October 30, 2015
We’ve arrived at the last trading day of what has been a very good month for stock prices – the best in fact in four years, as the market recovers from the September correction.
And it looks as though we may head yet a little higher at the open today. Last night, LinkedIn announced a GAAP loss of 31 cents per shares versus last year’s loss of 3 cents per share. You might think that’s BAD news. However, the expanded accounting loss was due to increased expenses for building out their rapidly expanding business. ADJUSTED earnings (which means you don’t talk about extraordinary stuff) were 78 cents per share, well ahead of the 46 cent estimate. LinkedIn shares are indicated almost 14 percent higher pre-market.
Starbucks matched the earnings estimate last night, although Chinese sales were a little weak. Abbvie shares are almost 5 percent higher on a good earnings report, and ExxonMobil shares are also moving higher after their report just minutes ago.
By 10 o’clock we’ll get the Chicago Purchasing Manager’s Index and the University of Michigan’s final read on October Consumer Confidence. Expect a little uptick to reading of 92½ .
Asia was mixed. Europe is mostly lower, but our futures continue to climb modestly. At this point, adjusted for fair value, the S&P 500 are higher by almost 4 points, Dow 30 futures are up 41, with the NASDAQ futures are about 8 points above fair value.
October 29, 2015
There's another big tax-motivated deal in the hopper this morning, as big American drug maker Pfizer is reportedly talking to Allergan about a take-under that would move Pfizer over to Ireland. If this deal comes together, it will certainly get a Congressional review and may serve as a lightning rod in the storm over U.S. tax policy.
On the earnings front, ConocoPhillips lost a penny more per share than expected and will cut iots capital expenditures budget. Deutche Bank will cut 9,000 lobs after a 6.6 billion dollar loss and Johnson Controls will control costs by sending 2 1/2 percent of it's employees to the unemployment line.
The miss of the mornings belongs to GNC Holdings. 83 cents was the target, 76 cents was the profit and GNC shares are missing about nine percent of their value pre-market.
China and Japan will us slightly overnight, but most other markets overseas are lower. After out post-Federal Reserve one percent rally yesterday, we'll be giving some back at the open. Right now, adjusted for fair value, S&P futures are lower by 9 points, Dow futures are down 77 and the NASDAQ futures are 23 points below fair value.
October 27, 2015
It’s a busy, busy day if you’re a data geek. At 8:30, the September Durable Goods Report is expected to reflect a one percent decrease in orders, but only one-tenth of a percent decrease if you strip out transportation.
Before the morning is out, we’ll also get the Case-Shiller Home Price Index, the PMI Flash report on the services sector and the Conference Board’s October Consumer Confidence reading, which is expected to drop a half-point to a level of 102.5.
The earnings winner of the morning is Chinese internet play Alibaba, which beat estimates of revenue and profit. Alibaba shares are about 8½ percent higher pre-market, dragging shares of Yahoo up 5 percent in their wake.
Also reporting better than expected profit numbers are drug makers Pfizer, Bristol-Myers and Merck all topped earnings expectations this morning and raised forward guidance. UPS and Dupont beat on earnings, but missed on sales.
Ford Motor’s 45 adjusted profit of 45 cents missed estimates by a penny, with the blame going to a 33 percent average tax rate, which was one percent higher than expected.
Stock futures have been pretty stead over the past hour, and are pointing toward a slightly lower open. At this point, adjusted for fair value, the S&P 500 are lower by about 4 points, Dow 30 futures are down 29, with the NASDAQ futures are about 5 points below fair value.
October 26, 2015
The Dow Jones Industrials are coming off their first four-week winning streak of the year and so far, October has been the best month the stock market has seen in about four years.
Nevertheless, the futures are pointing a little lower as we head into a week that will feature another two-day Federal Reserve Open Market Committee meeting as well as the quarterly earnings report from Apple, which comes after the close of open market trading tomorrow.
This morning, Xerox beat the earnings target by a penny, but sales fell short on (what else) the currency translation impact of a stronger dollar.
The deal of the day is in the energy space, as Duke Energy is buying Piedmont Gas for just shy of 5 billion dollars. That’s 60 bucks per share. Piedmont closed Friday at 42.22 per share.
Asian markets were mostly a little higher this morning, Europe is mostly a little lower and we will likely follow that lead at 9:30, although the stock index futures are in better shape than they were in an hour or two ago. At this point, adjusted for fair value, the S&P 500 are lower by almost 5 points, Dow 30 futures are down 28, with the NASDAQ futures are about 9½ points below fair value.
October 23, 2015
A nice uptick on good earnings news turned into a massive rally yesterday after Mario Draghi indicated that even MORE interest rate stimulus may be on the way in Europe. This morning, the futures were nicely higher on some great earnings news overnight, but the futures REALLY took off after China announced a quarter of one percent cut in its benchmark lending and deposit rates.
Speaking of those earnings reports, AT&T beat estimated earnings by a nickel per share and guided higher. AT&T stock look a couple percent higher pre-market. Microsoft shares are more than 10 percent higher pre-market after reporting 67 cents per share in profit, 8 cents ahead of estimates. Microsoft will also cut 1,000 jobs in addition to the 7,800 cuts announce in July.
Amazon was expected to lose 13 cents per share last quarter. Instead they MADE 17 cents and investors have made a paper profit of over ten percent this morning in the pre-market. Alphabet, the company formerly known as Google is almost 12 percent higher pre-market on a great earnings report and a stock buyback announcement.
The famous other hand belong to Pandora and Sketchers this morning. Pandora shares are lower by 32 percent, Sketchers down 27 percent pre-market on lousy revenue reports.
Overseas markets are higher and we’re on the up elevator again. At this point, adjusted for fair value, the S&P 500 are higher by 26 points, Dow 30 futures are up 171, with the NASDAQ futures are about 127 points above fair value.
October 22, 2015
The earning reports are flowing fast and furious this morning, and there are far too many to cover them all. But as usual, it’s a case of the good, the bad and the ugly.
Last night, eBay beat earnings and revenue estimates handily and the shares are almost 8 percent higher pre-market. Eli Lilly’s 89 cents of profit beat the 76 cent estimate, and Lilly raised full year guidance. 3M beat on earnings, but sales were a little light.
It’s better living through Chemicals at Dow Chemical. Shares are up almost 7 percent pre-market on a good report. McDonald’s shares are up over 6 percent after they reported about 15 minutes ago.
Moving down the ladder, Caterpillar reported only 75 cents per share in profit. That was 3 cents short. Revenue missed as well, and Caterpillar shares are missing almost 4 percent of their value this morning. American Express issued a downbeat report last night as they are struggling with the looming termination of their private-label card agreement with Costco. American Express shares are almost 5 percent lower.
China bounced back a bit overnight. Europe is pretty flat. At this point, adjusted for fair value, the S&P 500 are higher by 4 points, Dow 30 futures are up 54, with the NASDAQ futures are more than 18 points above fair value.
October 21, 2015
Let’s get the deals of the day of the way first. Western Digital will lay out 19 billion dollars to buy Sandisk, whose shares have been rising a bit lately on rumors of a deal. $86.50 per share is the price and Sandisk shares are about 6 percent higher pre-market. KLA-Tencor is 15% higher pre-market on a bid from Lam Research.
Now, on to the earnings news: There’s a lot of it and the biggest blowout of the morning (and I mean blowout in a good way) came from General Motors. $1.50 per share of operating profits was 27 percent higher than the $1.18 estimate. More impressively, the North American profit margin rose to almost 12 percent.
Boeing is also out with a big beat. $2.52 cents was 30 cents ahead of estimates, and Boeing shares are higher by about 4 percent.
Biogen, $4.48 beat the $3.80 estimate. They also raised guidance, while announcing that 11 percent of their workers will be looking for work somewhere else soon and there is some bad news about their drug Tysabri.
Coca-Cola, Kimberly Clark, Illinois Tool, ARM Holdings and Intuitive Surgical all beat estimates this morning. We’ll hear from eBay and American Express after 4 o’clock. Chipotle and Harley Davidson missed the mark last night.
China was lower overnight, but most other markets overseas are higher.
At this point, adjusted for fair value, the S&P 500 are higher by more than 6 points, Dow 30 futures are up 59, with the NASDAQ futures are more than 21 points above fair value.
October 16, 2015
Stock prices surged again yesterday, continuing a recovery from their summer “correction.” Confidence that the Federal Reserve is on hold until next year at the earliest appears to be joined by confidence that corporate earnings are not about to fall off a cliff. It’s way too early to draw conclusions, but so far this quarter, 85 percent of the big boys have beaten or matched earnings estimates with only 15 percent missing the mark.
General Electric counts as one of the 85 percent. 29 cents in operating profit was 3 cents ahead of estimates. However, revenue came up a little short and GE shares are giving up about two-thirds of yesterday’s 1½ percent gain.
Schlumberger is also in that camp. Revenue was a third lower than last year, and 78 cents of profit was well below last year’s $1.49, but a penny ahead of estimates. Sagging oil prices will cause Schlumberger to cut costs going forward.
At 10 o’clock, the University of Michigan’s first look at October Consumer Sentiment is expected to rise to 89.5 from September’s 87.2, due mainly to optimism about tomorrow’s game. Just kidding about that. Kind of.
Japan rose one percent overnight. European markets are about a half-percent higher, but gains have been fading over there
At this point, adjusted for fair value, the S&P 500 are down a point, Dow 30 futures are down 9, with the NASDAQ futures are about a point above fair value.
October 15, 2015
A rather stunning conference call from Walmart seemingly dragged all stocks lower yesterday. Walmart painted a picture of their estimated costs and projected revenue for the next three years and the picture wasn’t pretty. Big cost increases due to their plans to raise employee wages and tepid projected sales numbers whacked 10 percent of the value of Walmart shares and clipped about 45 points off of the Dow Jones Industrial Average. So far this morning, Walmart shares, following the “low prices everyday” mantra, are down another one percent.
Netflix shares were lower by about 14 percent after hours last night, but have recovered about 70% of that loss this morning. A disappointing subscriber growth projection gets the blame. Also out with less-than-great news this morning are Goldman Sachs and HCA Holdings. Beating earnings estimates were Philip Morris International, Xilinx, Citigroup and United Health.
Weekly Jobless Claims and Consumer Inflation data come at 8:30. We’ll also get a couple regional business surveys before the morning it out.
European markets are about one and a half percent higher. Our futures are well off their earlier highs, but it still looks like the broad market might recover almost all of yesterday’s losses in the early going today. At this point, adjusted for fair value, the S&P 500 futures are up almost 11 points, the Dow futures are up 72, and the NASDAQ futures are about 26 points above fair value.
October 14, 2015
We knew heading into this 3rdquarter earnings season that profit expectations had been lowered. The question is “have they been lowered enough?” So far, the answer is, yes, for the most part.
Reporting in this morning, Bank of America beat the 33 cent per share profit estimate by 4 cents and Delta Airlines’ $1.74 was three cents ahead of the consensus number. Both companies’ stocks are higher by about 2 percent. Wells Fargo beat estimates by a penny per share.
Last night Intel checked in at 64 cents, which was a nickel per share more than expected. On the famous other hand, JP Morgan Chase missed by a nickel at $1.32 per share. Higher legal expenses get part of the blame there, but aren’t they always.
Reports on Producer Prices and Retail Sales come at 8:30 this morning.
Outside of New Zealand, markets to the left of the Pacific were lower overnight. European markets are lower by a half percent.
Our futures have just about dig out of an earlier hole. At this point, adjusted for fair value, the S&P 500 futures are up a point an a half, the Dow futures are up 5, and the NASDAQ futures are just about even with fair value.
October 13, 2015
The Dow Jones Industrial Average is riding a seven-day winning streak, but that streak will >
Johnson and Johnson has a good news/bad news story this morning and the shares are marginally higher pre-market. Earnings of $1.49 per share beat the average estimate by 4 cents per share. However, sales fell short, hurt by the strong U.S. dollar. J&J raised their full year earnings estimate and authorized a 10 billion dollar stock buyback.
This is a big week for bank earnings, but we’ll have to wait until after 4 o’clock to hear from JP Morgan Chase as they drag themselves out of bed after a long Columbus Day weekend.
It looks like one third of the world’s beer will come from one company. Anheuser Busch/InBev and SAB/Miller have agreed in principle to their 100 billion dollar merger. The former will buy the latter for 67 dollars per share in cash.
Our futures have been taking a slow ride lower most of the morning. At this point, adjusted for fair value, the S&P 500 futures are lower by 8 points, the Dow futures are down 73, and the NASDAQ futures are about 22 points below fair value.
October 12, 2015
Word leaked about the deal last week, and this morning it’s confirmed. Michael Dell and Partners are buying EMC for a combination of 67 billion dollars in cash and stock. That values EMC at $33.15 per share. EMC shares closed at $27.86 last Friday. That computes to about a 19 percent premium, although EMC shares are only about 5 % higher pre-market.
Chinese stocks surged more than 3 percent this morning, on word of a new Chinese Government stimulus plan. The plan, of course, would allow Chinese Banks to lend even more money. Meanwhile, the Chinese Finance Minister stated that this would be a bad time for the U.S. Central Bank to raise interest rates. Ah, there’s no lunch like a free lunch, but sooner or later somebody’s economy is going to have to pay, don’t you think?
Tomorrow we’ll hear earnings news from Johnson & Johnson, Intel & JP Morgan Chase. A lot of the major banks will report in by week’s end. There’s not much on the agenda today due to Columbus Day and the banks are closed.
Unfortunately, not closed today are the mouths of Federal Reserve Bank officials. Three of them are out giving speeches today, perhaps to see what trouble they can cause.
Even though it is Columbus Day, our stocks market will trade, even though the early action appears to lack direction. Adjusted for fair value, the S&P 500 futures are higher by a little more than a point, the Dow Industrials futures are up 14, and the NASDAQ futures are about 3 points above fair value.
October 9, 2015
We finally heard from Alcoa last night, they company that usually leads the parade of quarterly earnings reports. Apparently, they weren’t in a big hurry to talk about last quarter and now we know why.
Earnings of 7 cents per share were substantially short of the 13 cent estimate. The global economic slowdown and specifically a slowdown in Chinese demand get the blame. After the report was issued last night, Alcoa shares fell about six percent, but have recovered about half of that loss in the pre-market this morning.
In the most recent Fed minutes which were released yesterday, it appears that the Open Market Committee is not just focus on inflation or jobs. The foreign economic slowdown is now another factor that is causing them to hold rates at emergency levels.
Shares of the Gap are also lower this morning on disappointing sales from their Banana Republic chain.
Positive earnings news came from International Speedway and Helen of Troy yesterday, and Speedway rose almost 6 percent into the close.
The Dow Jones Industrials are now on a five day winning streak and markets overseas are coming along for the ride. The markets that were open for trading today were trading stocks at higher prices. At this point, adjusted for fair value, the S&P 500 futures are higher by more than 5 points, the Dow Industrials futures are up 54, and the NASDAQ futures are about 11 points above fair value.
October 8, 2015
Stock prices continue to see-saw day to day, with yesterday being decidedly up day, and today – well so far, not so much.
Lumber Liquidators shares are indicated about 8 percent higher as they’ve reportedly reached a 10 million dollar settlement with the Justice Department regarding their wood product sourcing issue. People get SO upset about a little formaldehyde issue, don’t they?
Domino’s delivered earnings and sales numbers that were lower than the average estimate this morning. 67 cents in operating profit was 7 cents short. Even though domestic same store sales were 10 percent higher, Domino’s shares are looking to open almost 6 percent lower this morning.
Alcoa will finally release quarterly earnings after the market closes today. Alcoa missed the mark last quarter after beating estimates in the prior five reports. Expect 13 cents per share in profit. That’s down from 31 cents a year ago. The most recent Fed minutes will be made public this afternoon.
Chinese stocks were higher in a catch-up rally this morning. It was the first day of trading there in a week. Other overseas markets are mixed, but mostly a little higher. Our futures have been a little lower all morning.
At this point, adjusted for fair value, the S&P 500 futures are lower by 7 points, the Dow Industrials futures are down 51, and the NASDAQ futures are about 15 points below fair value.
October 7, 2015
It’s great to be a company that is positioned to benefit from growth in China. Just make sure that you GET that growth. Shares of Yum brands are indicated more than 15 percent lower premarket after a lousy earnings report last night. This after the company raised guidance about a month and a half ago. Operating earnings of a dollar per share fell seven cents short of estimates, even though up about 12 percent from a year ago. Although YUM’s profit margins in China improved, same store sales rose only 2 percent, versus the expected 9 percent.
A number of other big companies also lowered profit forecasts yesterday, including Adobe, Nu Skin and Allegheny Technologies. Monsanto just checked in with a much bigger loss than expected.
On the famous other hand, Constellation Brands shares are up about 3 percent after beating the earnings estimate by 24 cents per share.
The Mortgage Bankers Association reported a massive surge in mortgage applications last week, as interest rates dropped and increased disclosure requirements loomed. Mortgage applications rose more than 25 percent for both purchase mortgages and refinancing loans.
There are slightly lower stock prices in Switzerland and Ireland this morning, but who cares? All other major foreign markets are higher as are our futures.
At this point, adjusted for fair value, the S&P 500 futures are higher by 9 points, the Dow Industrials futures are up 88, and the NASDAQ futures are about 29 points above fair value.
October 6, 2015
We saw another massive and somewhat unexpected rally yesterday in stock prices. Traders evidently got tired of waiting for good news on the economy and decided that bad news was good news, because interest rates may be stuck at zero for quite some time.
Speaking of bad news being good, DuPont shares are looking to open more than 6 percent higher. Last night, DuPont guided substantially lower and CEO Ellen Kullman announced that she will exit stage right.
Earnings season is off and running this morning, as Pepsico reported $1.35 of operating profit, which was nine cents better than expected. Pepsi shares are almost 3 percent higher on the news. Container Store shares are about 10 percent lower on an earnings miss. PMC-Sierra is reportedly being acquired by Skyworks. Sierra shares are more than 30 percent higher on that news.
There’s nothing much on the economic agenda today.
Outside of a slight dip in Hong Kong, Asian markets rose overnight. Europe is mixed and little changed. For us, it looks like rally interruptus in the early going today.
At this point, adjusted for fair value, the S&P 500 futures are lower by about 7 points, the Dow Industrials futures are down 31, and the NASDAQ futures are about 21 points below fair value.
October 5, 2015
As we move past the worst quarterly stock market performance in four years, there’s hope that we may have seen the worst of the worst as stock index futures are again in rally mode this morning.
Third quarter earnings reports start to roll this week. Traditionally, Alcoa leads the parade of earnings reports, but they must have given their accountants a few days off this quarter, as they won’t have their work done until Thursday. In the meantime, we’ll hear from Pepsico, Domino’s Monsanto and Yum Brands among others. Pepsico will be first out of the gate tomorrow morning.
Not to kick a dead horse here, but interest rates and earnings are what drive stock prices. We know that interest rates aren’t going to move substantially any time soon. S&P 500 dividend yields, at 2½ percent are far higher than short and intermediate term bond interest rates and are higher than their 25 year average. Moreover, prices of the S&P 500 stocks are actually below their 25 year average, based on projected 2016 earnings. A good third quarter earnings season would bolster confidence that those projected earnings will come true.
The PMI and ISM survey results on the health of the services sector will be out by 10 this morning. General Electric shares are more than 4 percent higher pre-market on word of a private equity investment.
All overseas markets are higher this morning. European stocks are higher on the order of 2 to 3 percent on the heels of our late rally last Friday.
At this point, adjusted for fair value, the S&P 500 futures are higher by more than 15 points, the Dow Industrials futures are up 121, and the NASDAQ futures are about 36 points above fair value.
October 2, 2015
After a lot of up and down and all around, stock prices finished the day yesterday close to unchanged as traders await the September Jobs numbers. At 8:30 this morning, expect word that the September Unemployment Rate held steady at 5.1 percent with the addition of 200,000 new non-farm jobs. While that 5.1 percent rate sounds pretty good, another rate to watch is the one known as the U6. That’s the percentage of people without a full time job who want one. That rate is currently over 10 percent.
Micron Technology shares are indicated about 5 percent higher this morning on a 37 cent per share profit. That was 6 cents better than expected. That being said, we’ve seen relatively few earnings warnings as we head into the third quarter earnings season. That could be a good sign for stock prices into year-end, as good earnings reports could put an end to our current “correction.” Incidentally, the most recent past “correction” ended four years ago today.
WebMD guided revenue estimates higher this morning.
No fewer than five Federal Reserve Regional Presidents will give speeches today, as will the Vice-Chair of the Fed.
Asian markets were mixed overnight but Europe is solidly higher. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 11 points, the Dow Industrials futures are up 88, and the NASDAQ futures are about 30 points above fair value.
October 1, 2015
Yesterday’s substantial rally, which appeared to start in anticipation of a Janet Yellen speech, faded as she spoke, and then renewed when she didn’t pass out or say anything about interest rates. As substantial as that rally was, the third quarter of 2015 finished as the worst quarter for stock prices in four years.
This morning, the Challenger Job Cut Report surged to over 58,000 job cuts announced in September. Of course, the 30,000 jobs on the block at Hewlett-Packard had a lot to do with that.
FiatChrysler reported a 14 percent sales increase in September. That was in line with expectations. Oil prices are higher this morning as a key report in China overnight showed better than expected, although still contracting manufacturing activity. We’ll get the PMI and ISM Reports on our manufacturing activity later this morning.
Weekly Jobless Claims come at 8:30. Expect 272,000 new claims. The big jobs number comes tomorrow morning, and we may see traders take a wait-and-see stance on that number by the close of trading today.
The Dow Industrials futures were higher by well over a hundred points earlier this morning, but have suffered a steady leak ever since. At this point, adjusted for fair value, the S&P 500 futures are flat, the Dow Industrials futures are up 21, and the NASDAQ futures are 8 points above fair value.