There was a time – in fact it was a LONG time – when it looked like Amazon was built as a company designed to never ever make a profit. Well, those days may be gone, friends. Last night, Amazon reported $1.07 per share of quarterly profit. That was nearly double the 58 cent estimate. Amazon shares are looking to open about 12 percent higher this morning. Facebook shares, which also surprise to the upside this week, is looking to rise a bit more this morning.
Yesterday, in a television interview, Carl Icahn, who some regard as an investing icon, disclosed that he had sold all of his Apple shares and warned of an upcoming “day of reckoning” for stocks. Apple shares promptly sold off on the news, and it could be that his comment added fuel to the overall market decline yesterday afternoon. Just keep in mind that even major religions warn of a “day of reckoning.” The trick is to figure out when it will happen and to realize that it could be a long way off.
Tivo is being acquired by Rovi in a one billion dollar deal. Shares of both companies are higher pre-market. ExxonMobil shares are about one percent higher on an earnings beat this morning.
By 10 o’clock, we’ll get the Chicago PMI and the University of Michigan’s final verdict on April Consumer Sentiment. It’s expected to tick up to a reading of 90.4.
Most overseas markets are lower. At this point, adjusted for fair value, the S&P 500 and Dow futures are flat, but the NASDAQ futures, buoyed by Amazon’s blowout earnings report last night, are about 11 points above fair value.April 28, 2016
There are several big mergers to consider this morning as well as another boatload of corporate earnings reports. But never mind all that to figure out where stock prices will start the day.
We’ll start the day sharply lower and the blame goes to Japanese monetary policy. Overnight, the Bank of Japan announced no increase in their monetary stimulus program. Then later, a Bank of Japan Governor said that they were prepared to “do anything necessary” to boost inflation. Markets hate uncertainty, and if anyone can figure out what the Bank of Japan is going to do next, please send us an email. The Nikkei index fell 3½ percent overnight.
Ford Motor reported a 3½ billion dollar pre-tax profit this morning. Operating earnings of 68 cents per share came in 20 cents ahead of estimates. Don’t expect that to light a fire under the stock, however. Ford shares are indicated a little more than one percent higher pre-market.
Abbott Labs is buying St. Jude Medical for 25 billion dollars in cash and stock. That’s 85 dollars per share and has St. Jude trading pre-market about 27 percent higher than last night’s close.
That’s good if you own St. Jude’s, but if you own the broad market, you’ll see red arrows to start the day. At this point, adjusted for fair value, the S&P 500 futures are lower by 12 points, the Dow Industrial futures are down 134, and the NASDAQ futures, getting a big boost from Facebook’s earnings report last night, are just about even with fair value.
Apple has been known to surprise analysts with their quarterly reports. We didn’t expect a great earnings report from Apple last night, and in that regard, Apple didn’t surprise us. Revenue dropped 13 percent year-over-year. It’s the first revenue drop in 13 years, $1.90 of quarterly profit missed the 2 dollar estimate and Apple shares dropped almost 8 percent last night, and that looks like where they’ll start the trading day today.
Not to be outdone, Twitter shares are off about 14 percent this morning. Although15 cents of profit beat the estimate by a nickel, revenue was light and full year guidance was extremely weak.
Chipotle shares are down about 5 ½ percent this morning, after reporting same store sales that dropped about 30 percent. Panera shares are a bit higher on a positive report. Also beating estimates were United Technologies, Mondelez, EBay and Comcast.
The big winner of the morning may be shares of Dreamworks, up about 18 percent, on a report that Comcast may be interested in buying the company, pandas and ogres and all.
Almost lost in all the earnings news, the Fed’s Open Market committee will give its latest non-decision on interest rates at 2 o’clock, but in front of that, we should get off to a slightly lower start at 9:30, although the futures are showing less of a loss than they have all morning.
At this point, adjusted for fair value, the S&P 500 futures are lower about a point, the Dow Industrial futures are down 23, and the NASDAQ futures, dragged down by the lousy technology earnings reports, are about 38 points below fair value.
You’ve probably hear about the “FANG” stocks – (Facebook, Apple, Netflix and Google.) Well today you can look forward to an afternoon “tea.” That is, earnings reports are on the way from Twitter, EBay and Apple. Apple will be most interesting of the bunch as iphone sales are likely to post a year-over-year sales decline, which is pretty much unheard of.
The reports that are out this morning are, on the whole, pretty good. Eli Lilly and DuPont both beat estimates and raised earnings guidance. Also beating the earnings bogey were Jet Blue, Coach, Hershey, Spirit Airlines, 3M and Procter & Gamble.
Oil giant BP announced a bigger loss than expected on a replacement cost basis, but BP shares are indicated almost 5 percent higher pre-market.
The big loser of the morning is Sarepta. The biotech firm’s shares are on a nearly half-off sale after and FDA advisory panel refused to recommend fast-track approval for Sarepta’s muscular dystrophy drug. Sarepta shares are right around 8 bucks per share. They traded around 42 dollars just about 7 months ago.
The March Durable Goods Report at 8:30 is expected to reflect a 1.7 percent increase, after a nearly 3 percent decline in February.
A late rally almost pulled stocks out of the red yesterday and it looks like that rally could continue in the early going today as the futures have been higher all morning long. At this point, adjusted for fair value, the S&P 500 futures are higher about 6 points, the Dow Industrial futures are up 52, and the NASDAQ futures are about 12 points above fair value.
It’s Monday, so there must be at least one merger cooking. This morning’s isn’t a done deal, and the offer isn’t apparently welcomed. Media giant Gannett has offered $12.25 in cash for the shares of Tribune Publishing. That’s a more than 60 percent premium to Friday’s closing price, but Tribune Publishing’s Board is resisting so far.
It’s another big week for corporate earnings reports, with the highest profile reports coming out later in the week. Apple, for instance, reports tomorrow. This morning, Xerox missed the 23 cent per share estimate by a penny and lowered earnings guidance. LabCorp reported $2.02 cents of quarterly profit, which was 6 cents better than expected. Haliburton delayed its expected report, as it is spending all its time trying to convince the Government than the Baker-Hughes merger is really a swell idea.
And, don’t look now, but the Fed holds another Open Market Committee confab this week. We’ll hear all about it Wednesday afternoon.
Overseas markets are lower, but generally by about one half of one percent or so. Oil prices are down about a percent and a half this morning, and it looks like the linkage with stock prices continues. At this point, adjusted for fair value, the S&P 500 futures are down about 4 points, the Dow Industrial futures are off 47, and the NASDAQ futures are about 12 points below fair value.
We’re at the peak of first quarter earnings reporting season and there are far too many to cover in just 70 seconds or so. However, suffice it to say that between last night and this morning, we’ve seen more misses than hits.
Last night, we saw trouble in techland as Microsoft and Alphabet both checked in with disappointing results. Shares of both companies are almost 5 percent lower pre-market today. Starbux also reported a disappointing quarter, and its shares are looking to open about 3 ½ percent lower.
General Electric and Caterpillar shares are about 1 to 2 percent lower this morning on lackluster reports. Daimler shares are about 6 percent lower in Europe on a profit drop and Boston Beer, the maker of Sam Adams is about 10 percent lower on a miss and a warning about intensifying competition from craft beers.
Norfolk Southern shares are looking higher, with $1.29 in profit, which was a massive 32 cent beat. McDonald’s U.S. same store sales were up over 5 percent and the shares are 2 percent higher. Sears Holdings shares are up 6 percent after announcing 78 new store closings and Advanced Micro Devices shares are up 23 percent after reporting less of a loss than expected.
Overseas markets are mixed. Right now, adjusted for fair value, the S&P and Dow futures are pretty much flat, but the NASDAQ futures, pressured by all those lousy earnings reports in technology, are about 40 points below fair value.
The Dow Jones Industrial Average and the S&P 500 have now risen in price for 6 of the last 7 trading days, and if the early trade holds up, we’ll be calling it 7 of 8 by tomorrow morning.
The earnings continue to flow, and top of the list this morning is the news from General Motors. Earnings of $1.26 per share blew away the estimated $1.01. Perhaps more impressively, revenue topped 37 billion dollars for the quarter, almost 2 billion better than the average estimate. GM shares have jumped about 3 ½ percent higher in pre-market trade.
Volkswagen shares are about 6 percent higher in Europe on the report out a German newspaper of a potential settlement with the U.S. Government to buy back 5,000 diesel cars and pay a billion dollars or so.
Under Armour earned four cents on the quarter, which doubled expectations. Shares are a little more than 3 percent higher this morning. Verizon’s $1.06 of operating profit matched expectations.
The Federal Reserve’s Philadelphia regional business survey comes at 8:30. Leading Indicators at 10am.
Chinese stocks were lower overnight, but most other Asian markets were up. Europe is mixed.
Right now, adjusted for fair value, the S&P 500 futures higher by about 2½ points, the Dow Jones Industrials future are up 28, and the NASDAQ futures are about 4 points above fair value.
As we hit the heart of first quarter earnings season, the worst fears of many appear to be unfounded. Many believed that a 9 percent decline in quarterly earnings was baked in the cake, but the cookie has not crumbled to nearly that extent, and even though earnings are a bit lower, 78 percent of the S&P 500 that have reported so far have met or bested the estimates.
But even though earnings haven’t severely disappointed, revenues haven’t always measured up and forward guidance has been a little less than inspiring. Case in point last night was Intel. Fifty four cents of profit beat the forty eight cent estimate, but guidance was weak and Intel will cut another 12,000 jobs in a restructuring.
This morning Coca-Cola also beat the earnings bogey, but case volume was light and Coke shares are about a percent and a half lower. St. Jude Medical and Tupperware similarly beat on past earnings but guided lower.
At 10 o’clock, The March Existing Home Sales Report is expected to pick up to an annualized rate of just over 5¼ million units.
There’s not much movement overseas, but our futures have dug their way out of an earlier hole, but not by much. Right now, adjusted for fair value, the S&P 500 futures higher by about 1½ points, the Dow Jones Industrials future are down 4, and the NASDAQ futures are almost 4 points above fair value.
Earnings reports from last night and this morning are painting a very mixed picture of corporate performance. Last night, Netflix warned of slowing subscriber growth, as competition is picking up from the like of Amazon. Netflix shares are indicated about 9 percent lower in the pre-market.
Not far behind on the disappointment scale is IBM. Revenue dropped for the four year in a row and is at a 14 year low at Big Blue. IBM shares, which carry a pretty big weight in the popular indexes, is indicated about 4½ percent at this hour.
Goldman Sachs shares are fairly flat after reporting revenue that fell well short of estimate, although quarterly earnings of $2.68 came in 23 cents ahead of estimates.
The famous other hand belongs to a couple of health care stocks. United Health Group’s $1.81 of profit was a nine-cent beat. United Health also raised guidance for the year, as did Johnson and Johnson, whose $1.68 of profit was 3 cents better than expected.
March Housing Starts and Building Permits are to be reported at 8:30. Overseas markets are generally higher, with European markets up ½ to 2½ percent.
Adjusted for fair value, the S&P 500 futures higher by about 8 points, the Dow Jones Industrials future are up 63, and the NASDAQ futures are about 16 points above fair value.
I’m not sure anybody REALLY thought that the big oil big shots in the long white robes were going to play nice over the weekend in Doha. And sure enough, what started as a congenial chat ended in fairly predictable acrimony with no agreement to curb oil production. End result? Good news at that pump, bad news for stock prices, at least in the short run. West Texas Intermediate oil dipped more than 6 percent last night, but is only about 4 percent lower this morning and our stock futures are lower, but not by nearly as much as they were last night.
In the meantime, earnings season is getting into gear. Pepsico shares are indicated about one percent higher on higher reported margins and 89 cents of quarterly profit, which was an 8 cent beat. Morgan Stanley looks almost three percent higher on a nine cent beat and Hasbro shares are 5 percent higher, powered by massive sales of Star Wars themed toys. They reported 38 cents in profit, versus the expected 24 cents.
Toyota shares are under some pressure this morning. They have reportedly suspended production across Japan due to component shortages expected due to the resent earthquakes there. Keep an eye on Ford and General Motors shares this morning after a favorable piece in Barron’s over the weekend that speculated that share of both could rally by 25 percent. A separate article speculated that Intel shares could also do that well.
Most overseas markets are lower. Adjusted for fair value, the S&P 500 futures lower by about 8 points, the Dow Jones Industrials future are down 58, and the NASDAQ futures are about 13 points below fair value.
We’ve seen a couple great days for stock prices in anticipation of earnings season. Whether that’s justified or not remains to be seen. This morning, for instance, the news is pretty underwhelming. Big money manager Blackrock reported $4.25 of quarterly profit, which was just about 4 cents short of expectations. Blackrock shares are almost 2 ½ percent lower this morning. Bank of America shares are almost one percent lower. Last night they lowered estimates to 20 cents per share and magically reported 21 cents in profit this morning.
Delta Airlines shares are almost one percent higher after announcing $1.32 of adjusted earnings per share. Wells Fargo also one percent higher after reporting 99 cents, which was a 2 cent beat.
The Bank of England kept its interest rate policy unchanged this morning as they gird for the upcoming June 23rd“Brexit” vote, which is at this point, looking to be quite a disruptive event all on its own.
At 8:30 the Weekly Jobless Claims should hold steady at 267,000 and the March Consumer Price Index (remember when people worried about inflation?) is expected to rise two-tenths of a percent.
Asian markets were mainly higher overnight. Europe started the morning in the red, but is starting to recover a bit. Adjusted for fair value, the S&P 500 futures are flat, the Dow Jones Industrials future are up 10, and the NASDAQ futures are about a half point below fair value.
It spite of all the huffing and puffing about the future of short term interest rates, traders will clearly focus on corporate earnings for the next few weeks. Front and center this week and next are the big banks. This morning, JP Morgan Chase reported earnings and revenue that beat severely lowered expectations. Earnings of $1.35 per share were down a dime from a year ago, and that’s the first year-over-year earnings decline in 5 years for JP Morgan. However, the $1.35 was 9 cents better than expected and the shares are indicated about 2½ percent higher pre-market.
If you think that the banking business is tough, be happy that you’re not trying to make a go of it in coal. With governments around the world apparently intent on putting all coal back in the ground, Peabody Energy filed for bankruptcy today, joining giant Arch Coal, Patriot Coal, Walter Energy and Alpha Natural Resources in the Charter 11 line. So if you’re looking for a little something to put in your kid’s Christmas stocking, deals could be on the way.
Mortgage applications were up 10 percent last week as the average rate on the 30 year conventional fell to 3.82 percent. Retail Sales, Producer Prices and the Fed’s Beige Book are all on the way today.
Chinese exports rose 11½ percent in March on a year-over-year basis, which was a big surprise and has lit a little fire under equity prices worldwide, which outside of Greece and Estonia are solidly higher. Our futures are following suit. Adjusted for fair value, the S&P 500 futures are higher by about 11 points, the Dow Jones Industrials future are up 93, and the NASDAQ futures are about 32 points above fair value.
First quarter earnings are expected to drop about 8 percent from last quarter, and the season got off to a pretty-much-as-expected start last night, although the Alcoa report was delayed a bit by a power outage at Businesswire. Alcoa’s seven cents per share of profit was a nickel better than expected, but still way down from a year ago, and sales were lower than expected. Alcoa’s outlook didn’t give a lot of hope for improvement as aluminum prices continue to slump. Alcoa shares lost about 4 percent after the announcement. They’ve recovered about one percent of that this morning.
Juniper Networks may be the downer of the morning. Juniper pre-announced that earnings will fall far short of expectations, and its shares are falling about 9 percent short of yesterday’s closing price this morning.
Starbucks suffered a broker downgrade this morning. However, drug maker Abbvie shares are looking about two percent higher after getting the FDA’s green light for accelerated testing of a new leukemia drug.
Overseas markets are mixed. Adjusted for fair value, the S&P 500 futures are higher by about 4½ points, the Dow Jones Industrials future are up 31, and the NASDAQ futures are almost 12 points above fair value.
April 11, 2016
Every little squeak of any mouth of a Federal Reserve official has been at the tip of everyone’s economic tongue for a while now. To offer some welcome relief from that affliction, the first quarter corporate earnings season throws it into gear this week, with Alcoa unofficially leading the parade after 4 this afternoon.
Expect Alcoa’s earnings to be a paltry 2 cents per share. That’s down from 8 cents last quarter and 28 cents a year ago. It’s the kind of lowered bar that most companies should be able to clear this quarter. The question is – how many and by how much?
The proposed deal for Canadian Pacific to buy Norfolk Southern is dead. Apparently Norfolk Southern kept blocking that train to the point where Canadian Pacific decided to go on another track. Norfolk Southern shares are down a percent to two on the news.
There is one deal that looks like it WILL work. Hatteras Financial has been offered an 11% premium for its stock by Annaly Capital Management. The price is $15.85 per share. Hatteras had traded at $18.82 within the past year.
European markets are mostly modestly higher. Adjusted for fair value, the S&P 500 futures are higher by about 7½ points, the Dow Jones Industrials future are up 55, and the NASDAQ futures are almost 19 points above fair value.
Janet Yellen and her three predecessors held a little public chat last night and did nothing to rile the markets. Ms. Yellen stated that December’s rate hike was appropriate, in her opinion. She also indicted the future rate hikes are on the way, but not any time really soon. A couple more Fed heads will speak today, but there’s really not much else on the economic calendar to get excited about.
If you own shares of Under Armour, you might be excited this morning, but don’t panic. While the shares appear to be down about 49 percent, it’s because Under Armour is executing a stock split. It’s not exactly a 2 for 1, because the new Class C-shares to be received are non-voting shares.
A bunch of corporate executives meet with President Obama today to exchange ideas. Not sure if the CEO’s of Pfizer and Halliburton will be there, but if so, I’d love to be a fly on the wall.
Asia followed us lower overnight, but Europe is solidly higher at this hour.
Yesterday was a rocky day, as the price of oil declined. However oil is higher by almost 4 percent this morning and the stock futures are higher more than they were lower24 hours ago. Adjusted for fair value, the S&P 500 futures are higher by about 11 points, the Dow Jones Industrials future are up 85, and the NASDAQ futures are almost 27 points above fair value.April 7, 2016
I guess there’s no stopping Fed officials from influencing the trading machines with their incessant speeches, and Kansas City Fed President Esther George will deliver another one at 8:15 tonight in Nebraska. But if you’re really into that kind of non-news, at 5:30 this afternoon in New York, Fed head Janet Yellen will participate in a panel discussion with former Fed heads Bernanke, Greenspan and Volker, assuming that they can all stay awake that late in the day.
Weekly Jobless Claims come at 8:30 and are expected to decline a bit to about 270,000 from last week’s reported 276,000.
Conagra Food shares are more than one percent higher pre-market after announcing 68 cents per share of quarterly profit, which was a full10 cents better than expected. Earning are expected later on from Yahoo!
The Victoria’s Secret division of L Brands is reorganizing, and will cut 200 jobs in Columbus and New York
Asian markets were mixed overnight, but Europe is solidly lower, as are our futures after a triple digits gain in the Dow yesterday.
Adjusted for fair value, the S&P 500 futures are lower by about 10½ points, the Dow Jones Industrials futures are down 83, and the NASDAQ futures are almost 24 points below fair value.
Who says that the Government can’t get anything done? This morning it’s been announced that the 160 billion dollar Pfizer/Allergan merger is officially dead. This comes after the Treasury’s retroactive changing of the merger rules on Monday night. Of course, Treasury officials did say that they didn’t design the new rules trying to specifically kill the Pfizer deal. Maybe it would have been best if they didn’t say anything at all.
While 1stquarter earnings season doesn’t really get into gear until next week, Constellation Brands announced $1.19 or earnings this morning. That was a nickel better than expected. They also raised their dividend by 29 percent. Pre-market traders have the stock bid about 2 percent higher.
At 2 o’clock this afternoon, the Federal Reserve will release the minutes of the latest Open Market Committee meeting. It should be an interesting read. If you judge by their recent speeches, there’s a lot more conflict than consensus on the Committee regarding the future of short term interest rates.
Overseas markets are mixed, but really aren’t moving much higher or lower. Our big index futures appear to be indicating higher prices at 9:30. Adjusted for fair value, the S&P 500 futures are higher by almost 6 points, the Dow Jones Industrials futures are up 52, and the NASDAQ futures are 16 points above fair value.
It’s not a good morning if you have shares in pharma company Allergan. Allergan is the company that had planned to combine with Pfizer in what many people call a “tax-inversion” deal. Other people might call it good strategy in conformance with stupid tax laws. Whatever you call it, the Treasury Department has announced a change in the rules that may put the kibosh on the proposed merger. Some will say that changing rules of the game retroactively is unfair. Perhaps a better answer would be to get Congress and the Obama Administration to agree on changing the tax laws so that they actually make sense for our country. That, of course, may be too much to ask. Allergan shares are about 20 percent lower this morning on the news.
Walgreens-Boots Alliance and Darden Restaurants both reported better than expected earnings this morning, but Walgreens sales fell a bit short and their shares are 2½ percent lower pre-market.
Twitter shares are almost 4 percent higher on a report that it has acquired the rights to stream Thursday night NFL games next year.
Mainland Europe is lower by more than two percent at this hour and our futures have been trending lower all morning long.
Adjusted for fair value, the S&P 500 futures are lower by about 16 points, the Dow Jones Industrials futures are down 109, and the NASDAQ futures are 33 points below fair value.
We could be reaching a long awaited de-coupling between stock prices and oil prices. Last week, while oil fell by 7 percent, largecap domestic stock prices rose about 2 percent and smallcap were up about 3½ percent. Although on average foreign markets fell slightly, unless oil again drops dramatically, the odd linkage between oil and stocks may have run its course.
It’s been a few years since the last big airline merger, but we have one this morning, as the weekend’s worst-kept secret was announced. Virgin Airlines is being purchased by Alaska Airlines for 57 dollars per share. Virgin closed below 39 bucks per share Friday. It’s a 4 billion dollar deal and will make Alaska a formidable player on the West Coast.
At 10 o’clock, we’ll get the final report on February Factory Orders. Expect the advance number to be confirmed, which indicated about a 1.6 percent pullback in orders.
And, as we look forward to the start of first quarter earnings reports, the gang that won’t shut up will be at it again this week. Every single day this week, at least one Federal Reserve Bank official will be giving a speech somewhere, as their very confusing policy of over-communication continues.
Overseas markets are mixed, but mainly a bit higher. Our futures have weakened a bit, but are still indicating higher prices at 9:30. Adjusted for fair value, the S&P 500 futures are higher by 3½ points, the Dow Jones Industrials futures are up 20, and the NASDAQ futures are 11 points above fair value.
After a rather depressing start, the first quarter of 2016 has gone into the books with a 1 percent gain in the S&P 500 (with a 7 percent gain in the month of March.) Small-cap and mid-cap stocks performed even better, gaining 3 percent and 4 percent respectively. Value stocks took the lead over growth for the first time in quite a while, with utilities and telecoms outperforming.
Today, however, starts another quarter and it looks like we may get off to a lower start, led by oil prices which are lower by about 2½ percent.
At 8:30, the Labor Department’s Monthly Jobs Report takes center stage. Expect that 210,000 new non-farm jobs came to life in March, with the Unemployment Rate holding at 4.9 percent. Later this morning, we’ll hear the results of a couple of surveys on the health of the manufacturing sector as well as the University of Michigan’s final assessment of March consumer sentiment. Expect an uptick to a reading of 90.9, which would be up almost a full point.
Cleveland Federal reserve President Loretta Mester, who has the reputation of being a bit of an interest rate hawk, gives a speech at 1o’clock this afternoon in New York.
Japanese stocks downshifted by 3½ percent overnight, but China was a little higher on a good manufacturing report. Adjusted for fair value, the S&P 500 futures are lower by 10 points, the Dow Jones Industrials futures are down 50, and the NASDAQ futures are 18 points below fair value.