May 31, 2013
It’s the last day of another positive month for stock prices. That makes it seven months running now. And let’s not forget the wisenheimers who always scream “Sell in May and go Away” on April 30th. Those who did bail on the stock market at that point that have passed up about 3½ percent appreciation, measured by the S&P 500.
At 8:30 this morning, the report on April personal income is expected to show a two-tenths of a percent increase, while consumption is expected to be flat. At 9:45, the Chicago Purchasing Managers Index is expected to show no growth and no contraction, with a reading of 50 and just before 10 o’clock, we’ll see if the final reading on Consumer Sentiment from the University of Michigan confirms the strong Confidence reading reported by the Conference Board earlier this week.
An upgraded earnings outlook form Krispy Kreme yesterday. Big Lots and Joy Global guided lower.
Japanese stocks recovered about a percent and a half of Thursday’s losses overnight. But outside of Tokyo and South Korea, Asian markets slumped. Europe is mostly lower. At this point, adjusted for fair value, the S&P futures are down by about 7 points, Dow futures are down 62, and the NASDAQ futures are about 13 points below fair value.
As good as Tuesdays have been for domestics stocks, Thursdays seem to be developing into a bit of a problem in Japan. The Nikkei stock index fell over 5 percent overnight. You may remember an over-7 percent fall in the Nikkei last Thursday.
At 8:30 this morning, we’ll get the Government’s second guess at the Gross Domestic Output of the economy in the first quarter of this year. Expect no change from the first guess of 2.5%. Also at 8:30, weekly Jobless Claims are expected to hold steady at 340,000. And don’t look now, but the yield on the 10 year Treasury Bond, that started the month at about 1.6 percent, is about a half percent higher than that this morning.
Costco Reported $1.04 of adjusted earnings for the quarter gone by. That’s a penny better than expected, but sales were a little below estimates.
NV Energy shares are about 23 percent higher this morning. A unit of Berkshire Hathaway will be buying NV. And DISH Network is raising its offer to buy Clearwire from $3.40 per share to $4.40 per share.
Asian markets were mixed, but mostly lower overnight while Europe is mixed, but mostly higher.
It looks like we may be getting on the one-day-up-one-day-down roller coaster again. At this point, adjusted for fair value, the S&P futures are higher by 5½ points, Dow futures are up 38, and the NASDAQ futures are about 6 points above fair value.
May 29, 2013
We made it 20 straight positive Tuesdays yesterday. But, as they say, today is another day – and it looks like the mirror image of Tuesday as far as the futures are concerned.
There is one similarity to yesterday - we have a big deal on the table. And this one might get some Congressional attention. Smithfield Foods, the big U.S. food producer has agreed to be purchased by a Chinese company. Ostensibly, this gives Smithfield more access to the Chinese market. More interestingly, we’ll see if there’s any pushback to having a big domestic food company at the apparent whim of the Chinese Government. Shares of Smithfield Foods are about 25% higher pre-market.
And just when you thought that there were no jobs out there for economists, along comes something called the Organization for Economic Co-operation and Development. In a statement release this morning in London, this organization warned that when central banks around the world stop their quantitative easing programs, there could be a spike in government bond yields, which would be a bad thing. Well – duh. Perhaps next they’ll move on to a less obvious matter, if they can find one.
Whole Foods splits its stock 2 for 1 today. Asian markets were mostly higher, but Europe is a bit of a mess and it looks like yesterday’s gains here may be gone shortly after 9:30.
At this point, adjusted for fair value, the S&P futures are lower by about 14 points, Dow futures are down 104, and the NASDAQ futures are about 24 points below fair value.
May 28, 2013
We used to call them “Merger Mondays.” But with yesterday’s Holiday, I guess we’ll call this a “Takeover Tuesday.” Canadian drug-maker Valeant has agreed to buy Bausch & Lomb from Warburg Pincus for 8.7 billion dollars. Word of that deal leaked late Friday, and had Valeant shares up 13 percent. This morning, in the pre-market, Valeant shares are higher by another 10 percent or so.
That pales, however, to the pre-market action in shares of specialty pharmaceutical company Omthera. They will be acquired by Astra Zeneca and Omthera shares are up 97 percent premarket.
There are evidently lots of little blue boxes moving out the door at Tiffany. The jewelry retailer reported adjusted earnings of 70 cents per share this morning. That beat the 53 cent estimate on higher than expected sales. However, Tiffany only reaffirmed, and did not raise full year earnings guidance. Still the shares are more than 5 per higher per-market.
The March Case-Shiller home price report comes at 9 o’clock, and at 10, the Conference Board’s May Consumer Confidence Report is expected to check in at 70.8, up from April’s 68.1.
We’re working on 19 straight Tuesday’s of rising stock prices, and we’ll start the day with a good chance of making it 20. At this point, adjusted for fair value, the S&P futures are higher by about 15 points, Dow futures are up 123, and the NASDAQ futures are almost 30 points above fair value.
May 24, 2013
Nobody likes to go out in the cold. Apparently, Sears and Kmart shoppers REALLY don’t like to go out in the cold. Last night Sears Holdings reported a quarterly loss that was more the double the estimated loss of 60 cents per share. The CEO called the results “unacceptable,” and blamed the cold weather, the payroll tax hike, changing customer buying habits and just about everybody except George W. Bush for Sears and Kmart sales that each dropped over 2½ percent. There is a blue light special on Sears Holdings shares this morning. We’re looking at about a 12% discount to yesterday’s close.
Abercrombie & Fitch is also about 12 percent lower after a lousy report this morning. Salesforce.com issued a less-than-impressive report last night as well. Sales were higher, but expenses rose even faster. Lowered earnings guidance has Salesforce.com shares about 7½ percent lower pre-market.
Just like JC Penny did recently, Procter & Gamble is bringing back their former President and CEO. So if you’re a former President & CEO temporarily “on the beach,” keep the faith, you may be next in line for another bite of the apple.
At 8:30, the April Durable Goods number is expected to check in at 1.7, versus the March decline of 5.7.
Asia mostly higher, Europe mostly lower. Our futures have been in the red all morning. At this point, adjusted for fair value, the S&P futures are down about 5 points, Dow futures are down 19, and the NASDAQ futures are about 11 points below fair value.
May 23, 2013
Stocks in Japan had their worst day in more than two years today, with the Nikkei Index falling more than 7 percent. Maybe it was Ben Bernanke’s comments yesterday that scared them. Maybe it was the Federal Reserve meeting minutes that were released yesterday afternoon. Maybe they just got an early look at “The Hangover Part 3.” Whatever, it was a case of rally interruptus in Japan overnight.
To summarize the Fed head news from yesterday for those of you occupied with something more interesting, suffice it to say that the money printing machine will not run at full speed forever, and may slow down, maybe as soon as sometime this year. However, it still appears that we’re a long way away from any actual increase in short-term interest rates.
Stateside, we’re looking forward to the 8:30 Labor Department Report regarding weekly Jobless Claims. Expect only 345,000 new claims, after last week’s surprisingly bad 360,000. Also coming later this morning is the April New Home Sales report and the Kansas City Fed’s regional economic report.
In spite of the big dipsy-do in Japan, Chinese stocks only lost about 1 percent overnight. European markets are about 2 percent lower. Our futures are in better shape than they were in a couple of hours ago, but that doesn’t mean that they’re pretty.
At this point, adjusted for fair value, the S&P futures are down about 12 points, Dow futures are down 77, and the NASDAQ futures are about 23 points below fair value.
May 22, 2013
Ben Bernanke is back on Capitol Hill this morning, and starting at 10 o’clock, traders will hang on every word, every pause, every body movement. They’ll probably inspect the punctuation on the prepared statement for any hint regarding if and when the Fed will start to ease up on the printing press. I’d imagine that sometimes Mr. Bernanke wishes that he were accused of something bad, so he could just invoke his 5thAmendment rights. Maybe he’s just working in the wrong branch of the government.
Target executives wished that they could have remained silent regarding last quarter’s results. GAAP earnings of 77 cents missed the 85 cent estimate. Sales missed the target, pun intended, and same store sales were lower by just a bit.
Some indications that the Fed plans no change in its policy drove stock prices up yesterday for the 19thconsecutive Tuesday. That, in spite of a flurry of earnings warnings from the likes of Compuware, Analog Devices and Intuit.
Also at 10 o’clock this morning, April Existing Home sales are expected to have risen to an annualized rate of 4,990,000 units, up 70,000 from the March number.
Japanese stock rose overnight, but China was lower. Europe is mostly lower, but our futures are giving us hope for another positive market at 9:30. At this point, adjusted for fair value, the S&P futures are higher by 3 points, Dow futures are up 24, and the NASDAQ futures are about 7 points above fair value.
May 21, 2013
We have an 18-in-a-row Tuesday winning streak on the line this morning. Of course, happenstance has been mis-interpreted to be indicative of the future in days gone by. You may remember the hemline indicator, or the Super Bowl indicator. So, I wouldn’t bet on another up market today. But I wouldn’t bet against it.
You can bet that Home Depot shares will be on the rise this morning. Home Depot reported 83 cents of operating profit this morning, which was 6 cents per share better than expected. Best Buy, whose stock has more than doubled since the beginning of the year, reported 32 cents of profit versus the expected 25 cents. Revenue was a little light, however and same store sales were down from a year ago.
Medtronic, another stock that has been doing well this year, reported $1.10. That was 7 cents better than expected. Intuit reports later today.
Asian markets were mixed overnight. Europe has not yet been notified that it’s Tuesday, as they are mainly lower at this hour. But, the day’s not over yet.
At this point, adjusted for fair value, the S&P futures are up a half-point, Dow futures are up almost 21, and the NASDAQ futures are about 3 points above fair value.
May 20, 2013
Yahoo! made it official in an 8 o’clock press release this morning. Yahoo! will buy social blogging service Tumblr for about 1.1 billion dollars. Late last Friday, Accenture announced that it will buy digital marketing firm Acquity for 13 dollars per share, which is more than twice Acquity’s closing price on Friday.
It looks to be a fairly light week for economic news, although Ben Bernanke will spend some time mid-week testifying before Congress. President Obama will spend time today talking to the President of Myanmar, which is bound to be more fun than talking to the press like he did last week. Myanmar’s President has agreed not to ask any questions about the IRS.
Urban Outfitters and Campbell Soup report earnings a little later today. Gold is another half percent lower this morning, after losing 7 percent of its value over the last 7 trading sessions.
Markets in Canada, Switzerland and a smattering of other countries are taking a long weekend, but other markets overseas are generally a little higher and we’ll be back at it at 9:30.
Our futures started the day just a little lower and have been holding at slightly lower levels ever since. At this point, adjusted for fair value, the S&P futures are down about 3 points, Dow futures are down 19, and the NASDAQ futures are about 9 points below fair value.
May 17, 2013
Stock prices had their worst day in two weeks yesterday, yet if the futures are to be believed, much of yesterday’s loss will be recovered right off the get-go this morning.
A couple of less-than-wonderful earnings reports are out. Last night Dell reported a far lower profit than expected. Adjusted earnings of 21 cents fell 14 cents short of expectations. You shouldn’t be surprised that earnings are a bit of a mess, given Michael Dell’s ongoing battle to buy the entire company while that pesky old Carl Icahn continues to get in the way.
Also not surprising was the train wreck of an earnings report last night from PC Penney. When an old CEO is booted out the door, so usually goes the bathwater with the baby inside. The quarterly loss of $1.31 per share was far wider than the expected 89 cent loss. J.C. Penny stock is about 3 percent lower pre-market.
Just before 10 o’clock, we’ll get the University of Michigan’s first look at May Consumer Confidence. Expect a reading of 76.8, which would be a slight improvement from the April number.
Asian and European markets are solidly higher, with China up about a percent and a half, and we should head higher at 9:30 as well. Adjusted for fair value, the S&P futures are higher by almost 5½ points, Dow futures are up 49, and the NASDAQ futures are about 9 points above fair value.
May 16, 2013
Last night, Cisco Systems pleasantly surprised with operating earnings of 51 cents, which was 2 cents per share better than expected. That has Cisco Systems shares up more than 10 percent pre-market the NASDAQ futures pumped up a bit this morning. However, all the earnings news is not so great.
A little over an hour ago, Walmart announced first quarter earnings of $1.14, that was a penny shy of estimates on lower than expected sales. They also lowered their second quarter guidance. Walmart’s same store sales (even excluding gasoline) were down 1.2%. Of course, Social Security Taxes went up 2% in the first quarter, so, at least among the Walmart shoppers who work for a living, there may be some (not surprising) cause and effect. Walmart shares are looking to open about 3 percent lower.
At 8:30 this morning, we’ll find out just how many of those who were working for a living stopped working and applied for unemployment assistance last week. Expect 330,000 new claims. We’ll also get the Consumer Price Index at 8:30 as the Government will once again try to tell us that the cost of everything we buy is going down. The Philly Fed index rolls at 10 o’clock.
Overseas we have a mixed picture. Our futures, reflecting the Walmart and Cisco reports, are also pointing in mildly opposite directions. Adjusted for fair value, the S&P futures are down one half of a point, Dow futures are down 4, but the NASDAQ futures are about 7 points above fair value.
May 15, 2013
It looks like a pretty uneventful start for stock prices this morning. Maybe not so for shareholders of Deere. Deere reported $2.76 of quarterly operating profit this morning. That was a slim 4 cents above estimates. However, Deere lowered the outlook for full year equipment sales and traders are cutting Deere’s share price by about 4 percent pre-market.
Department store Macy’s just reported 55 cents of profit, which is a two cent beat. Macy’s also raised their dividend. We’ll hear from networking firm Cisco Systems after the close of trading today.
At 8:30, we’ll find out how much producer prices dropped in April. Most expect another six-tenths of a percent drop, just like we saw in March, due mainly to lower energy prices. April Industrial Production and Capacity Utilization numbers come at 9:15, but are not expected to show a lot of change from March.
Overseas markets are mostly higher at this hour. Our futures are in wait-and-see mode after yesterday’s impressive rally (of course, it was a Tuesday, after all.) Adjusted for fair value, the S&P futures are down a point and a half, Dow futures are down 14, but the NASDAQ futures are about even with fair value.
May 14, 2013
We have seen stock prices rise the last seventeen Tuesdays in a row. That, of course, means nothing, because earnings and interest rates don’t know what day of the week it is. Nevertheless, it’s a trend that I wouldn’t bet much against.
The National Federation of Small Business survey released this morning showed that small business people are a bit more optimistic about business conditions. The index was up 2.6 points to 92.1. Although that’s the best reading since 2010, it’s still pretty weak on a historical basis, as small business people continue to blame taxes and over-regulation as their biggest problems, even BEFORE Obamacare kicks in next year.
Notwithstanding the suits and slacks, the shares of Joseph A. Bank went on sale yesterday as the company warned that first quarter profits would be 27 to 30 cents a share, versus the 50 cents that analysts were expecting. Shares of Joseph A. Bank dropped over 7 percent. It’s fairly quiet on the earnings and economic fronts today, with most of the week’s earnings reports due tomorrow and Thursday.
A weak investor sentiment survey in Germany has Europe in a bit of a funk this morning. Asia was more of a mixed picture. Our futures, which had been solidly lower all morning, broke into the green about a half hour ago.
At this point, adjusted for fair value, the S&P futures are up about 3 points, the Dow futures are higher by 19 and NASDAQ futures are about 5 points above fair value.
May 13, 2013
Just in the nick of time, as corporate earnings reports begin tail off, we’ll see a good number of economic reports this week. Not only that, traders will be listening to every word that pops out of a Federal Reserve official’s mouth.
The Wall Street Journal is reporting that the Fed has developed a plan to wind down its 85 billion dollar a month bond buying program. Just the thought of coming off the economic steroids has traders feeling like a bunch of 98 pound weaklings this morning.
At 8:30, the April Retail Sales Report is expected to have declined three-tenths of a percent, as the impact of the Social Security tax increase continues to drag on consumers. The March decline was four-tenths of a percent. Inflation, Housing and Consumer Sentiment data comes later this week.
Dick’s Sporting Goods reports earnings later on. And keep an eye on stock of Tesla Motors, which rose more than 40 percent last week. It looks ready to rise another 5 percent in the pre-market.
Tokyo rallied again overnight, rising more than one percent. However, most other overseas markets are modestly lower at this hour.
Our futures are lower, but not quite as weak as they were a couple of hours ago. At this point, adjusted for fair value, the S&P futures are down 5½ points, the Dow futures are lower by 41 and NASDAQ futures are about 10½ points below fair value.
May 9, 2013
The irrepressible rally of 2013 kept pressing on yesterday, bringing us another record high in the Dow and S&P 500.
Say what you will about the tensions in the Korean peninsula, the South Koreans haven’t taken their eye off the world-wide rush to de-value every currency in sight. Overnight, the Bank of Korea cut its short term interest rate target to 2½ percent.
Costco reported April same store sales of 4 percent, which was about a half-percent lower than expected. Lower gasoline prices and a stronger dollar take the blame.
The number of domestic housing foreclosures fell 32% from a year ago in April. Coincidently, Fannie Mae reported enormous profits this morning as low interest rates and loosening mortgage qualification standards continue to pump up housing prices. But the bubble police on alert – we’ve seen this movie before.
Electric automaker Tesla reported adjusted earnings of 13 cents per share this morning. That easily beat the 4 cent estimate. Tesla is a heavily shorted stock and anytime you get really good news in a really shorted stock, the action can be violent. Tesla shares are looking to open 20 percent higher this morning.
Weekly Jobless Claims come at 8:30. Expect 335,000 new claims.
Overseas markets are mixed, but mainly a little lower. Our futures have slipped just a bit in the past half hour. At this point, adjusted for fair value, the S&P futures are down 2½ points, the Dow futures are lower by 13 and NASDAQ futures are about 8 points below fair value.May 8, 2013
The Dow closed above 15,000 for the first time yesterday, after our seventeenth consecutive Tuesday of higher prices. While the market pauses this morning to catch its collective breath, there’s a little flurry of earnings reports to consider.
Last night, Disney reported earnings of 79 cents, 2 cents ahead of estimates on better than expected revenues. Although the stock spiked higher after the announcement, it’s looking to open a fraction lower this morning. Whole Foods also beat estimates, earning 76 cents, three cents ahead. Same store sales were up 6.9 percent, and are reportedly up over 9 percent this quarter.
Symantec beat earnings estimates but guided lower and Electronic Arts missed the 57 cent estimate by 2 cents but promised better times ahead, after they get through a “rough patch” for results.
Nouriel Roubini, who gets a lot of attention by being a supposed seer of economic doom, said yesterday that the stock market could rise nicely for the next couple of years, but then be set up for a massive crash. The lesson here is that if you are going to pretend to know the future, always talk out of both sides of your mouth, so that someday half the people will think that you’re not full of baloney.
Ireland, Iceland and Portugal are lower. So what, you say? Well you’re right. Everybody else has shifted into drive, although our futures are in neutral.
At this point, the S&P, Dow and NASDAQ futures are all within a couple points of fair value.
May 7, 2013
Many individual investors manufacture a nice capital loss deduction on their annual tax return by trying to time the market. History has overwhelmingly demonstrated that predictions are very difficult, especially when they involve the future. However, one stock market indicator is pretty reliable – when interest rates come down, stock prices tend to rise.
As we all know, our central Bank has set short term rates a zero for more than 4 years. The Bank of Japan has also hit the accelerator on monetary easing. Last week, the European central Bank started to cut rates again. And overnight, the Australian Central Bank pulled a bit of a surprise by cutting its target rate to by a quarter percent to 2.75 percent. Someday, rates will rise again – but this morning, that day seems a long way off.
Disney’s earnings are not a long way off. We’ll hear from Mickey just after 4 o’clock today. Expect 76 cents in operating earnings.
Microsoft has announced that their revolutionary new Windows 8 operating system may be a revolution that failed to kill the king. Windows 8 will be re-worked and re-released later this year.
Australian stocks fell a bit after the interest rate cut overnight. But every other overseas market that is trading is trading higher. We’ve had a string of good Tuesday’s this year, and this one will start out in the green as well. At this point, adjusted S&P futures are higher by 3 points, the Dow futures are up 35 points, and the NASDAQ futures are more than 4 points above fair value.
May 6, 2013
This week should be kind of a mid-quarter “quiet time.” Some significant earnings reports, including Disney and Toyota come later in the week. However, the cupboard of economic reports is almost bare, with nothing major on the docket for today.
A big shareholder vote is coming up at JP Morgan. This morning, Institutional Shareholder Services, which advises people on how to vote their proxies, advised that JP Morgan shareholders vote to oust three JP Morgan directors and split the Chairman and CEO roles currently held by Jamie Dimon. This comes in the wake of the 6.2 billion dollar “London Whale” trading loss of 2012. We shall see if shareholders are paying attention, or are simply feeding their proxies to the shredder as many do.
Food service firm Sysco and Anadarko Petroleum report in a little later on today. Tyson Foods checked in with a disappointing report this morning. The 26 cent profit fell well short of the 44 cent estimate and Tyson shares are shedding about 6 percent pre-market.
The Japanese market was closed overnight, but most of Asia finished higher. European markets are more of a mixed picture. And mixed is what we see in the futures as well.
At this point, adjusted S&P futures are down about a point and a half, the Dow futures are down almost 8 points, but the NASDAQ futures are more than 2 points above fair value.
May 3, 2013
The one day up, one day down syndrome appears to be back in vogue. Like a frustrated dieter, what the stock market lost in the waistline on Wednesday attached to the hips yesterday, as traders seem to be very comfortable buying every dip that comes along.
At 8:30 we’ll see how comfortable traders are with the April Unemployment data. Expect that Nonfarm Payrolls added 160,000 jobs in April and the Unemployment Rate held at 7.6 percent. Of course the UNDER-employment rate is much higher, but that seems to only matter to those who ARE underemployed.
The interesting stock story of the morning would be shares of Linked-In. Last night earnings of 45 cents were well above the 31 cent estimate. Revenue also beat expectations. So all is well, right? Well, with stock prices, it’s not what you’ve done for me lately, it’s what will you do for me next. Linked-In issued lower-than-expected guidance and the shares are lower by about 10 percent pre-market.
Overseas markets are mixed, and our futures are playing wait-and-see with the Jobs Report. Adjusted S&P futures are down about a point, the Dow futures are down almost 11 points, and the NASDAQ futures are about 2 points below fair value.
May 2, 2013
Everyone expected that the European Central Bank would cut their short-term interest rate target this morning. And, a half-hour ago, right on cue, the ECB cut its target interest rate from three-quarters of a percent to one-half of a percent. That’s still roughly a half-percent higher than the target in the U.S. However, it’s the first European rate cut in ten months and probably not the last.
It was a good quarter for General Motors. Operating earnings of 67 cents beat the 54 cent estimate. Revenue was a little better than expected and GM shares are looking about 4 percent higher in the pre-market.
Insurer Cigna is also out with a good report this morning. $1.72 in operating earnings handily beat the $1.42 estimate. Cigna also raised full-year guidance.
Facebook issued a mixed report last night. Earnings missed by a penny per share, but revenues were higher and 30% of that revenue came from mobile advertising. That’s a key metric and its up from 23 percent. Facebook shares are looking to open about a percent and a half higher.
Overseas markets are mostly lower after our big pullback yesterday. But, a chuck of that should come back early on as our futures have been on the rise all morning. Adjusted S&P futures are higher by about 6½ points, the Dow futures are up 56 points, and the NASDAQ futures are a little more than 11 points above fair value.May 1, 2013
Happy May Day, everyone! And Happy Federal Reserve Decision Day, or maybe perhaps we should say Indecision day. At 2 o’clock, we’ll get the words of wisdom from Ben Bernanke, and just like with the family dog, the words are expected to be “sit” and “stay.” The Fed is expected to continue its 85 billion dollar a month bond buying spree, as the economy is still viewed as too weak to stand on its own, without continued monetary steroid therapy.
Speaking of weak, the Chinese manufacturing survey released overnight gave us a reading of 50.6. That’s still expansionary, but only by the six-tenths, and most were expecting a little bit better reading. Weakness in exports took the blame.
Drug maker Merck reported 85 cents in earnings for last quarter. That was 6 cents better than expected, but full year guidance was weak and Merck shares are looking about 3 percent lower pre-market.
Comcast shares are looking about one percent higher, after beating the 50 cent estimate by a penny. And Humana earned $2.69 versus the expected $1.81. They raised guidance and traders are raising the shares by about 4 percent pre-market.
Don’t look for the futures, or the market, to move a lot before the Fed announcement at 2 o’clock, and so far, that seems to be the case.
Adjusted S&P futures are higher by a point, the Dow futures, reflecting the Merck guidance, are down 3 points, and the NASDAQ futures are a little more than 4 points above fair value.
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