January 31, 2002It was the most predictable Federal Reserve announcement in recent memory. Yesterday afternoon the Fed kept interest rates steady and said that the economy is getting better. That was all the stock market needed to hear. Especially a stock market that suddenly couldn't tell the difference between audited financials and a Harry Potter novel.
Dow Chemical is the big earnings story, or maybe we should say lack of earnings story this morning. Dow was expected to make a nickel a share. Instead it's a loss of a penny on an operating basis, for last quarter. The loss including special charges was 4 cents per share.
If the shareholders of Hewlett Packard vote to buy Compaq, it'll be okay with the European Union. The EU, which has been most famous in the last year for blocking mergers, sees no problem with the combined Hewlett-Packard Compaq.
Most of Europe is up by 1 to 2 percent this morning, and it looks like we may get off to a decent start at 9:30. Adjusted for fair value, S&P futures are up about 2 ½ , Dow futures are up 17, and the Nasdaq futures are 10 points above fair value.
January 30, 2002You might all it Enron-itis. The stock market caught accounting pneumonia and hidden losses flu yesterday. Concern about accounting practices at conglomerate Tyco sent that stock down 20 per cent. On top of that, the Federal Reserve went on the attack against PNC Bank. The Fed says they've hidden some losses, that they have to restate earnings, and they've referred the matter to the SEC.
In the wake of those stories, it seemed that the only companies that were hurt yesterday were companies that have accountants. The market went down 2 ½ percent, and we're not likely to get a big rebound this morning.
The Fed's Open Market Committee speaks at 2:15 this afternoon. After Mr. Greenspan's testimony last week, it's a pretty sure bet that we'll see no change in interest rates, and we may get no change in the Fed's opinion on future economic risks. However, if they do change back to a neutral opinion, stocks may get a boost.
America Online met estimates this morning. AT&T beat by a penny, but they're giving a pretty downbeat view of the year to come. There's apparently no big "feel good" rally on the way after the State of the Union speech. Futures on all major indexes are within a few points of fair value.
January 29, 2002AT&T Wireless disappointed in their earnings report this morning, but there were a couple of very good earnings reports overnight. No apparent recession in the housing market. Pulte Homes beat estimates by eleven cents a share, their backlog of new work is up 58%. Online travel company Expedia actually turned a profit last quarter. Eight cents a share on a GAAP basis, 31 cents excluding charges.
Texas Instruments lost less money than analysts expected, but they warned yesterday that things aren't going to get a lot better in the cell phone business any time soon.
Alan Greenspan chairs a two day meeting of the Federal Reserve Open Market Committee starting today. They spend the first day just talking about the Super Bowl. In ten minutes the December Durable Goods number will be released and Consumer Confidence numbers will be out at 10 o'clock.
Waiting on the economic numbers, the State of the Union and the Fed, the market may just drift along at the open. Adjusted for fair value, S&P futures are up 1, Dow futures are up 7 and the Nasdaq futures are 8 points above fair value.
January 28, 2002We're past the mid point of the fourth quarter earnings reports now, and it looks like corporate profits are running about 16% below year ago levels. That's the biggest year-over-year decline in a long, long time. This morning, Xerox beat estimates by 16 cents per share, before special charges. But, there's trouble in Toyland. Toys 'R Us is closing 37 Kids 'R US and 27 Toys 'R Us stores and cutting 1900 jobs.
The earnings reports will continue all week, but it's Federal Reserve Open Market Committee meeting time again. The interesting twist is that whatever the Fed does could be interpreted as good news for stocks. Of course a cut in interest rates is always welcomed news for financial assets. But, based on Mr. Greenspan's testimony last week, it looks as if the Fed may be done cutting rates. Words of confidence from the Fed about prospects for the economy may actually gives us more of a lift at this point than another quarter percent cut in rates.
There's virtually no fair value adjustment this morning, so what you see is what you get, and if things hold, we may get a little rally at 9:30. S&P futures are up 2½, Dow futures are up 30 and the Nasdaq futures are up 13 points.
January 25, 2002The stock market got a couple shots in the arm yesterday. The initial jobless claims number was lower than expected, so while the unemployment picture isn't pretty, it's not as bad as most thought. Later yesterday morning, Alan Greenspan admitted before Congress that the he was just in an ugly mood went he gave his January 11th speech in San Francisco, that the economy is showing signs recovery, and that he'll start carrying some additional antacid so that he doesn't scare everybody again. Okay, he really didn't say that - but that's what he meant.
Earnings reports are pretty much wrapped up for the week. JDS Uniphase missed their earnings estimate and issued a pretty downbeat forecast last night. Sweden's telecom equipment maker Ericsson also disappointed with their news overnight.
The report on December existing home sales will be out at 10 o'clock.
European markets are down a little bit, and we could see a little profit taking when the market opens. Adjusted for fair value, S&P futures are almost flat, the Nasdaq and Dow futures are down 5 to 10 points.
January 24, 2002The earnings reports continue to roll in. The big market driver of the morning is the report from cell phone maker Nokia. They beat estimates by 3 cents overnight, and predicted that sales of cell phones will shoot up late this year. Nokia command 37% of that market, and the stock markets in Europe clearly liked what they heard as the stock shot up about 9%.
But, for every bit of good news, lately it seems that we have an "on-the-other-hand." Well, on the other hand, biotech company Amgen missed their earnings number by a penny last night, although revenues were a little stronger than most expected. The stock was off a bit after hours last night.
Alan Greenspan talks about the state of the economy today before the Senate Budget Committee. The last time Greenspan spoke, about 2 weeks ago, he wasn't exactly a bundle of optimism, and stocks have sold off almost every day since then. With a Fed meeting coming up next week, we'll see if he's changed his tune.
European markets are generally up one percent or more. Absent a big surprise in the jobless claims numbers at 8:30, we should get off to a decent start at 9:30. Adjusted for fair value, S&P futures are up almost 6, the Nasdaq futures are 18 points above fair value. Look for the Dow to be up around 40 points at the open.
January 23, 2002Yesterday's early rally faded fast as weakness in technology and a case of the "general jitters" after the Kmart bankruptcy filing pulled the entire market lower. A bankruptcy judge did approve over a billion dollars of the Kmart financing package, so key suppliers and employees will continue to be paid while the company retools its operations.
Lots more earnings news on the calendar for today. So far, Pfizer, the big pharmaceutical maker matched estimates and projected solid growth for the future. Merrill Lynch met estimates. DuPont And ExxonMobil beat estimates. Compuware also beat estimates and guided higher, as did data storage maker Emulex. Compuware was up about 5% in after hours trading.
On the other hand, Motorola last night reported its first annual loss in 71 years. On an operating basis, Motorola lost a penny per share less than expected, and they say that they will turn the corner by the second half of this year. Motorola picked up a couple brokerage house upgrades this morning. It's up about 4% in the pre-market.
The futures are moderately positive this morning, so we should get off to a decent start. Adjusted for fair value, S&P futures are up almost 5, Dow futures are up 34, but the Nasdaq futures are 15 points above fair value.
January 22, 2002The mystery on Big Beaver Road continues to unfold. No official word yet on whether Kmart will be restructuring itself inside, or outside of bankruptcy court protection. One thing is fairly certain. Something's going to happen soon. Yesterday, Kmart missed a 78 million dollar payment to Fleming, their grocery supplier. Fleming cut off shipments. So we should get some word on Kmart plans before the bananas ripen too terribly much.
There's a frost/freeze advisory in Hell this morning, thanks to Amazon.com. Believe it or not - on a GAAP basis - Amazon.com has made money. Five million dollar profit last quarter, that's a penny a share. The pro-forma profit for the quarter was 16 cents per share better than expected. The big comglomerate Tyco announced this morning that it will split into four separate companies.
This is a critical week for the stock market. The recent slump in prices has pulled the Dow and the S&P back to support levels established in mid-December. Market technicians will tell you that staying above current levels is important.
The futures indicate that we'll start the week at higher levels. Adjusted for fair value, S&P futures are up 6, Dow futures are up 67, but the Nasdaq futures are 18 points above fair value.
January 21, 2002The U.S. stock market is closed for the holiday today, but the rest of the week is going to be busy. About 30% of the S&P 500 will report earnings in the four remaining days of this week. That's about 30% more than the number that reported all of last week.
Looking back at last week's announcements, things could have been a lot worse. Less than 10% of companies reporting did not meet earnings estimates. Unfortunately, some cautious comments from Intel, Microsoft and IBM about the coming quarter put quite a damper on stock prices, not to mention that we can't seem to get through a day without the names Enron or Kmart popping up.
For the year thus far, the Nasdaq is down three tenths of a percent, the S&P 500 is down 1.8% and the Dow Jones Industrials are off about 2 ½ percent.
One speech today, from St. Louis Fed President William Poole. Thursday of this week Alan Greenspan will testify before the House Budget Committee, and of course, the Fed meets next week to decide if eleven cuts is enough, or if they should just round it off to an even dozen.
January 18, 2002Microsoft and IBM reported in last night. Although they both beat earnings estimates, they both did it more by cutting costs, rather than beating revenue estimates. Both companies talked about a challenging year to come, and the stock market doesn't like that kind of talk. Both companies are in the Dow Jones 30 industrials. And because both Microsoft and IBM have such large market capitalizations, they have a big impact on indexes like the S&P 500. As a result we're seeing pretty ugly numbers in the futures market this morning.
We did get a couple of good economic reports yesterday. The Philadelphia Fed Survey, which measures business activity in the Mid-Atlantic region was way up, at a level of 14.7. The reading last month was a negative 12.6.
Potentially good news for manufacturing as well, the Maufacturers Alliance/MAPI survey showed an uptick from the prior quarter, although the level of activity was far from what you'd consider an expansion.
Yesterday's gains may just go poof in early trading today. Adjusted for fair value, S&P futures are down 10, Dow futures are down about 115 and the Nasdaq futures are 35 points below fair value.
January 17, 2002We've had to endure a steady stream of "just plain bad news" during the past couple of weeks. About Enron. About Ford. About Kmart. All that bad news gave us six losing sessions in a row on the Dow, but without any really big down days. Until yesterday. The Intel and JP Morgan Chase reports knocked down about 2% yesterday, inspite of some good inflation news.
The Consumer Price Index dropped 2 tenths of a percent in December. That closes out 2001 with an overall inflation rate of 1.6%. That's a lot lower than the long term average.
Among the technology stocks, Compaq and Advanced Micro Devices beat estimates and guided higher. Later today we get earnings from IBM, Microsoft and Sun Microsystems. General Electric reports this morning, but yesterday said they were right on track.
Our futures are positive, although adjusted for fair value, they're not as positive as they would otherwise seem, but we're about as positive today as we were negative 24 hours ago. Adjusted S&P futures are up 5, Dow futures are up 55 and the Nasdaq futures are 23 points above fair value.
January 16, 2002General Motors reported earnings about 25 minutes ago, reporting a quarterly profit of 60 cents per share. That's six cents better than expected. Revenues were up a billion from last year's fourth quarter, although profits per share were cut just about in half.
Intel reported last night, and as expected, they beat analyst estimates. Intel reported a 15 cent per share profit, versus the expected 11 cent profit. Unfortunately, the news that's moving the markets today is that Intel will cut capital expenditures by 25% this year. While that may be good news for Intel's bottom line, it's bad news for the top line of every other company down the semiconductor food chain - and that's a whole lot of companies.
Comerica missed their estimated earnings by 10 cents per share, even though earnings were 12 cents better than last year. JP Morgan Chase with a big miss. They made 12 cents on an operating basis versus an estimated 35 cents, blaming exposure to Enron and Argentina. Including special charges they actually lost 18 cents per share.
There are a bunch on economic reports coming out by 9:15 this morning, including the Consumer Price Index and Industrial Production numbers.
But at this point, we're looking for more a lot more sellers than buyers at 9:30. Adjusted for fair value, S&P futures are down 7, Dow futures are down 52 and the Nasdaq futures are 27 points below fair value.
January 15, 2002Kmart's Board of Directors meets this morning to review the company's options as speculation about possible debt restructuring alternatives continues to grow. The December retail sales number come to us in 7 minutes. Expect a drop in retail sales due mainly to a drop in auto sales. Excluding vehicles, retail sales are expected to drop only two tenths of a percent.
Earnings reports are a trickle at this point, but that will turn into a flood by later this week. The big conglomerate Tyco reported in this morning, beating estimates by the obligatory penny but they warned that the next quarter looks a little soft. Tyco's off about 3% in pre-market trading.
Later today, we get numbers from eBay, Juniper Networks and the big number of the day - Intel is expected to report good numbers on strong orders for the Pentium 4 chip.
Asia was down overnight. Europe just can't figure out which way to go. Our futures at this point, are indicating green arrows at 9:30. Adjusted for fair value, S&P futures are up 3 ½ , Dow futures are up 39, and the Nasdaq futures are about 7 points above fair value.
January 14, 2002It's finally happened. The stock market has decided it doesn't give a hoot about lower interest rates. In a speech Friday afternoon, Alan Greenspan cautioned that while the economy is showing signs of stabilizing, it still >
Earnings reports really start rolling this week. If you look at the number of companies warning about missing forecasts, we've had 584 companies warn this quarter versus 794 at the same time last year. That's a positive of sorts, but what we're really looking for is positive guidance for the coming year. So far this morning, Fannie Mae beat estimates by a penny and did indeed say that 2002 should be a good year for them.< br>
Looks like a lower open on the way today. Adjusted for fair value, S&P futures are down 3½, Dow futures are down 15, and the Nasdaq futures are about 9 points below fair value.
January 11, 2002Ford Motor is front and center this morning as they announce their revitalization plan. But if you ask Wall Street, even the rumored 20,000 job cuts and 1.8 million vehicle reduction in annual capacity may not be enough. Ford stock lost over 6% yesterday. It's trading at $15.20 in the pre-market this morning.
We haven't heard much from Alan Greenspan lately. He'll pop up in San Francisco today, giving a speech at about 1:45 this afternoon. We may get some indication whether interest rates will be coming down one more time at the end of the month.
The December Producer Price Index will be out in just about 5 minutes. The consensus calls for a decline of 2 tenths of a percent.
Japan was down about 1 percent overnight, European markets are mixed at this hour. Our morning futures indicators have been pretty quiet all week and today's no exception. All the major indexes are within a few points of fair value, so unless we get a big surprise in the PPI number, we should have a pretty flat market at 9:30.
January 10, 2002We had a nice day going yesterday, on some positive remarks out of Cisco and Oracle. But in the final hour of trading, the market had second thoughts. The Nasdaq, at one point, was up about 2 percent, but by 4 o'clock, all the indexes were solidly down.
We'll get the December sales reports for the big chain stores today. In general, so far, so good. J.C. Penney same store sales were up 3.7%. Costco has announced that same store sales were up 7% over last December. Wal-mart same store sales were up over 8%, Pier One says comparable store sales were up over 9% last month.
The Justice Department is opening a criminal investigation into the Enron debacle. This is a story that will keep a lot of lawyers busy for many years to come.
Futures have been improving over the past hour, but right now it looks like a quiet, but mildly positive open for stocks. Adjusted for fair value, S&P futures are up 1, Dow futures are up 5, but the Nasdaq futures are about 6 points above fair value.
January 9, 2002Earnings reports are starting to trickle in. No big surprises so far. The big focus of the morning is workforce reduction, and unfortunately, this morning that news centers in Detroit. General Motors will again offer early retirement, as they try to drop 10% of the salaried workers. Ford, of course will announce their latest cuts Friday morning. Outside of the car business, Merrill Lynch is cutting another 9,000 jobs and taking a charge of more than 2 billion dollars.
If you've owned stock in a fuel cell company during the past couple of years, there's probably not a roller coaster in the world that can scare you. The Bush administration's announcement of economic support for fuel cell development is sparking fuel cell stocks higher this morning. Plug Power, for instance up 28% yesterday, Ballard Power up 15%.
Looks like the Nasdaq will continue to outperform the broader market this morning. Adjusted for fair value, S&P futures are up 4, Dow futures are up 25 and Nasdaq futures are about 18 points above fair value.
January 8, 2002AOL Time Warner held its conference with stock analysts late yesterday. Everybody was expecting an earnings warning for 2002 --- and they got one, as AOL said it does not see a big economic rebound in the cards. They say that they're looking for a 5 to 8% rise in revenue next year. Estimates had been about 9%. AOL is also taking a first quarter charge of 40 to 60 billion dollars to "reflect market declines" since the merger of AOL and Time Warner. That 40 to 60 BILLION that's magically going to disappear from the books. That's the >
Same store sales at Sharper Image were off 4% last year, but during the last 5 days before Christmas, sales were 10% HIGHER than a year before, and they say that's an encouraging sign for 2002.
The futures are indicating a decent market at 9:30 this morning. Right now, adjusted for fair value, S&P futures are up about 3 points, Dow futures are up 26 and Nasdaq futures are about 10 points above fair value.
January 7, 2002We finally get back into the swing of things this week, with the Holidays behind us. And quite frankly, the last few weeks have been pretty much an ongoing party for stocks. In fact, since September 21st, the S&P 500 is up 21%, the Dow is up 25% and the Nasdaq is up 45%.
We have a day full of meetings on tap. President Bush meets with Alan Greenspan today, perhaps to get some stock tips. Lucent will be meeting with a new CEO. AOL/Time Warner management meets with stock analysts late today, reportedly to trim back their earnings guidance. The rest of us will be meeting with our wardrobe consultants, to figure out what to wear to the Auto Show.
No big economic reports due today. The 4th quarter earnings season will kick off tomorrow, as it always does, with the report from Alcoa.
The futures have spent the last couple of hours drifting higher, as we look toward the market opening at 9:30. Right now, adjusted for fair value, S&P futures are up 2, Dow futures are up 20 and Nasdaq futures are about 16 points above fair value.
January 4, 2002One year ago today the Federal Reserve went into action. Today, eleven rate cuts later, there's not much ammunition left in the stockade. The question is not if - but when - the economy gets some traction.
Semiconductors. That's where the traction was yesterday. The Philadelphia Semiconductor Index was up over 8%. A lot of that is based on an upgrade of Intel and a potential merger for Micron Technology.
In about 15 minutes we'll get the big economic report of the week. The Employment numbers are expected to reflect an increase in the unemployment rate to 5.8%. While increases in unemployment are not good - really not good if you're one of the unemployed - the economy usually starts to recover from recession well before unemployment starts to decline.
The futures are waiting for that unemployment number as well. Right now, adjusted for fair value, S&P and Dow futures are flat, and Nasdaq futures are up only about 5 points or so.
January 3, 2002There's a lot made about the importance of market direction on the first day of trading. As the first session goes, so goes the week.....As the first week goes....so goes January, As goes January, so goes the year. Obviously, a lot remains to be seen. But we got off to a much better start yesterday than we did a year ago. A year ago, the Nasdaq lost 7% on the first day of trading and the Dow was off over 1 percent. Yesterday we rallied in the last hour to post a 52 point gain on the Dow and pick up about 1 ½ percent on the Nasdaq.
One potential psychological downer is on the way today. The employment consulting firm Challenger, Gray and Christmas will report on Job cut announcements today. Yesterday's ISM index was a sign of hope for manufacturing businesses, but it's likely that even if this recession is ending, the jobless rate will climb for a while.
Dow Chemical warned this morning that they won't hit their fourth quarter earnings forecast.
We're looking for a mildly positive market at 9:30 this morning. Adjusted for fair value, S&P and Dow futures are pretty much flat, but the Nasdaq futures are 14 points or so above fair value.
January 2, 2002Alright. Let's try this again. For the second year running, the major stock indexes took it on the nose in 2001. For the year, the Dow lost 7%, the S&P lost 13% and the Nasdaq lost 21 per cent.
We will be gearing up slowly today after the holiday. There are only two economic reports due. The first report used to be known as the National Association of Purchasing Managers Index. We have a new name for the new year. It's now the Institute of Supply Management Index. It's expected to be up for the second month in a row, but still not strong enough to signal an expansion in the manufacturing.
December auto sales figures will also be released today. It's expected that they'll be down a bit from November, but still running at a very high level, due to all the special financing deals.
Looks like we'll have a quiet start to trading this morning. Adjusted for fair value, S&P futures are flat, Dow futures are up about 40 and the Nasdaq futures are 10 points or so above fair value.
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