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.
Bear Stearns, once the nation’s fifth-largest investment bank, had been a fixture on Wall Street since 1923 and had survived the crash of 1929 without laying off any employees.
But in 2008, its customers and creditors didn’t much care about its storied history. They were worried that the billions of dollars of mortgage-backed securities on its books weren’t worth what the company claimed. En masse, they stopped doing business with Bear.
Facebook’s (FB) stock on Tuesday came within a hair of reclaiming its $38 debut price for the first time since going public in 2012, a milestone in the social networking company’s effort to wipe away Wall Street’s skepticism of its business.
The stock has surged more than 40 percent in the past week after the company reported blowout quarterly results that showed Facebook’s progress building a mobile advertising business. Shares of Facebook climbed as much as 7 percent to $37.96 in heavy trading on Tuesday, before settling back to finish the regular session at $37.63.
The social network, with 1.15 billion users, has never traded at or above $38 since the first few days after its initial public offering in May 2012.
Facebook’s market value was cut in half in the months following the IPO as concerns about issues ranging from slowing revenue to massive insider selling made the Internet company’s stock a Wall Street punch line.
“Most companies of that size don’t re-accelerate their growth rate. Facebook’s been an exception,” said Aaron Kessler, an analyst with Raymond James. “I would say they’re in better shape today than they were at the IPO price and the stock is still below that.”
Facebook options volume was frenzied on Tuesday, as overall turnover was 3.8 times the recent daily average, according to options analytics firm Trade Alert. Traders on Tuesday exchanged 694,000 calls and 300,000 puts on Facebook.
The most popular options were the weekly $38 and $37 strike calls expiring this Friday as most traders expected gains in coming days. One player liked the weekly $32.50 strike puts expiring on Aug. 9, which appeared to be bought 15,000 times for only a dime, said options strategist Frederic Ruffy.
Facebook’s recent success building a mobile advertising business — an area where many of its rivals have struggled — and the online service’s expanding number of daily users have won back investors’ respect and confidence in its prospects. That has fueled a rebound in the shares, which are up more than 50 percent in July.
Facebook said last week its mobile advertising revenue grew 75 percent in a span of three months, trouncing analyst targets and delivering the company’s strongest revenue growth since the third quarter of 2011. Many analysts raised their price targets above the $38 level following Facebook’s quarterly report last week.
The second quarter results “were really a game-changer in terms of how Facebook is perceived on the Street,” said Pacific Crest Securities analyst Evan Wilson. “It was pretty close to the perfect quarter.”
Facebook announced plans on Tuesday to help market and distribute mobile games on its social network in exchange for a cut of revenue that the games generate, raising hopes that the company could tap a new business. And many investors expect Facebook …read more
By Jake Zamansky, Contributor The Feds have opened their substantial arsenal this week to take down Steve Cohen, the Biggest Fish on Wall Street, and a minnow, Fabulous Fab, or Fabrice Tourre, the former Goldman Sachs executive who allegedly defrauded investors in a complex mortgage bond called Abacus. …read more
agreed to pay $410 million to settle charges with the Federal Energy Regulatory Commission (FERC) for manipulating electricity prices in the same markets Enron used to play its dirty tricks. Under the supervision of Wall Street power woman Blythe Masters, who was reportedly under scrutiny but escaped sanction, a unit inherited by Bear Sterns designed bidding strategies to trick electronic systems and obtain massive compensation payments sometimes doubling market prices in California and Michigan. …read more
By Tero Kuittinen, Contributor So this is it – Nextel has been shut down and Sprint lost 1.05 M contract customers during the quarter when it finally happened. That’s about 70K more than was expected, so Wall Street consensus on that number was close to the mark. But what will happen in the autumn quarter – the first period in the very long time when Sprint is no longer handing out freebie subscribers to its rivals? During the spring quarter, both Verizon and AT&T posted strong subscriber growth and smartphone sales figures. But a portion of that strength derived from the giant operators hoovering in Nextel die-hards who finally were forced to jump ship and chose not to switch to Sprint’s CDMA network. …read more
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.
Facebook surprised Wall Street with stronger-than-expected earnings for the second quarter Wednesday on a sharp rise in revenues, sparking a 16 percent jump in its share price in after-hours trade. …read more
President Obama gave the first of a series of speeches today intended to refocus attention on the economy, reports CNN . “America has fought its way back,” he declared, but “we’re not there yet.” He hit familiar themes in his speech at Knox College in Illinois, which, as the Wall Street… …read more
The first MLS Cup Final in 1996 was a dramatic affair that saw D.C. United recover from a late two-goal deficit against the Los Angeles Galaxy to win through Eddie Pope’s golden goal in overtime. Yet the drama at Foxborough Stadium that day could not come close to emulating the ‘Greatest Soccer Final Played on American Soil’ — the first continental professional final held between franchises from those two cities to crown the 1967 United Soccer Association champion. Nearly 18,000 fans at the Los Angeles Memorial Coliseum witnessed 11 goals, two hat-tricks, three penalty kicks, last-minute equalizers in normal and extra-time, one sending off, countless punch-ups and a heartbreaking golden own goal in sudden-death overtime. Ian Thomson is a former Wall Street reporter and freelance soccer journalist based in Morgantown, West Virginia. In his first book “Summer Of ’67” Ian tells the story of that final and the 12 teams that arrived in North America from around the globe to compete in the first United Soccer Association. The twelve teams were adopted by cities across North America and went through name changes. Cagliari of Italy became the Chicago Mustangs, Wolves and Sunderland from England played as the Los Angeles Wolves and the Vancouver Royal Canadians. Stoke City became the Cleveland Stokers, Bangu from Brazil the Houston Stars and Dundee United offered a Texas rivalry as the Dallas Tornado. Toronto City was Hibernian from Scotland, C.A. Cerro of Uruguay the New York Skyliners and the Netherlands side ADO Den Haag took temporary possession of the mouthful that was the San Francisco Golden Gate Gales. Rounding out the 12 teams was Glentoran of Northern Ireland as the Detroit Cougars, Shamrock Rovers from the Republic not surprisingly lined up as the Boston Rovers and Aberdeen became the Washington Whips. Ian was kind enough to take time to answer some of my questions. Q What drew you to this specific subject? A I’d heard many years ago that my team, Aberdeen from Scotland, had played as the Washington Whips in some far-flung American tournament before I was born. I never thought too much about it until I attended my first D.C. United game at RFK Stadium last year. Shortly afterward, I interviewed Notre Dame head coach Bobby Clark for a college soccer story. Bobby was Aberdeen’s goalkeeper during the 1967 tour. It struck me that the United Soccer Association was a key milestone in the timeline of U.S. soccer history that remains largely obscure. Q As you did your research what level of awareness did you find 0f the 1967 United Soccer Association on both sides of the Atlantic? Or was it case that Pele signing for the Cosmos years later was the starting point for most? A It’s funny, I was talking to Vancouver Whitecaps head coach Martin Rennie after his team’s 1-0 win at RFK Stadium in June. Rennie is an Aberdeen fan, yet he had no idea that The Dons had played in that venue. Sunderland’s club historian had written a …read more
By Tero Kuittinen, Contributor As I expected, did beat the iPhone consensus. The company shipped 31 M units while Wall Street expected 26-27 M units. But Apple’s revenue strength was largely limited to Americas and Japan, where sales grew YoY by 12% and 27%, respectively. The worrisome part in the June report was the double digit revenue decline Apple saw in both China and Asia Pacific. Europe was a limp fish, as expected – Apple followed ‘s suit by delivering a stiff sequential revenue decline in the region where consumer spending on electronics may now be fading at an alarming clip. …read more
Mac sales fell 4% in the quarter that ended June 30, putting Apple into the same leaky boat as the much larger, problem-plagued PC industry, according to a survey of several dozen financial analysts. …read more
In an ironic twist, the Occupy Wall Street movement, which, two years ago, galvanized resentment against Wall Street and gave birth to the phrase “the 99%,” has given birth to something new: a financial institution. …read more
Apple reports its June quarter results after the market close tonight and Wall Street is looking for the company to deliver earnings of $7.31 per share on revenues of $35.09 billion. That consensus expectation is derived from the 48 or so analysts that follow Apple shares. Now, as I tell subscribers to my investment newsletter PowerTrend Profits, context is key. …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.”
RICHMOND, Va. — Marlboro maker Altria said Thursday its second-quarter profit rose about 3 percent as higher prices and lower expenses from a longstanding legal settlement offset a decline in cigarette sales.
The owner of the nation’s biggest cigarette maker, Philip Morris USA, also raised the lower end its full-year earnings guidance.
Altria (MO), based in Richmond, Va., earned $1.27 billion, or 63 cents a share, for the April-June period, up from $1.22 billion, or 60 cents a share, a year ago.
Excluding one-time items, earnings were 62 cents a share, missing Wall Street expectations by a penny.
Revenue, excluding excise taxes, decreased 2.5 percent to $4.5 billion. Analysts polled by FactSet expected $4.62 billion.
Cigarette volumes fell nearly 7 percent to 33.8 billion cigarettes compared with a year ago. Marlboro volumes fell more than 7 percent, volume for its other premium brands fell by nearly 11 percent, and volumes for discount cigarette brands like L&M increased nearly 4 percent,
Its share of the U.S. retail market rose 0.3 percentage points to 50.7 percent. Marlboro’s share of the U.S. market was flat at 43.7 percent.
The premium Marlboro brand has been under pressure from competitors and lower-priced cigarette brands as consumers face economic pressure and high unemployment.
Those economic challenges are in addition to the tax hikes, smoking bans, health concerns and social stigma that have made the cigarette business tougher.
The company has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include special blends of both menthol and non-menthol cigarettes to try to keep the brand growing and to lure smokers away from its competitors. It has said it has a pipeline of innovative products to supplement the Marlboro brand in the future.
Altria and others are focusing on cigarette alternatives — such as electronic cigarettes, cigars, snuff and chewing tobacco — for future sales growth because the decline in cigarette smoking is expected to continue.
Volumes of Altria’s smokeless tobacco brands such as Copenhagen and Skoal rose more than 4 percent from a year ago. For the quarter, the company’s smokeless tobacco brands had 55 percent of the market, though smokeless tobacco is a tiny market compared with cigarettes.
Altria said inventory changes and retail share losses drove volumes for its Black & Mild cigars down 8 percent during the quarter.
Altria also owns a wine business, holds a voting stake in brewer SABMiller, and has a financial services division.
The company Thursday also raised the lower end of its full-year adjusted earnings guidance by a penny to a range of $2.36 and $2.41.
During the latest quarter, Altria said it repurchased 3.7 million shares for a total cost of about …read more
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.
SAN FRANCISCO (AP) – Apple’s (AAPL) latest quarterly results are likely to illustrate why investors are clamoring for the maker of the iPhone and the iPad to come out with another trend-setting device.
The report, due out after the stock market closes Tuesday, is expected to show that Apple Inc. is making less money as more customers buy its lower-priced iPhones and iPads instead of the top-of-the-line models. Other consumers increasingly are bypassing Apple products altogether as smartphones and tablet computers running Google’s Android software win more fans.
Those dynamics have changed the way that Wall Street – and even parts of Main Street – view Apple. Once regarded as an indomitable innovator, Apple now looks vulnerable and perhaps a step behind Google Inc. and the leading Android disciple, Samsung Electronics Co.
If analysts’ projections pan out, Apple’s earnings fell during the three months that ended in June, marking the second consecutive quarter of decline. The slump follows a decade-long streak of earnings growth that ended at the start of the year. Analysts surveyed by FactSet are expecting, on average, earnings of $7.34 per share, down from $9.32 per share a year ago.
Meanwhile, analysts are forecasting little or no revenue growth for the first time since the debut of the iPhone six years ago. Analysts are expecting $35 billion in revenue for the period, its fiscal third quarter. It was $35 billion at the same time last year.
Those would be impressive numbers for most companies, but the bar has been set high for Apple since the introduction of its iPhone triggered an upheaval that has changed the way people engage with technology. Smartphones and tablets are emerging as the preferred way to connect to the Internet and perform many other common computing tasks. In the process, those mobile devices are supplanting laptop and desktop computers.
Ignited by its early lead in smartphones and tablets, Apple’s financial performance launched into a scintillating trajectory that catapulted its stock into Wall Street’s stratosphere, too. The company’s shares rose nearly six-fold from the debut of the first iPhone in 2007 to the release of the latest model last September to establish Apple as the world’s most valuable company.
Since peaking 10 months ago at $705.07, Apple’s stock has plummeted by about 40 percent to about $425 to wipe out roughly $260 billion in shareholder wealth. It is now behind Exxon Mobil Corp. in market capitalization – at $400 billion, compared with $422 billion for the energy company. Not even a recent 15 percent increase in Apple’s quarterly dividend has done much for the stock.
Despite the downturn in the company’s fortunes, Apple’s products still have legions of admirers. Sales of iPhones for the just-ended quarter are expected to total about 26 million, around the same number as the same time last year. But a …read more
Netflix may or may not be the future of television, but in a just world, its investor updates are definitely the future of shareholder communications. Why? Just days after Yahoo tried to bring some life to its quarterly earnings call with video cameras that ultimately added little, Netflix used streaming video, social media and minimal streaming to update one of Wall Street’s most tired rituals. If I were watching it on Netflix, I’d rate it **** (out of 5). …read more
Microsoft unveiled its earnings for Q4 2013 on Friday, and the results left some investors uneasy. What matters on Wall Street, however, isn’t the same as what matters on Main Street, so small and medium businesses need to analyze the news through a different lens.
Microsoft actually had a decent quarter to cap off a very successful fiscal 2013. Revenue for Q4 was up 10 percent over Q4 2012, and profit was almost $5 billion (USD) compared to a $492 million loss in the same quarter last year. Revenue was also up for the year, and Microsoft profit was nearly 30 percent higher than 2012.
Despite declining PC sales, adoption of Windows 8 is on pace with that of its predecessor. There has been some backlash over the dramatic redesign of Windows 8, and Microsoft’s attempt to convert the OS to a touch-based interface, but most of the major complaints are addressed with the Windows 8.1 update, which will be officially available later this year.
Another silver lining from the Microsoft earnings report is the fact that the Business Division and Server and Tools units both reported solid increases in both revenue and profit over the previous year. Office 365 is a cost-effective way for SMBs to acquire Microsoft Office, along with hosted Exchange and SharePoint, and it has quickly grown into a $1.5 billion source of revenue for Microsoft.