Stocks are set to rally this morning, but history offers a warning to investors. That and more is what’s in market news Thursday
The Dow industrials (^DJI) lost 21 points Wednesday, and the S&P 500 (^GPSC) was virtually flat, but the Nasdaq (^IXIC) gained nearly 10 points.
All three major averages posted solid gains for all of July. For the Dow, it was the seventh increase in eight months. So what can we expect from August? Well, since 1987, it’s been the worst month of the year for the market.
In earnings news, Exxon Mobil’s (XOM) quarterly earnings appear to have badly missed Wall Street expectations.
Procter & Gamble’s (PG) net fell by nearly half from a year ago, but still edged past expectations.
Animated filmmaker DreamWorks Animation (DWA), biotech company Affymetrix (AFFX), and the online review company Yelp (YELP) are all set to rally on better-than-expected earnings news.
But Whole Foods Market (WFM) and Marriott International (MAR) both issue disappointing results.
Ford (F), General Motors (GM), Toyota (TM) and other carmakers report sales for last month. Industry watcher Edmunds.com forecasts a double-digit gain from a year ago.
The dispute between J.C. Penney and Macy’s (M) over the rights to sell Martha Stewart (MSO) branded products could come to an end today. The two department stores are set to deliver closing arguments in their long-running case, and the judge could issue an immediate ruling.
The International Trade Commission is expected to rule today on Apple’s (AAPL) patent-infringement case against Korean rival Samsung. The companies have filed suit and countersuit against each other, with both sides claiming some victories in court.
And Starbucks (SBUX) has enlisted Google (GOOG) to make the Internet connection at its coffee shops up to 10 times faster than it is now.
Pfizer’s (PFE) operating profit and revenue edged lower, but still beat expectations. The company has been coping for several years with the loss of patent rights on the top-selling cholesterol drug Lipitor, and sales of Lipitor tumbled 55 percent in the latest period. Pfizer also says it will reorganize, a move some analysts say could lead to another spinoff.
Rival drug-maker Merck (MRK) reports net edged past Wall Street expectations, but revenue was a bit light. Sales of several key drugs fell as it too struggles with the expiration of patents.
After the closing bell we’ll hear from biotech leader Amgen (AMGN).
Community Health Systems (CYH) has agreed to buy Health Management Associates (HMA) for $3.9 billion. Both companies operate for-profit hospitals, mostly in smaller cities and rural areas.
Herbalife’s (HLF) net easily beat expectations. The nutrition supplement company has been at the center of a high-profile battle between some big-time investors during the past year, with one hedge fund manager claiming the company is run like a Ponzi scheme, and he’s been betting against its stock. So far, he’s lost more than $200 million on that bet. On the other hand, Carl Icahn has made a cool quarter of a billion by backing the company.
AIG (AIG) is getting out of the retail banking business. The company says it will return deposits because of limits placed on insurance companies under the Dodd-Frank law. Allstate Group (ALL), MetLife (MET) and Hartford Financial Services (HIG) have already backed away from retail banking.
JPMorgan Chase (JPM) reportedly has agreed to pay $400 million to $500 million to settle federal charges that it manipulated the power markets in California and other states in 2010 and 2011.
On the economic front, the Federal Reserve begins a two-day policy meeting. Everyone will be looking for clues about when and how it will taper down on its massive bond-buying program.
WASHINGTON – The number of Americans who signed contracts to buy homes dipped in June from a six-year high in May, a sign that completed sales could stabilize in the next month or two.
The National Association of Realtors says its seasonally adjusted index for pending home sales ticked down 0.4 percent to 110.9 in June. The May reading was revised lower by a percentage point to 111.3, but it was still the highest since December 2006.
The slight decline suggests higher mortgage rates may be starting to slow sales. Still, signed contracts are 10.9 percent higher than they were a year ago. There is generally a one- to two-month lag between a signed contract and a completed sale.
Starbucks (SBUX) continues to expand beyond coffee. It’s joining forces with Dannon to make Greek yogurt parfaits. The fast-growing yogurt business in the U.S. is worth more than $6 billion, and analysts say there’s still plenty of room to go. Last year, Starbucks expanded its tea business by acquiring the Teavana chain.
Apple’s (AAPL) quarterly earnings fell 22 percent from a year ago, but that wasn’t as bad as most analysts had forecast. Revenue edged higher as it shipped more than 31 million iPhones. That was well above expectations and the stock is likely to climb this morning.
AT&T’s (T) net edged slightly lower, but on the positive it reported the number of new customers signing long-term service contracts nearly doubled from a year ago.
Ford (F) reported better-than-expected second quarter earnings in part due to strong domestic demand for its F-Series pickups. The automaker earned $1.2 billion in the April-June period, propelled by a $2.3 billion profit in North America. Ford shares rose 3 percent in premarket trading.
Among other big names reporting this morning: Boeing (BA), Caterpillar (CAT), Delta Air Lines (DAL) and USAirways (LCC).
Other stocks likely to make big moves to the upside following earnings include video gamemaker Electronic Arts (EA) and software company VMWare (VMW); like to trade to the downside, chipmaker Broadcom (BRCM) and restaurant chain Panera Bread (PNRA).
The big report after the bell today comes from Facebook (FB). The focus will be on how much the company grew its revenue from mobile platforms.
The New York Times (NYT) reports officials in Louisiana are preparing to file suit against Exxon Mobil (XOM), BP (BP) and other oil producers, accusing them of damaging the coastal wetlands that help protect the region from hurricanes.
A new report shows that Google (GOOG) accounts for nearly a quarter of all the Internet traffic in North America. That’s more than Facebook and Twitter combined.
And Carl Icahn, one of those big time investors who can move stock prices, is offering a tease about what he’ll do next. CNBC reports that Icahn plans to give clues about his next big investment on Twitter. His handle is @Carl_C_Icahn.
U.S. stock futures point to a higher open Wednesday, ahead of the publication of new home sales data and quarterly earnings statements from major American companies, including Facebook, Ford, PepsiCo, Qualcomm, Visa and Boeing.
Futures on the Dow Jones industrial average (^DJI) were up 0.2 percent, while futures on the Standard & Poor’s 500 index (^GSPC) were up 0.3 percent and those on the Nasdaq 100 Index were up 0.9 percent.
Investors are expected to focus on new home sales data for June, to be released by the Commerce Department, at 10 a.m. Eastern time. Analysts expect new home sales — the annualized number of new single-family homes that were sold during the previous month — may probably increase to 485,000 in June from 476,000 in the previous month.
New home sales had recorded a better-than-expected gain in May, helped by a pick-up in demand, while existing home sales data for June, which was released Monday, showed a decline. Analysts attributed the fall to a recent hike in mortgage interest rates and believe new home sales could still increase in June.
“With the NAHB current sales index still rising strongly, we have penciled in an increase in new sales from 476,000 in May to 485,000,” Paul Diggle, an economist with Capital Economics, wrote in a research note.
On the earnings front, a number of major companies, including Caterpillar (CAT), Eli Lilly & Co. (LLY), EMC Corp. (EMC), US Airways Group, (LCC), Ford (F), PepsiCo (PEP) and Boeing (BA), will announce quarterly earnings before market hours. Visa (V), Western Digital (WDC), Qualcomm (QCOM) and Facebook (FB) are to announce their earnings after markets close Wednesday.
Markit Economics’ flash Purchasing Managers’ Index, or PMI, for the manufacturing sector in the month of July, is scheduled to be released at 9 a.m. Eastern time. The index, which measures the activity level of purchasing managers in the manufacturing sector, is expected to show a reading of 52.5 in July, up from the 51.9 recorded in June. A reading below 50 indicates contraction.
European markets were trading higher Wednesday, as investor sentiments were buoyed after flash PMIs for the euro zone’s manufacturing and services sectors beat expectations. The 17-nation eurozone’s manufacturing PMI for July came in at 50.1 compared to 48.8 in the previous month. The services PMI registered a reading of 49.6 compared to 48.3 in June.
Germany’s manufacturing PMI came in at 50.3 in July, up from 48.6 in June while the nation’s services PMI was at 52.5 in July, up from 50.4 in June. Meanwhile, in neighboring France, while the …read more
Netflix and Apple are the stocks you want to watch today. Those and more are what’s in the news Tuesday on Wall Street.
The Dow industrials (^DJI) edged just slightly higher Monday, the S&P 500 (^GPSC) added 3 points — to mark its 23rd record high of the year — and the Nasdaq (^IXIC) rose 12.
Netflix says its quarterly profit soared nearly fivefold from a year ago, even better than Wall Street had expected. But subscriber growth to the movie streaming service was a bit off target. Last week Netflix received 14 Emmy nominations for its original series, including best drama for “House of Cards.” Now investors want to see if it can turn those nominations into new subscribers. Netflix (NFLX) shares have more than tripled in price during the past year, but they’re set to slide Tuesday morning.
Dow components DuPont (DD), United Technologies (UTX) and Travelers Cos. (TRV) are also out with quarterly numbers this morning. In addition to its earnings, DuPont says it may sell its performance chemicals business, which is the company’s second largest revenue producer.
On the merger front, CapitalSource (CSE) has agreed to be acquired by Pacwest Bancorp (PACW) in a deal valued at $2.3 billion dollars.
Taco Bell is taking the toy out of the taco. The Yum Brands (YUM) unit says its will stop selling kids meals and toys, probably early next year. It wants to focus on attracting young adults. The company says kids meals account for less than 1 percent of its overall sales.
Finally, how much money do you need to have to be rich? A survey by UBS (UBS) found $5 million is the magic number for most people, with $1 million of that in cash. Half of the respondents also said being rich means having “no financial constraints.”
U.S. stock index futures point to a higher open on Wall Street on Tuesday, ahead of the publication of the House Price Index and corporate earnings statements from tech majors Apple, AT&T and Electronic Arts.
Futures on the Dow Jones industrial average(^DJI) were up 0.3 percent, while futures on the Standard & Poor’s 500 index (^GSPC) were up 0.1 percent and those on the Nasdaq 100 index were up 0.3 percent.
Investors will also be turning their attention to the publication of the Federal Housing Finance Agency House Price Index at 9 a.m. Eastern time. The index provides the monthly average change in house prices across the country or a certain area, using data provided by Fannie Mae and Freddie Mac. The index is expected to nudge up to 0.8 percent in May, from 0.7 percent recorded in the previous month.
In addition, a number of major companies, including United Parcel Service (UPS), Altria Group (MO), Lockheed Martin (LMT), MGIC Investment (MTG), Wendy’s (WEN) will announce quarterly earnings before market hours. Altera (ALTR) and Broadcom (BRCM), along with Apple (AAPL), AT&T (T) and Electronic Arts (EA), will announce their earnings after markets close.
European markets were trading flat after climbing higher earlier Tuesday, as Asian markets rallied following recent reports from China indicating Beijing might take measures to support the country’s economic growth, and the Japanese government upgraded its outlook of the country’s economy for a third consecutive month.
The Stoxx Europe 600 index rose 0.1 percent, London’s FTSE 100 was flat, Germany’s DAX-30 was up 0.1 percent and France’s CAC-40 was trading up 0.05 percent.
In Asia, Chinese stocks led a rally in the region’s markets, with the Shanghai Composite index surging 2 percent while Hong Kong’s Hang Seng Index soared 2.3 percent. Shares jumped after several local media reported that Premier Li Keqiang, at a cabinet meeting last week, gave an assurance that the government won’t allow China’s economic growth to fall below 7 percent.
Japan’s Nikkei ended up 0.8 percent after the government said that the recovery in the world’s third-largest economy had turned self-sustaining, MarketWatch reported. South Korea’s KOSPI Composite index rallied 1.3 percent, Australia’s S&P/ASX 200 added 0.3 percent and India’s BSE Sensex was trading up 0.8 percent in late-afternoon trade.
WASHINGTON – Companies are increasingly confident the economy will grow at a modest pace over the next year and are hiring more, according to a survey of business economists.
Nearly one-third of the economists surveyed by the National Association for Business Economics said their companies added jobs in the April-June quarter, according to a report released Monday. That’s the highest percentage in nearly two years. And 39 percent expect their firms will hire more in the next six months. That’s near the two-year high of 40 percent reached in the January-March quarter.
The hiring pickup occurred even though sales and profit growth slowed in the second quarter.
Optimism about future economic growth increased. Nearly three-quarters of the survey respondents forecast growth of 2.1 percent or more over the next 12 months. That’s up from two-thirds in the first quarter survey, released in April, and the most in a year.
The quarterly survey’s results echo much of the recent data tracking the economy. Growth has been slow in the past nine months, but employers have added jobs at a healthy pace. Many economists anticipate that the steady hiring will help accelerate growth in the second half of this year.
The NABE surveyed 65 of its member economists between June 18 and July 2. The economists work for companies from a variety of industries, including manufacturing, transportation and utilities, finance, retail and other services.
Among the findings:
– Only about 35 percent of the respondents said sales at their firms increased in the second quarter. That’s sharply lower than the 55 percent who reported rising sales in the first quarter. And 15 percent said sales fell, up from 9 percent in the first quarter.
– Profit growth also slowed: Only 21 percent of respondents said profit margins increased last quarter, down from 29 percent in the first.
– Only 19 percent of economists said their firms were raising wages and salaries, down from 31 percent in April and the lowest proportion since October.
– A small but increasing minority of respondents say that government spending cuts and tax increases have hurt their businesses. Twenty-six percent of the economists said their firms were negatively impacted, up from only 16 percent in April. Still, 74 percent said the government policies had no impact on their businesses, though that’s down from 79 percent three months earlier.
Looking ahead, companies are increasingly concerned about higher interest rates. That reflects the jump in rates that took place following Federal Reserve Chairman Ben Bernanke’s comments in late May that the Fed could slow its bond-buying program later this year. Those purchases are intended to keep interest rates low.
Big brand winners, and strong earnings from Goldman Sachs. Those and more are what’s in business news Tuesday.
The Dow industrials (^DJI) rose 20 points Monday and the S&P 500 (^GPSC) added two points — both edging further into record territory. The Nasdaq (^IXIC) gained 7.
What companies are being talked about the most around the water cooler? YouGov’s BrandIndex puts Ford (F) at No. 1, largely because of the automaker’s Focus model. It was followed by Amazon.com (AMZN), sandwich-maker Subway, the History Channel and retailer Lowe’s Cos. (LOW). And what about V8, the beverage that everyone belatedly remembers they could’ve had? It made No. 6 on the British market-research firm’s list.
AT&T (T) is rolling out a plan today to keep existing customers happy. Instead of the typical two-year mobile phone contract, it will allow customers to upgrade after just one year to buy the newest gadgets on the market. There are no upgrade fees and no down payments, but you will have to pay the full cost of the phone.
Coca-Cola (KO) reports flat quarterly earnings, and when you’re talking about Coke, flat is not so good. It said cool and wet spring weather in many areas hurt soft drink consumption.
But Goldman Sachs (GS) easily beat expectations on both the top and bottom line. The investment banker also sees improving economic conditions in the U.S.
After the closing bell we’ll hear from Yahoo (YHOO), the first of the big tech companies to report. Later in the week: IBM (IBM), Intel (INTC), Google (GOOG) and Microsoft (MSFT).
More than 5 million people a day wear uniforms from Cintas (CTAS) — including everyone working at McDonald’s (MCD) restaurants. Because of that, some see it as economic bellwether. But the company’s earnings still fell a bit short of expectations, and it issued a cautious outlook, citing the “uncertain” economy.
NEW YORK — This week marks the first big week of second-quarter earnings, and it is sure to bring both joy and misery to Wall Street.
Investors will concentrate on market fundamentals after weeks when Federal Reserve policies have dominated the market. If they see companies are still struggling, stocks could take a fall.
Even after Fed Chairman Ben Bernanke scared markets in June by telling investors the Fed is likely to reduce monetary stimulus in the coming months, stocks have recovered, with both the Dow Jones industrial average and S&P 500 climbing to all-time highs. In an appearance earlier this week, the Fed chairman said monetary policy was likely to be accommodative for some time.
“We’re in the terminal stages of a Bernanke-driven bubble,” said Walter Zimmerman, a technical analyst at United-ICAP in Jersey City, N.J. “While a lot of damage has been done to the bear case, eventually bad news like weak earnings growth will start to bear fruit.”
To be sure, the Fed, which has shown a much friendlier face to investors lately, will not be out of the picture. Bernanke will appear before congressional committees Wednesday and Thursday to deliver the semiannual testimony about monetary policy. However, few surprises are expected.
The S&P’s 17.8 percent advance in 2013 is largely attributable to the central bank’s accommodative policies. The major indexes made impressive gains in the week: the Dow (^DJI) up 2.1 percent, the S&P 500 (^GSPC) 3 percent higher and the Nasdaq (^IXIC) up 3.5 percent. It was the third straight week of gains for all three, and the best week for the S&P and Nasdaq since early January.
“The Fed has been able to prevent a big sell-off so far, but eventually the economy will have to catch up to the market or the market will fall back to match the economy,” said Scott Armiger, who helps oversee $5.6 billion as portfolio manager at Christiana Trust in Greenville, Del.
More Focus on Earnings
That analysts are now turning their focus to earnings, believing the Fed’s power to buoy stocks is waning, may not be a positive if the rally is going to continue.
Earnings are seen growing 2.8 percent in the second quarter, according to Thomson Reuters data, a far cry from the 8.4 percent growth forecast by analysts Jan. 1. Revenue is now seen increasing 1.5 percent.
For every company that has said it expects positive earnings, 6.5 have lowered their forecasts, the worst positive-to-negative ratio since the first quarter of 2001.
LOS ANGELES — It’s summertime and the stock market is sizzling. The market reached an all-time high last week, torching its previous record set just before Memorial Day.
Even so, a handful of companies stand out. Six stocks — Amazon, Starbucks, UnitedHealth, Visa, Mastercard, and Discover Financial — notched their own records last week, helped by the growing confidence of American consumers.
Would buying these stocks now be a hot-weather impulse or a coldly calculated move?
All six have improving earnings outlooks, analysts say. Credit-card companies and UnitedHealth appear to be the best bets.
The six companies share similar traits that make them attractive. They are consumer-focused, with dominant market positions and growing revenue streams, says Fred Dickson, chief investment strategist at D.A. Davidson & Co.
Their importance to shoppers is crucial to their growth prospects. Americans’ confidence in the economy has reached its highest point in 5½ years. The housing recovery is strengthening. Job growth continues at a steady pace.
When consumers feel better about the economy, they splurge on discretionary items like a Venti Caramel Macchiato from Starbucks or a new book or DVD from Amazon. And they pay for those items with credit cards.
Visa and UnitedHealth are the most attractive buys right now, says David Brown, chief market strategist at Sabrient Systems, an investment research firm.
The outlook for Discover and MasterCard is also good, particularly as consumer confidence improves. The companies’ biggest challenge remains staying competitive in a crowded field, he says.
While Brown expects Amazon to continue to dominate its market, he sees a big risk in buying the stock now.
“It’s a fine company, but I would want to enter it in a pullback — a big pullback,” Brown says. “It has, by far, the most downside.”
The stock of the nation’s largest health insurer has climbed more than 25 percent this year and hit an all-time high of $68.75 in trading Wednesday, according to FactSet.
Like other health insurers, UnitedHealth stands to benefit from the federal health care overhaul. The company will be able to participate in state-based health insurance exchanges designed to expand coverage to millions of uninsured Americans. The company is also the largest provider of Medicare Advantage plans, which are privately run versions of the government’s Medicare program for the elderly and disabled people.
Financial analysts, on average, expect the stock to move higher. Their consensus target price is $71.47, according to FactSet.
On average, the stock has a “Buy” rating from analysts polled by FactSet.
CHICAGO — Torrential downpours across a broad swath of the U.S. Midwest this week are easing the worst drought in more than 50 years, flooding streams, snarling river transportation, stalling corn plantings — and changing the outlook for the American farm economy in 2013.
The Army Corps of Engineers is closing locks along a 150-mile stretch of the Mississippi River from roughly Davenport in Iowa to Hannibal, Mo. Barge traffic was backing up Thursday, as water levels were too high for barges to take on grain.
The Mississippi and other major rivers are expected to begin cresting Sunday — and likely will run over levies in some areas. That is a sharp reversal from as recently as January, when low water levels disrupted the main water thoroughfares that bring grain from the nation’s breadbasket to the world’s markets.
“These rains are really helping bring most areas out of drought status. And the rain encompasses all of the western Corn Belt that was previously dry,” said Don Keeney, meteorologist for MDA Weather Services, a widely followed commercial forecasting firm.
If the drought is ending, it would represent a sea change for the farm economy, where expectations for another dry summer had been baked in. Continued rainy weather could further delay spring plantings, cause a sharp fall in the price of farm commodities, and lower the cost of everything from hog feed to cereal ingredients.
Lower feed prices would help livestock and dairy producers, but soft grain prices could cut into farmers’ incomes and perhaps even cause farmland values to retreat from recent record highs.
An end to drought conditions would bring a burst in economic activity across the agriculture industry — from farmers in the fields to those operating grain elevators, processing companies and shippers.
“If in fact the drought is easing, and if we are migrating to a situation that might afford better yields, to my mind, for the full value chain, it’s a godsend,” said Bruce Scherr, chief executive of agribusiness analytics firm Informa Economics. “Another year like last year would be devastating.”
The 2012 drought brought corn production to only 10.8 billion bushels, a 6-year low, with yields reaching a 17-year low of 123.4 bushels an acre. The production losses added to the impact of rising exports to China and domestic demand for ethanol production to drive corn prices on the Chicago Board of Trade to an all-time high last August.
Farmers filed a record $11.8 billion in crop-insurance claims, according to Agriculture Department data. And farm income fell last year by 3 percent from a record set in 2011.
“Isn’t it ironic that all winter we’ve been worried about dry soil, and all of that has changed in a period
Two big takeover deals are in the works, and plunging gold prices pressure stocks.
All three of the major averages rallied by more than two percent last week, with the Dow and the S&P setting record highs along the way.
This could be a big merger Monday: Dish Network (DISH) is bidding to acquire Sprint Nextel (S). The offer – termed an informal offer and valued at more than $25 billion dollars, including debt – is intended to derail Sprint’s deal with the Japanese company Softbank.
And Thermo Fisher Scientific (TMO) has agreed to buy Life Technologies (LIFE) for more than $13 billion dollars. Both companies make laboratory equipment. Life Technologies‘ stock has jumped 25 percent since it put itself up for sale in January. At least two other groups had been considering bids.
Earnings season kicks into high gear this week. Citigroup (C) topped expectations on both earnings and revenue.
Freeport McMoRan (FCX) and Newmont Mining (NEM) are both under pressure as the price of gold tumbles more than 6 percent this morning. That’s partly because of signs of slowing growth in China.
In an effort to settle a long running anti-trust suit in Europe, Google (GOOG) has reportedly offered to change the way it operates its search engine. News reports say Google is prepared to make a greater distinction between its internet searches and those of competitors.
General Motors (GM) and Ford (F) are working together to develop more fuel efficient nine- and 10-speed transmissions for their cars. Some rivals, including Chrysler, are already there.
J.C. Penney (JCP) on Friday won a round in its court battle with Macy’s (M). The judge said Penney could temporarily sell housewares designed by Martha Stewart, while the trial continues this week.
Dell’s biggest institutional investor, Southeastern Asset Management, is stepping up its opposition to Michael Dell‘s effort to take the computer maker private. The investment firm has hired a proxy solicitation group and may contact shareholders directly.
WASHINGTON — Federal Reserve policymakers are divided over when to end extraordinary measures intended to encourage more borrowing and spending to help stimulate the U.S. economy, according to minutes of the Fed’s last meeting released Wednesday.
The minutes of the Fed’s March 19-20 meeting were released at 9 a.m. EDT — five hours earlier than planned — after the Fed inadvertently sent them a day earlier to congressional staffers and lobbyists.
The report showed that a few members want to end “relatively soon” a program that is spending $85 billion a month to purchases bonds. Those members say the costs likely outweigh the benefits. A few others saw the risks as increasing quickly and said the purchases would likely need to be reduced “before long.”
Many members said an improved job market could lead them to slow purchases within a few months, and a few said economic conditions would likely justify continuing the program until late this year.
Despite the division over when to end the program, the minutes indicated that many of the Fed’s members want to see sustained improvement in the job market — from a wide range of economic indicators — before making any decision to reduce the pace of purchases.
After the March meeting, the Fed said the economy had strengthened but that it still needed its efforts to help lower high unemployment. In addition to continuing the bond purchases, the Fed stuck by its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
The economy had added an average of 220,000 jobs a month from November through February, including 268,000 jobs in February — the last report available when the Fed met in March.
But a weak March employment report is likely to make policymakers even more supportive of keeping the measures in place for the foreseeable future. Employers added just 88,000 net jobs last month, the fewest in nine months.
The unemployment rate dropped to a four-year low of 7.6 percent. However, the rate fell only because more people stopped looking for work and were no longer counted as unemployed.
The Dow Industrials rose 60 points yesterday, closing at another record high. The S&P 500 added five points and the Nasdaq gained 15.
General Motors (GM) is re-friending Facebook (FB). The automaker pulled its ads from the social networking site a year ago. But now the Wall Street Journal reports that GM is testing a new tie-up with Facebook, including a pilot campaign for its Chevrolet Sonic.
Health Management Associates (HMA) may need to see the doctor. The operator of healthcare facilities warned that earnings will fall well short of Street expectations. That’s likely to drag down the stock of competitors HCA (HCA) and Tenet Healthcare (THC), as well.
A jury in Las Vegas has ruled that two United Healthcare units must pay $500 million dollars in punitive damages to a pair of …read more
The Dow Industrials edged slightly lower last week, while the S&P 500 lost one percent and the Nasdaq dropped two.
Two Arkansas residents have filed a lawsuit against ExxonMobil (XOM). They’re seeking $5 million in damages, claiming a pipeline spill has caused a permanent drop in their property values.
General Electric (GE) is expanding its oilfield services business, agreeing to buy Lufkin Industries for $3.3 billion. Lufkin makes equipment used in oil and gas production.
Anheuser-Busch (BUD) says the Justice Department has accepted the company’s revised concessions, and will no longer block the company’s effort to acquire Mexican beer maker Modelo. The deal is valued at more than $20 billion. As part of the accord with antitrust regulators, Anhueser-Busch will sell more of Modelo’s assets to Constellation Brands.
UPS (UPS) plans to appeal a ruling by European regulators, who are blocking the company’s planned acquisition of Dutch rival TNT Express. That deal is valued at $6.7 billion.
You’ve probably never heard of CPI Corp. (CPI), but you’ve no doubt seen its work. For years the company provided the portraits sold at Sears (SHLD), Wal-Mart (WMT) and Babbies ‘R’ Us. But CPI abruptly closed it business on Friday. It had been a mainstay at Sears since 1959.
Earnings season begins after the market closes this afternoon. As usual, Alcoa (AA) will be the first major company to report. Analysts expect both sales and earnings to edge lower compared to a year ago because of slumping aluminum prices. Overall, Thomson Reuters expects corporate earnings to increase by only 1.5 percent for the quarter, while other analysts say that may be too optimistic.
And J.C. Penney (JCP) and Macy’s (M) are back in court today in their fight over the right to sell Martha Stewart‘s line of home goods. The court battle was suspended for a month to allow for mediation, but that has not produced a settlement.
The Dow and the S&P 500 retreated yesterday from record highs. The Dow edged lower by five points, the S&P lost seven and the Nasdaq fell 28 points.
Shares of health insurance provider Humana (HUM) jumped yesterday and are set to gain more today. This follows an apparent change of course by Medicare, which is now calling for an increase in reimbursement rates on its Advantage plans. UnitedHealth (UNH), Aetna (AET) and Wellpoint (WLP) are also on the rise.
Another supporter falls off of the Apple (AAPL) bandwagon. Goldman Sachs (GS) dropped Apple from its conviction buy list, and lowered its price target on the stock. But Goldman still expects Apple to hit 575 dollars a share within the next 12 months. It’s now around 429 a share.
A former Anheuser-Busch (BUD) employee claims the company has filed suit against him in order to silence him. The employee charged last week that the company is selling watered-down beer. Anheuser-Busch rejects those allegations.
The major automakers report domestic sales for March, and analysts are looking the recent strong sales trend to continue. Edmunds expects the best annual sales rate in almost six years. Yesterday, General Motors (GM) launched a new front in its battle with Ford over pick-up trucks. GM claims its Sierra and the soon-to-be released 8-cylinder Silverado get better gas mileage than Ford’s top-selling F-150.
Verizon (VZ) and AT&T (T) are reportedly working on a plan to break-up Vodaphone. According to a Financial Times blog, Verizon would acquire the U.S. assets and AT&T would take the overseas assets. The deal would value Vodaphone at 245-billion dollars.
And shares of Nuance Communications (NUAN) are set to rally on word that billionaire investor Carl Icahn has taken a nine percent stake. It’s described as a passive stake, which means he’s not seeking a takeover of the speech recognition firm.
Nobody can predict all the news that will break and move the markets in a given week, but here are a few things we do know: A controversial seed seller will report its latest quarterly results, and the world’s biggest social network operator will show off its new smartphone tools. Let’s go over those, and a few more of the items that will help shape the week that lies ahead on Wall Street.
1. Socket to Me, Electric Cars: Tesla Motors (TSLA) CEO Elon Musk is so excited about an announcement going out on Tuesday that he even took to Twitter to tease it last week.
“Really exciting @TeslaMotors announcement coming,” he tweeted last week. “Am going to put my money where my mouth is in v major way.”
The “v” in the tweet is probably short for “very” — though it’s not as if Musk had used up all of his 140 Twitter characters to force the shorthand. It would be a mind-blowing deal if the maker of electric cars using single letters for its models would be actually introducing a Model V sedan.
In reality, the “money where my mouth is” is probably the real giveaway here. Musk will likely either be boosting his stake in the company or making a move to improve its balance sheet.
2. Facebook Phones It In: “Come See Our New Home on Android,” reads a Facebook (FB) media invitation that went out late last week. The world’s largest social networking website will host analysts and tech journalists on Thursday as it introduces its new smartphone initiatives.
Don’t hold out for the long-rumored Facebook Phone. It’s not going to happen. It would be devastating to the Facebook brand if it flopped. The more popular theory here is that Facebook will just work with existing mobile operating systems to make them more Facebook-centric.
Android is the mobile platform of choice, commanding the lion’s share of the world’s smartphone market. If Facebook can find ways to be a larger part of the smartphone experience it will naturally be in its best interest.
3. Let’s Get It Going in the Second Quarter, Team: The second quarter kicks in this week following a surprisingly robust first quarter. The S&P 500 has cranked out a healthy 10 percent gain so far this year.
Three months ago, it didn’t seem as if it would play out that way. The fiscal cliff loomed in late December, and moves to avert the automatic spending cuts proved temporary once sequestration kicked in two months later. The end of the two-year stimulus break on payroll taxes collected meant less take-home pay for consumers.
<br …read more Source: FULL ARTICLE at DailyFinance
The Dow and the Nasdaq edged higher last week, but the S&P 500 stole the show. It gained eight-tenths of a percent and ended the week at a record high for the first time in five-and-a-half years. The index had lost more than half its value during the financial crisis.
For most market pros, the S&P is the best gauge of the market, and its record is a lot more significant than the 10 new highs for the Dow last month.
Last week’s gains capped a powerful first-quarter rally, during which the Dow soared 11 percent and the S&P jumped 10 percent. And April has traditionally been a good month for the market. Stocks have posted gains every April for the past seven years. But a growing number of technical analysts say the market is now due for a mild pullback.
As for stocks to watch today, Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ) and other multinational drugmakers are assessing the impact of a ruling by the Supreme Court in India. It rejected a request from Novartis for patent protection on an expensive drug to fight leukemia, possibly setting a legal precedent for other drugs. India has become one of the world’s leading producers of generic drugs.
Dell (DELL) has presented a bleak outlook for itself. A preliminary proxy statement made the case for why it needs to go ahead with a deal to go private. The company says it needs a major overhaul, and it projects declining revenue over the next few years.
And AT&T (T) says it will buy back up to 300 million additional shares of its stock, more than 5 percent of the total number of shares outstanding.
With the Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) at record highs, even investors who fearfully stayed out of the market for years in the wake of the financial crisis have started inching back in. Flows of money into stock mutual funds and exchange-traded funds have risen sharply.
But the old adage that advises “Sell in May and go away” reflects a widely held view of the stockmarket — that seasonal factors play a role in whether share prices go up or down. The idea behind the sell in May strategy is to buy stocks in November and hold them through the end of April, and then sell them in May and shift your portfolio into alternative investments through the end of October.
But Does It Work?
Some parts of the sell in May strategy make intuitive sense.
September and October have long been notoriously bad months for stocks, with the big stockmarket crashes of 1929 and 1987 having happened in October, and the 2008 market meltdown having reached an initial climax in September. Meanwhile, December and January have tended to be fairly strong months, aided by new money coming into the market from work bonuses.
But when you look more closely at the sell in May strategy, its results don’t hold up.
A 2012 study showed that the strategy returned an average of 8.3 percent annually over an 86-year span, compared to a 9.9 percent average annual return for simply owning a broad-based stock index throughout the entire period.
And then there was last year.
In 2012, stocks actually rose slightly from May 1 to October 31, with the S&P 500 providing a total return of about 1 percent. But that performance hides some important details about what happened last year.
One problem that often happens with seasonal strategies is that as they get popular, investors start anticipating their impact. That seemed to happen last year, when the Dow opened April by plunging nearly 500 points in the first ten days of the month. That was only half of the nearly 1,000 points that the Dow climbed in January through March of last year, though, and so even after a worse decline in May, the Dow never fell more than 200 points below where it started the year.
As a summer rally took hold, sell in May advocates believed that traditional weakness in the fall months might justify the strategy. But the market actually soared in September, and even a poor October showing wasn’t enough to send the Dow lower.