB – Analysts at investment firm Sanford C. Bernstein placed an “underperform rating” on the stock and expect the price to fall to $25.  According to their research, advertising (which makes up a majority of FB’s revenues) can’t keep up with the increasing use of its ad-free cell phone app.  The report adds fuel to investors’ concerns that investment bank Morgan Stanley (MS), which helped bring FB public through its initial public offering, valued it way too high at $100 billion.

Tomorrow:

  • Besides Greece, Portugal is the most overweight debtor in Europe, and today 3 major banks tapped some of Portugal’s bailout money to comply with banking regulations.  How will European bond investors react to this bailout escalation?
  • Major non-manufacturing index is released at 10 AM.  We know manufacturing is struggling, but what about agriculture, construction, and the service industry?
  • Coffee titan Starbucks (SBUX) urged shareholders to get psyched for a venti-sized announcement after the market closed, sending the stock up 3.36% in anticipation.  Investors though were unimpressed after learning the company bought a San Francisco bakery chain for $100 million cash and expressed frustration by selling shares (SBUX lost nearly 1% by 7pm in after-hours trading).

© 2012 MarketSnacks

Tags: , , , , , ,

“Week in Review” – US MARKETS CLOSED FOR MEMORIAL DAY

28 May

May 21st – May 25th

US markets are closed for Memorial Day, so take a break from holding down the grill to look back on last week in all its glory.  Following the worst weekly performance in 6 months, markets were yanked up, down and sideways on European news. Like that sly kid at your high school who brought a 24-year old, partially-naked escort to prom, Greece has been getting all the attention at the European Leaders’ Summit “dance” – can Greece stay or is it getting kicked out? The mid-week meeting provided no specific solutions for how nearly-bankrupt Greece can stay in the Eurozone, but whispers & rumors resulted in abrupt stock movements. US economic data remained mixed, with “Existing Home Sales” beating expectations, yet “Weekly Jobless Claims” barely budged down, a slowdown in the improving jobs market. All eyes though were on Facebook’s struggles since their IPO, as investors sued them and investment bank Morgan Stanley for a misleading valuation and the Nasdaq stock exchange admitted botching many opening day FB trades.  News of credit downgrades and a government bailout to a slew of Spanish banks kept markets down on Friday, but the Dow did register its first overall weekly gain of May.

Click here for must-read long weekend articles and the economic calendar for the week ahead

Tags: , , , , , , ,

“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

Tags: , , , , , , , ,

“American Markets Finish Close to Even After Euro Leaders Signal No Change”

23 May

“Peace, Greece?”

Dow 12,496 (-.05%)        S&P 1,319 (+.17%)

We’re not calling this ‘the perfect storm’ (there technically aren’t any meteorologists on the MarketSnacks team).  But it was clear today that investors were (to borrow a phrase from every British movie ever involving a boat in a storm) ‘battening down the hatches’ after waves of negative market news.  New Home Sales for April in the US did jump 3.3%, but disappointing corporate earnings from Dell hit tech stocks, new developments in Facebook’s botched IPO smacked bank stocks and, most of all, news from the political summit in Europe slammed Blue Chip stocks all morning.  The Dow had lost nearly 200 points by lunch, though after the European markets closed, stocks managed to claw back and finish down just 7 points.

No news is bad news at European Summit, European markets continue free-fall
 

The highly publicized European summit unsurprisingly produced no new strategy to fix the debt crisis.  In a post-meeting statement released by a poor messenger boy, the leaders said they were excited to see the new Greek government that will continue implementing austerity reforms.  Meanwhile the Greek Prime Minister said that exiting the Euro was a real possibility, which would sadly be a catastrophe for Greeks and much of the Eurozone.  At least the Greeks are facing reality because it seems the European leaders have their heads in the sand, causing Americans investors to wake up to a bloodbath in European markets, down about 2-3% today.  The value of the euro dropped to an unholy level not seen since July of 2010, $1.26.  Part two of this European summit happens this evening with a “European Dinner.”  A tip for the Greek Prime Minister – order the lobster and down as many Grey Goose martinis as you can – this is your last free meal at that table.

Dell quarterly corporate earnings disappoint, pull tech stocks down

Dell (DELL) 1st quarter earnings fell bellow expectations and provided a weak outlook on 2nd quarter revenues.  Shares got hammered, dropping 17% at the open, and stayed there all day (could this mean a revival of the circa ’98 “Dude Your Getting a Dell” guy spots?).  The negative news was like a tsunami hitting islands of tech stocks, as Intel (INTC) and Microsoft (MSFT) lost over 2% and Juniper (JNPR) over 4%.  Dell is considered a barometer for tech firms because it’s such a long-time, large-scale cornerstone of the industry, so its earnings have an impact.

Facebook and Morgan Stanley sued over IPO valuation issues

Facebook (FB) has been getting a paparazzi-level of attention over the last few days – after sliding 19% since Friday’s bungled initial public offering (IPO), shares finally finished positive today.  The newest development (we considered going with “status update,” but we’ll spare you) was a lawsuit.  As we reported yesterday, Morgan Stanley (MS), the investment bank that valued FB at a tech IPO record $105 billion, actually cut their estimates of its revenues just before its market debut.  So investors in Massachusetts and New York subpoenaed the social network today, along with Morgan Stanley and the other investment banks that prepared (or underwrote) the IPO, for misrepresenting what it was actually worth.

Tomorrow:

  • After finishing the day down, Hewlett-Packard (HPQ) announced earnings after the close that beat expectations following a restructuring package that includes laying-off 27,000 workers over the next few years – the stock is up in after-hours trading, but can momentum be sustained….
  • Facebook (FB) may have finished up today – but what will happen after today’s post-close report that the company is considering switching its stock to the New York Stock Exchange (NYSE) after Friday’s technical issues on the Nasdaq exchange….
  • “Weekly Jobless Claims,” the amount of Americans filing for unemployment, in the AM….

© 2012 MarketSnacks

Tags: , , , , , , ,

“Stocks Down Slightly After Yesterday’s Gains, Facebook Continues to Struggle”

22 May

“Markets were supposed to go up, sir, but something seems to have happened in the last hour of trading”

Dow 12,503 (-.01%)        S&P 1,317 (+.05%)

With the Dow Jones Industrial Average down over 6% this ugly May and ending negative every single day last week, yesterday’s positive finish was an overdue relief.  It’s really a shame that the warm feeling couldn’t last.  Despite adding 70 points in the morning on surprisingly positive US housing data, the Dow fell late in the afternoon to finish down 2 points as Greek concerns overwhelmed investors.  Ahead of tomorrow’s European political summit, Greek Prime Minister Lucas Papademos said Greece is quietly preparing for a possible exit from the Eurozone and, therefore, the euro currency, which dropped markets fast.  It’s Facebook though that continues to dominate headlines after the newborn public stock continues its awkward slide.

“Sales of Existing Homes” beats expectations, sends banks stocks up

The National Association of Realtors reported that “Sales of Existing Homes” popped 3.4% in April.  The solid result beat expectations and the average price of sold homes was 10% higher than April of 2011.  Not too shabby.  The news boosted enthusiasm among investors, who aggressively high-fived and bought up banks stocks, as Citi (C) and Bank of America (BAC) added over 2% and JP Morgan (JPM) jumped almost 5% after recent slides from last week’s $2 billion trading loss.  Economic data tends to have a significant influence on financial stocks because their businesses are so dependent on the health, growth and flows of the economy.

Facebook shares fall again following report on Morgan Stanley valuation

In just their third day of trading, Facebook (FB) shares dropped nearly 9%, another embarrassing development after yesterday’s 11% fall.  According to a report released today, the Morgan Stanley (MS) investment bankers who valued the company at a record (for a tech company) $105 billion, actually cut their estimates of FB’s revenues just before its market debut.  Morgan Stanley was the primary investment bank raising $16 billion for FB through an initial public offering (IPO), bringing the company’s shares to be sold in the open market for the first time.  The report supports many analysts’ criticisms before the IPO that Morgan Stanley was valuing Zuckerberg’s baby too much on its popularity and not enough on its financial fundamentals.

Tomorrow:

  • Even though it’s across the pond, tomorrow’s latest summit of European leaders’ is going to be all the rage – how will France’s new Socialist President Francois Hollande and German Chancellor Angela Merkel hit it off on the big stage?  Investors will be looking for specifics on how they plan on dealing with Greece and growth problems in Europe….

© 2012 MarketSnacks

Tags: , , , , ,

“After a Choppy Week, Stocks Finish Up on Impressive Earnings”

20 Apr

"The Corporate Earnings Boogie"

Dow 13,029 (+.50%)        S&P 1,379 (+.12%)

Stocks have gone up and down so much recently we’ve been suffering daily nosebleeds.  But the Dow Jones Industrial Average finally reached its first weekly gain in April, finishing the week up 1.4% when all of the recent dips and spikes were said and done.  In this early portion of the second quarter, corporate earnings have been the dominant theme over the last few trading sessions, yanking the stock index back and forth.  Today’s positive corporate earnings from key blue chip companies, combined with surprisingly strong econ news out of Europe, led the Dow up a comfortable 65 points after yesterday’s 69-point loss.

Earnings from Blue Chip stocks Microsoft, General Electric and McDonald’s beat expectations

Microsoft (MSFT) led the way with the top performance in the Dow, leaping 4.6% after the software behemoth reported results on Thursday evening above Wall Street’s estimates.  Bill Gates’ baby cited increased Windows and Office product sales for the performance.  General Electric (GE) did see a 12% decline in earnings, but the first quarter number was still ahead of analysts’ forecasts.  GE stock advanced 1.15% on the news that profit growth was triggered by production in its energy-infrastructure division.  And finally, deep-fried shares of McDonald’s (MCD) bounced 0.69% after sales increased at a faster pace than expected.  Each of these companies is large enough to make a splash in the trading floor kiddie pool and with positive quarterly earnings news from each, investors jumped in too.

 Positive economic data from Germany and United Kingdom surprise economists

Okay – the following news was just as shocking for us to write as it is for you to read right now.  For over a year, Europe’s debt crisis has pushed the continent into a recession, as gross domestic product (GDP) shrinks, and investors refuse to lend to the countries they fear cannot pay them back – the result has been months of bearish economic news.  But this morning, positive headlines from two of the region’s stronger economies provided a unique moment of stability for traders to temporarily cherish.  In Germany, business confidence rose in April for the sixth straight month and in the United Kingdom, retail sales increased significantly – both against economists’ expectations.  While serious concerns over the financial state of the PIIGS nations of the Eurozone fundamentally remain, the news that two of the “healthier” economies are making progress was a (momentary) relief.

 “Week in Review”

Like some kind of baller hotel-style breakfast buffet, the past week featured a rich variety of headlines for investors to plop spoonfuls of on their plates.  And with a total mix of extreme results, markets were some of the choppiest we’ve seen all year.  Strong retail sales stats for March powered the Dow up to start the week, then weekly jobless claims, regional manufacturing and previously owned homes sales econ data disappointed later.  Verizon (VZ), Citi (C), Bank of America (BAC) and Morgan Stanley (MS) notably beat earnings expectations midweek, but slow growth from tech-giants IBM (IBM) and Intel (INTC) dropped markets earlier.  And Spain and Italy are still keeping investors tossing and turning at noche, yet Spain did manage a strong bond auction this week despite European debt fears flaring up.  Corporate earnings, US econ data and international concerns were all over the place, leaving us feeling like we just stepped out of a week-long Avicci rave.

Next Week:

  •  The French Presidential election over the weekend – will President Sarkozy be unseated and how will Le stock market react on Monday?
  • Apple (AAPL) stock was down 2.5% today, 5.3% this week and has fallen in 8 of the last 9 trading sessions, turning the tech-heavy Nasdaq stock index negative today – are investors “correcting” (reevaluating) its market value?  Does it still have further to go?  Will they buy the stock back at this discount next week?  Apple reports earnings next Tuesday….
  • Economic data on manufacturing and housing – how will they affect the Federal Reserve‘s upcoming monetary policy decisions?
  • Week #3 of earnings season, baby: US Steel (X), Boeing (BA), Xerox (XRX), Apple (AAPL)….

© 2012 MarketSnacks

Tags: , , , , , , ,

← Older Entries

%d bloggers like this: