Showing posts with label DD. Show all posts
Showing posts with label DD. Show all posts

Tuesday, October 23, 2012

Stocks Socked Again on Earnings, Revenue Misses

Today's decline had no end-of-day rally from which to save itself. Stocks were down from open to close, and hard, owing mostly to a continuing spate of earnings disappointments and negative guidance outlooks.

Today's main culprits were a trio of Dow components, DuPont (DD), 3M (MMM) and United Technologies (UTX), though DuPont was clearly the worst of the bunch, recording a third quarter profit of just one cent per share, far below analyst estimates of 46 cents per share.

That report, early in the morning, hours before the market opened, sent futures crashing, so that the Dow opened with a triple digit loss in the first minutes of trading. Stocks could not recover, as it is quickly becoming clear that corporate earnings and revenues are lacking - 60% of companies reporting thus far have missed revenue estimates, many of which have been radically lowered. Meanwhile, Europe's woes continue to weight on markets globally, as the bourses across the continent showed heavy losses again.

The race for president also added to investor dismay, the predominant thinking that President Obama clearly outclassed challenger Mitt Romney in Monday night's final debate, focused on foreign policy, an obvious weak spot for the Republican. According to the best guesses on investor sentiment concerning the election, an Obama victory would be bad for stocks, because Obama favors more regulation and higher taxes for high wage earners, while Romney would likely favor policies which generally leave the status quo alone, allowing the abuses of the rich to continue and the wealth gap to widen.

All politics aside, it is actually fundamentals - for a welcome change - that are driving the most recent declines. Companies are reporting an assortment of earnings misses and sour outlooks for the remainder of 2012 and 2013, based almost entirely on current conditions, which have consumers strapped, governments broke and debt levels for all, unsustainable.

Where stocks will go from here is unknown, though all of the major indices have broken below their 50-day moving averages, generally a sign of more bad days to come.

Additionally, the advance-decline line has deteriorated badly over the past week, as has new highs-new lows, finally capitulating, with new 52-week lows outpacing new highs, 129-53

Dow components reporting on Wednesday include AT&T (T) and Boeing (BA), just a pair in a slew of over 400 companies that will be reporting throughout the day. Both of the Dow components report prior to the market open.

The silver lining in the recent declines is the slump in oil and gas prices. Motorists are already seeing 12-15 cent reductions in the price of a gallon of regular gas, with more easing to come, as crude oil is in the midst of a severe mean reversion, which could bring the cost of a gallon of gas to below $3.00 in some areas.

A reduction in the price of gas could be just what the market needs in time for the holidays, critically important to markets and, well, kids.

Dow 13,102.53, -243.36 (1.82%)
NASDAQ 2,990.46, -26.50 (0.88%)
S&P 500 1,413.11, -20.71 (1.44%)
NYSE Composite 8,197.14, -132.05 (1.59%)
NASDAQ Volume 1,780,896,750
NYSE Volume 3,233,623,000
Combined NYSE & NASDAQ Advance - Decline: 1709-3814
Combined NYSE & NASDAQ New highs - New lows: 53-129
WTI crude oil: 86.67, -1.98
Gold: 1,709.40, -16.90
Silver: 31.79, -0.459

Tuesday, July 27, 2010

Dull Summer Session May mark End of Rally

With the passing of the Tuesday session, it appears that the recent rally in stocks has pretty much run its course. More than 75% of the S&P 500 companies having already reported, there are fewer opportunities for quick scores on earnings rises and investors are now looking seriously forward to Friday's initial estimate of 2nd quarter GDP due to be released prior to the opening bell.

Now that the European credit crisis has been put down for at least a nap, the market has been able to focus on earnings for much of the past two weeks, and the results are obvious. All of the major indices have experienced significant bounces since the start of the month, with gains in the range of 7-9% overall.

In particular, the Dow is up a whopping 850 points since its interim bottom on July 2nd (9686.48), though it is still some distance from the most recent high of 11,250 in late April. While the major averages have all found comfort zones above their respective 200-day moving averages, chartists will note that criss-crossing the 50 and 200-day MAs are not uncommon circumstances, especially in periods of economic uncertainty, like the current markets conditions.

Thus, it's unsurprising that many analysts are taking a rather dim view of the currently-stalling rally, seeing it as transitory and temporary. After all, markets became severely oversold by the end of June, and perceptually, stocks were cheap, even if they remain well above traditional norms.

Projections for what the government will report 2nd quarter GDP as are all in the range of 2.3 to 3.5% annualized growth, which would be a slowdown for the second straight quarter, and therefore, not helpful in alleviating stresses over a return to recession. With just about anyone who matters already resolved on slower growth for the remainder of 2010, it's difficult to imagine stocks breaking to new highs any time soon. The rational bet is for the major averages to continue trading in the same ranges that have prevailed since last October, though risk is skewed to the downside quite prominently.

Dow 10,537.69, +12.26 (0.12%)
NASDAQ 2,288.25, -8.18 (0.36%)
S&P 500 1,113.84, -1.17 (0.10%)
NYSE Composite 7,044.99, -1.01 (0.01%)

Declining issues held sway over advancers, 3618-2812, but new highs ramped far ahead of new lows, 401-63. Volume was slim.

NASDAQ Volume 1,940,649,125
NYSE Volume 5,330,884,000

Part of the reason for Tuesday's lackluster performance can be tied to consumer confidence, which fell again in July, to 50.4, from an upwardly revised 54.3 in June. The dour outlook by consumers is keeping a lid on prices and profits.

Commodities seemed to have been struck with liquidity issues on the day. Crude oil for September delivery fell $1.48, to $77.50, but continue to be range-bound, between $70 and $80 per barrel.

Gold was zapped lower by $25.00, to $1,158.00, it's lowest price in three months. In concert, silver dropped 57 cents, to $17.62.

Companies reporting strong earnings included DuPont (DD) and Cummins (CMI), both of which beat earnings and revenue forecasts.

The prolonged slump in residential housing and employment continue to weigh on the minds of consumers and investors alike.

Tuesday, October 20, 2009

Market Gains on Low Volume

A quick overview of Monday's trading follows. More on Tuesday after the bell.

Awaiting the 3rd quarter earnings report from Apple (AAPL), investors were encouraged by the number of S&P companies which reported earnings better than estimates (78%) last week and further weakness in the dollar as the session unfolded.

Dow 10,092.19, +96.28 (0.96%)
NASDAQ 2,176.32, +19.52 (0.88%)
S&P 500 1,097.91, +10.23 (0.94%)
NYSE Composite 7,222.21, +88.25 (1.13%)

Advancing issues led losers, 4415-1889. There were 819 stocks making new 52-week highs, to 100 new lows. Volume was exceedingly low, signaling a large degree of caution at the very start of the biggest week of earnings reports. If the low volume pattern continues through the next few days, it could be indicative of a short-term market top. However, most companies have not yet reported, so not much can be read into one day's trading volume.

NYSE Volume 3,816,968,500
NASDAQ Volume 1,725,801,875

Oil reached a new high for the year, trading up $1.08, to $79.61. Gold advanced $7.90, to $1,066.00. Silver tacked on 21 cents, to close at $17.63 per ounce.

Besides Apple reporting after the close, five Dow components will report prior to Tuesday's opening bell. Caterpillar (CAT), Pfizer (PFE), United Technologies (UTX), Coca-Cola (KO) and DuPont (DD) are the companies reporting.

Tuesday, July 24, 2007

Bear Claws

How bad was it?

It was in the top five worst performances for the combined indices this year, and likely the third worst showing (at least for the Dow it was). What triggered the Tuesday tempest was poor showings by a multitude of companies reporting second quarter earnings, most notably, McDonald's (MCD) huge miss and a miss by DuPont (DD) prior to the market open and Texas Instrument's (TI) poor showing announced Monday after the close.

Dow 13,716.95 -226.47; NASDAQ 2,639.86 -50.72; S&P 500 1,511.04 -30.53; NYSE Composite 9,909.95 -211.63

Here are just some of the early headlines, which seemed to get worse as the trading session wore on.

IN PLAY: Corn Products reports 2Q07 results; beats by $0.09
DuPont reports flat 2Q earnings
Kimberly-Clark 2Q Profit Beats Outlook
Legg Mason profit climbs 22 percent
Lexmark net profit slips 16 percent
Northrop 2Q profit rises 7%
PepsiCo 2Q Profit Rises 13 Percent

While there were a smattering of positives, they were overwhelmed by more than just a few companies not meeting 2nd quarter estimates.

Declining issues crushed advancers by a 5-1 margin and new lows swamped new highs, 642-162.

Not even bonds, tame, with the 10-year note yielding 4.92%, or oil, down $1.33 to $73.56, could pick up the spirits on Wall Street. The continual unwinding of the sub-prime mortgage blow-up (now spreading into other credit areas) combined with the spate of earnings disappointments led to an all-out rush for the exits.

For those with weak stomachs, stop here, because I'm going to tell you why it's going to get worse the rest of the week.

First, more companies will be releasing earnings reports and some are certain to miss estimates. Investors are in a sour mood already, and they simply don't need any more reasons to sell. Later in the day, US Steel (X) reported a 25% dip in profits from the year ago period. Net income fell to $302 million, or $2.54 per diluted share, for the quarter, from $404 million, or $3.22 per share, during the same period last year. Analysts were looking for earnings of $2.35 per share on $4.05 billion in sales and the stock ended the day up 42 cents at 106.41.

After the close, Amazon (AMZN) booked solid profits. Earnings climbed to $78 million, or 19 cents per share, from $22 million, or 5 cents per share during the same period last year, soundly beating expectations of 16 cents per share.

Eli Lily (LLY) also reported after the close. Excluding charges, adjusted earnings totaled $978.7 million, or 90 cents per share. Analysts had expected 82 cents per share on that basis.

Tomorrow, in addition to the more than 300 companies reporting 2nd quarter earnings, the following report prior to the open:
Colgate-Palmolive (CL), ConocoPhillips (COP), DaimlerChrysler (DCX), Freeport-McMoRan Copper & Gold (FCX), GlaxoSmithKline (GSK), Xerox (XRX)

After the close:
Apple (AAPL), Pulte Homes (PHM), Symantec (SYMC), Boeing (BA).

Additionally, Existing Home Sales for June will be out at 10:00 am. On Thursday, New Home Sales figures for June and on Friday, the preliminary 2nd quarter GDP estimate.

With those economic reports on the way, traders may have taken an early hiatus, expecting the worse. It's likely to not be as bad as the worst skeptics suspect, but don't look for a quick turnaround - at least not this week.