Tag Archives: Nasdaq

“Tech Stock Rally Propels Markets Up”

16 Aug
"Boy, those Cisco earnings are driving tech stocks up huge"

“Boy, those Cisco earnings are driving tech stocks up huge – just look at my HiDef computer screen”

Dow: 13,250 (+0.65%)        S&P 500: 1,416 (+0.71%)

It’s kind of like Revenge of the Nerds, but without the tasteful ’80s clothing – tech stocks, which have struggled as of late, rebounded & surged today.  Networking powerhouse Cisco (CSCO) reported better-than-expected earnings & revenues and a 75% increase in its quarterly dividend to 14 cents per share, lifting its peers and the tech-heavy NASDAQ stock index up 1%.  On the flip side, Walmart (WMT) lost 3% as sales declined last quarter and Facebook (FB) jumped into the headlines as insiders were finally eligible to sell-off shares.  US housing data was mixed and weekly jobless claims edged up slightly from the previous week, but a rise in building permits helped the Dow jump 85 points for its biggest gain in nearly 2 weeks.

July Building Permits rise, but Housing Starts ease

New building permits rose last month higher than expected, a signal of confidence to investors about future construction – after dipping in June, the number of building permits jumped nearly 7% in July.  Although the building data helped drive markets up, other econ reports weren’t so perky.  Housing starts, on the other hand, pulled the ol’ switcheroo with a reverse performance over the last two months compared to building permits – after advancing in June, construction on new residential buildings slipped 1% in July.  Investors focused on the glass-half-full side of the data following recent improvements in home-builder confidence this month.  The housing market isn’t anywhere near fixed, but economists believe this summer has started to experience a very modest up-trend.

Flood of new FB shares hit the market, causes 6% stock price dive

There are about 2.5 billion Facebook (FB) shares out there, but only 471 million were issued in the Initial Public Offering (IPO) in May.  It’s typical not to withhold the bulk of the shares from the public in an IPO, the world wasn’t ready for all of Facebook.  Many shares have a holding period when early investors cannot sell the stock in order to ensure that the owners continue to have the best interest of the company post IPO, and to create scarcity that should keep the stock price up.  Think about it – if Mark Zuckerberg had sold his entire 21% stake in FB on Day 1, he would have made ~$20 billion, but then who owns Facebook?  Investors need to know that the owners still have a stake in the company so new shares are periodically released to the public market in waves until May of next year (these are the rules – accept them). 

Today, another 250 million shares held by early investors (Bono, maybe) were eligible to be sold on the NASDAQ stock exchange (if we were Bono, we’d be tired of holding pieces of paper with “FB common stock” written on them – we’d prefer cash).  As FB shares sold-off, the stock dropped 6.2% to an all time low of $19.88.   Surely not all new shares were sold to the market today, but just the fact that 251 million shares could have been sold may have been a fear factor that contributed to today’s sell off in the market.  The number of FB shares traded today (i.e. the volume) was twice the average since the IPO.   Expect a super-sized version of today’s phenomenon on November 14th, when another 1.3 billion shares will be freed up – this is the first day that Zuck will finally be able to cash in on his FB investment. 

Tomorrow:

  • The preliminary Reuters/University of Michigan Consumer Sentiment poll for August
  • The 2nd quarter earnings season dwindles: Footlocker

© 2012 MarketSnacks

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“Despite Solid Econ News, Stocks Drop Ahead of Fed Meeting”

31 Jul

“Forget econ data – I’m dyin’ for some sexy policy news from the Fed”

Dow: 13,009 (-0.49%)        S&P 500: 1,379 (-0.43%)

It looked like investors pounded a 64 ounce, Bloomberg-banned big-gulp Thursday and Friday’s given the big stock rally, but post-sugar high they’re getting fidgety.  After dipping 3 points yesterday on the downgrade of JP Morgan stock, the Dow fell 64 more points today despite solid econ data.  Investors’ focus is on any stimulus news from the Fed’s policy setting meetings.  With few big names reporting earnings, consumer-discretionary stocks (the antithesis of essentials) were the S&P 500 stock index‘s worst performers as designer clothing-maker Coach (COH) missed expectations.  It’s not all bad for the Dow – the blue chip index finished July with its 9th monthly increase in 10 months by adding 1%.

Housing, Manufacturing and Consumer econ reports impress

As they say in the mean streets of Seattle, when it rains, it f**ing pours – especially when you don’t expect it.  Case in point – today’s econ news.  None of it was significant enough to move markets like Friday’s upcoming government jobs report, but together they impressed.  The S&P/Case-Shiller home price index showed May home prices rising slightly for the 2nd straight month (investors hope consistency in the housing market will signal a “bottoming-out”).  Although consumer confidence rose in June and personal income numbers beat forecasts, consumer spending was actually down, indicating people saved their extra income in higher rates than usual, about 4.4% of income was shoved into piggy banks in June.  High savings indicate, well lack of confidence.  Clearly economic reports sometimes contradict, but the trend continues to be shrinking consumer confidence.  Economists believe a reduction in the unemployment rate is needed for this trend to reverse.

UBS reports poor earnings, points finger at Nasdaq for blowing Facebook IPO

Like most investment banks this quarter, Zürich based UBS (UBS) blamed a poor economy and reluctant investors for poor earnings.  UBS’s 58% drop in profit to 425 million Swiss Francs knocked the stock down 6% today, but the CEO made the most of his spotlight by calling out the NASDAQ stock exchange for botching Facebook’s IPO, costing the bank $350 million.  While Nasdaq’s computers were glitching on that fateful day, UBS kept putting in more and more “buy” orders.  Then, like a faulty printer driving you mad minutes before your term paper deadline, UBS received way more shares than it wanted once the machines finally worked.  And we all know what has happened to Facebook (FB) stocks since their IPO (FB hit another record low today of $21.71 from its IPO price of $38).

Deutsche Bank announces earnings half of last year’s and 1,900 job cuts

Frankfurt-based Deutsche Bank (DB) took a beating from the markets too and managed just 600 million euros of profit compared to 1.2 billion in this quarter last year.  To appease shareholders, the CEO quickly announced huge job cuts, including 1,500 investment banking jobs.  No I-banker at Deutsche is safe from having the dreaded empty cardboard box pushed into their arms.

Tomorrow:

  • The ADP jobs report gives us a preview of what to expect from Friday’s official employment announcement from the U.S. government.
  •  Earnings announcements: Mastercard and Metlife Insurance

© 2012 MarketSnacks

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“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

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“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

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“Facebook IPO Disappoints As Markets Cap Worst Week of 2012″

18 May
"That whole IPO thing was supposed to be a lot more fun"

“This whole IPO thing was supposed to be a lot more fun”

Dow 12,369 (-.59%)        S&P 1,295 (-.74%)

After 5 straight depressingly negative days, Friday morning was the psychological break you, us, and every investor who ever owned a modem was waiting for – Facebook‘s record Initial Public Offering (IPO).  But if we read one more article that mentions “liking” Facebook stock or “poking” a broker to buy some shares, the MarketSnacks team will collectively jump in front of traffic.  The only thing bigger than the build-up to today’s Facebook-a-palooza was journalists’ frenzied effort to accumulate as many social-networking analogies as humanly possible.  Despite the hype, Facebook shares stumbled and continuing Eurozone concerns (16 key Spanish banks were downgraded yesterday) ultimately overwhelmed investors.  The Dow dropped 73 points for its 6th straight loss and worst weekly finish in years.

How did Facebook’s IPO get here?

Ahead of today’s Facebook (FB) stock fiesta/bar mitzvah, the $38/share price was set by wealthy investors and institutions yesterday who made bids for the stock over the last couple weeks and ultimately purchased existing shares from Zuckerberg, Goldman Sachs, Peter Thiel and other long-time Facebook investors.  Facebook went public, selling its shares on the open market for the first time through an initial public offering, in order to raise money.  By selling $16 billion worth of shares, Facebook raised more money in an IPO than General Motors (GM) in 2010 and just short of Visa’s (V) record for American companies in 2008.  The most important element of this valuation was how Facebook brought in just $3.7 billion in revenues last year – this eye-popping 88 P/E ratio (price per share divided by earnings per share) is a critical way to measure the value and hype of a stock.  Expectations were high….

What happened to Facebook’s IPO today?

Things got off to a rocky start.  IPOs often begin trading after stock markets open at 9:30am, but Facebook’s 11am scheduled start was delayed 40 minutes because the NASDAQ exchange struggled to match up the millions of buyers with sellers.  FB shares immediately  jumped 11% from the $38 offering price on the overwhelming demand, but that level of enthusiasm couldn’t be maintained – after reaching $45, the stock fell to its opening price.  FB never touched under $38 because the underwriters (the investment bankers who brought the company public) started buying the shares to prevent them turning negative, a potential black-eye on Facebook’s “first day of school.”  The lackluster performance influenced related companies like LinkedIn and Groupon (game developer Zyngawas even given the “mercy rule” and trading stopped after so many investors sold its shares) who got slammed.  Overall, Facebook’s modest finish may not be considered a huge success, but still set records for trading volume with over 571 million shares exchanged.

Why did this happen to Facebook stock?

Facebook’s uninspiring 23-cent debut today is not a reflection of what the company has accomplished, but is foremost a judgment about the potential for the site to make cash money.  Some doubt whether Zuckerberg and his circa ‘98 Adidas slip-on sandals have what it takes to be a bona fide corporate CEO.  Others question whether FB can rely only on advertising revenues (GM recently pulled millions for Facebook ads because it figured users preferred stalking ex’s over auto ad distractions).  And many simply believe that today’s record valuation was too enormous considering the company is so young.  These bearish thoughts may have moved the stock today, but with unprecedented access to 900 million users’ information, many still believe that FB will continue to revolutionize how ads reach customers.  Either way, this IPO raised $16 billion and Mark Zuckerberg is sitting on a bajillion dollars.

Next Week:

  • How will Facebook perform after the attention of its IPO is gone?
  • Spring Housing Data in the US….

© 2012 MarketSnacks

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“Markets Down Big For 5th Straight Loss”

17 May

“Seriously? Five days, dude?”

Dow 12,443 (-1.24%)        S&P 1,305 (-1.51%)

Even though you’ll have to wait for Friday to buy shares of Facebook (FB), the company’s record $105 billion valuation was already receiving media attention this afternoon worthy of a viral wardrobe malfunction video.  MarketSnacks of course will have you covered tomorrow on the stock’s first day performance – but today, it wasn’t aggressive Facebook anticipation that sent markets to their 5th straight loss.  This morning, blue chip American retailers Sears (SHLD) and Wal-Mart (WMT) jumped over 3% and 4%, respectively, after 1st quarter earnings smashed analyst expectations and projected a solid 2nd quarter.  But disappointing US economic reports and developments in Spain took control later on and slammed the Dow down 156 points for its 11th loss in 12 days.

Spanish bond yields spike and Moody’s downgrades Spanish banks

Apparently all those bulls killed in Spanish bullfights are bad karma.  While Greece dominated headlines all week for its failed new government, developments in Spain highlighted debt crisis fears among the other PIIGS, pulling markets down.  First, the yields on Spanish bonds (which is the return required by investors funding the nation’s debt) increased because investors feel that they are taking on greater risk from the financially struggling country and, therefore, deserve more in return.  Then, after US markets closed, ratings agency Moody’s reportedly downgraded 16 key Spanish banks multiple notches, many from B-level to C-level grades.  Though many investors expected this, the downgrades reflect how financially unstable the banking institutions have become, increasingly more likely to default on debts.

Initial Jobless Claims flat compared to last week, Mid-Atlantic manufacturing slows

Once again, initial jobless claims were unchanged at 370,000 this week, signaling little improvement in the labor market.  Although it was below the symbolic 400,000 threshold, economists would like to see the number of newly unemployed gradually decrease week to week, and this figure has gradually risen since touching 350,000 several weeks ago.  In other Econ data the Federal Reserve Bank of Philadelphia reported slowing industrial activity in the mid-Atlantic region.  Following reports of industrial growth from the New York Fed earlier this week, it’s difficult to interpret this news, but a steady trend of slightly disappointing econ data is washing away the remaining US economic optimism from the monster start of 2012 we all witnessed.

Tomorrow:

  • All hail the Facebook!  The social network sold $18.4 billion of shares to VIP investors for $38/share today.  At tomorrow’s initial public offering (IPO) common investors will pounce at their first chance to buy shares of the $105 billion company on the public markets.  9:30 AM tomorrow: NASDAQ stock exchange + “FB” = MARKET MAYHEM.
  • JP Morgan (JPM) CEO Jamie Dimon responds to the newest development in last week’s $2 billion trading loss – he agreed to testify before the US Senate on the incident and whether new regulations are needed.

© 2012 MarketSnacks

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“Solid US Economic Data Helps Dow End 6-Day Skid (Barely)”

10 May

“Oh positive stock market, you’re back – you’re really back”

Dow 12,855 (+.16%)        S&P 1,358 (+.25%)

Despite what you’ve probably become conditioned to think over the last week, the stock market doesn’t only go down for days at a time.  After six consecutive negative trading sessions, stocks finally reversed course on some optimistic US economic numbers, eking out a gain.  While the results of contentious weekend elections in Europe kept markets down earlier in the week, investors were also pleased by signs today that Greek leaders are closer to forming a unified government committed to the budget-cutting austerity measures that will keep the nation in the Eurozone.  In response, the Dow tip-toed up 20 points (we’ll take what we can get).

Weekly jobless claims drop and US exports reach record highs as trade deficit widens

A mix of the most significant economic news of the week came in mainly positive, helping kick-start markets in the morning like an old lawnmower.  Weekly jobless claims, the number of Americans filing for unemployment, fell by 1,000 applicants, beating expectations that it would rise after dropping to 365,000 the week before.  Following the Labor Department’s key monthly report last Friday that only 115,000 jobs were added in April (well below the 160,000 forecast), concerns grew that improvements in the US job market since the fall had slowed – so investors have been eager for any positive developments they can get their hands on.  In addition to the solid jobs news, although the US trade deficit increased, exports surged to record highs, indicating growing demand among American consumers.  Together, both the jobs and trade headlines represented underlying economic strengths.

Poor financial outlook for Cisco forces the Nasdaq stock index down

Cisco Systems (CSCO) is a global provider of technology and communications products and services for just about any major company that possesses multiple computers.  Their stock plummeted over 10% today after CEO John Chambers announced quarterly earnings.  What was most troubling about the CEO’s report was not the results, but his outlook for the future – he significantly lowered earnings expectations for 2012 as big companies are reducing investment in the technology that Cisco provides.  And European governments (who are all cutting back on spending) are cutting demand as well.  The plummeting shares weighed heavily on the NASDAQ 100, which is a stock index composed of mostly tech companies (including Cisco), while the Dow Jones Industrial Average and S&P 500 turned positive.

Tomorrow:

  • The University of Michigan’s “Consumer Sentiment Poll” is the most major financial headline on tap – how do American buyers feel?
  • Can stocks rally for a second day in a row to end the week?….

© 2012 MarketSnacks

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“More Spanish Debt Issues Push Dow Down For Third Straight Day”

5 Apr

"Dude, just stay down and don't move until the government's employment report tomorrow."

Dow 13,060 (-.11%)        S&P 1,399 (-.06%)

The realization that the Federal Reserve plans no further policies to stimulate the economy was a right jab on Tuesday and a weak Spanish debt auction was a blowing body shot on Wednesday.  This morning, investors in Europe continued to sell their Spanish bonds to anyone daring enough to buy the risky assets and this news was an uppercut to fatigued American traders.  The Dow fell a measly 15 points on a mostly quiet Thursday as many investors ignored more good U.S. jobs data and threw in the towel before the long Good Friday weekend.  And the rest were simply looking ahead to tomorrow’s huge US government March employment report….

Weekly jobless claims fall to lowest level in 4 years ahead of Friday’s major employment report

The Labor Department reported that the amount of Americans filing for unemployment over the last week, or “jobless claims,” dropped by 6,000 applicants to reach 357,000 total, its lowest level since April 2008.  The number has been declining for six months and economists point out that claims consistently below the 400,000 mark are a sign that employers are firing less.  Today’s data though did little to move the markets as investors remain focused on tomorrow’s big ol’ monthly jobs train pulling into the station – the government’s official March employment report will detail the unemployment rate and how many new non-farm jobs were added.  Since the report comes out the first Friday of every month and Good Friday is dependent on cycles in the moon, tomorrow presents a unique situation in which the stock market will be closed when the major labor news is released.  Investors who are members of the futures market will have a 45-minute window only on the Chicago Mercantile Exchange to trade early in the morning right after the announcement….the rest of us will swallow the news and react on Monday.

Nasdaq wins Facebook over New York Stock Exchange

It’s a game of bragging rights and NASDAQ (NDAQ, +1.19%), the rival exchange to the New York Stock Exchange (NYX, -1.26%), won the recruiting battle for the golden Facebook stock listing.  When Facebook finally becomes a public company after its Initial Public Offering (IPO) this summer all of its shares will be traded on NASDAQ’s exchange under the ticker symbol “FB.”  Tech enthusiasts shook their heads upon hearing that Mark Zuckerburg did not stick it to the establishment with a comical symbol such as “POKE” or “LIKE.” NASDAQ is the home stock exchange of tech titans including Google, Apple, and soon Facebook.

Tomorrow:

  • The US stock market is closed for Good Friday; US bond market is open until noon.
  •  The all-critical, eagerly-anticipated, much-discussed government employment report for March.  MarketSnacks will have you covered….

© 2012 MarketSnacks

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