Wednesday morning, ADP reported a loss of 20,236,000 US private sector jobs in April, a record likely never to be broken again (unless an asteroid hits somewhere along the East or West coast).
Job losses covered the entire spectrum, with 11,274,000 jobs lost by businesses with fewer than 500 employees, and 8,963,000 losses by businesses with over 500 employees. The numbers comfirm what everybody already knows, that the United States and the world at large are at the beginning of a Greater Depression, many metrics having already surpassed the Great Depression of the 1930s.
For the week ending May 1, US residential mortgage applications edged up 0.1% while the interest rate on a 30-year fixed loan fell to its lowest level ever, checking in at 3.4%, according to the Mortgage Bankers Association. Purchase activity remains almost 19 percent below year-ago levels.
Stocks gained on Tuesday, though the rally was shunted late in the day, shaving off roughly two-thirds of the gains in the final hour of trading.
While stocks seem to be always going up in recent days, all rallies have been capped by violent resurges of selling, as was the case on Friday, when the major indices gave back all the gains of the week in one session. Stocks have traded in a relatively stable, narrow range since April 6, after the markets had rebounded smartly off the March lows. The S&P 500, during that span, has fluctuated between a low of 2663 and a high of 2939, the all time high of 3386.15 (February 19, 2020) a fading memory.
COVID-19 and the government response to the outbreak has caused wild swings, anguish, and some recovery, after the Federal Reserve, in conjunction with the US Treasury Department has sought to stabilize equity markets, buying up every losing asset they could find, from junk bonds to munis.
Despite the gargantuan lifting by the Fed, stocks are still being stung by first quarter earnings releases showing how disruptive just two to three weeks of partial shutdown (late March) had on the bottom line of various companies.
One of the latest casualties is Disney (DIS), which posted first quarter earnings (fiscal second quarter) of 60 cents against expectations for 91 cents after the closing bell Tuesday. The company, which owns a variety of media and entertainment assets, including movies, ABC, ESPN, Disneyland, DisneyWorld, and other theme parks around the world, also found it necessary to eliminate its semiannual dividend of 88 cents per share for the first half of their fiscal year (October-March). Instead of paying out the $1.6 billion to shareholders, the company will keep the cash for itself, ostensibly to cover ongoing expenses.
Profits at the "magic kingdom" fell 90% year-over-year.
Putting it bluntly, the Mouse in the House just screwed over a large swath of investors expecting a payout on the dividend. Imagine the frustration and angst of not only seeing the stock fall from an all-time high of 161 (November, 2019) to as low as 85 in March, but now to have what was thought to be a guaranteed dividend denied. The stock is trading right around 100 per share as of Tuesday's close.
Also cutting its dividend, Wendy's Co. (WEN) reported Wednesday that its first-quarter net income declined 54.9 percent to $14.4 million from last year's $31.9 million.
Earnings per share were $0.06, down 57.1 percent from $0.14 a year ago. Adjusted earnings per share were $0.09, compared to prior year's $0.14. The company - which reported flat to declining same-store sales across all markets and a number of outlets running out of beef patties on Tuesday - lowered its dividend for the second quarter from 12 cents per share to 5 cents per share, payable on June 15, to shareholders of record as of June 1.
On Tuesday, shares of rental car company Hertz (HTZ) fell more than 14% after it disclosed that it received approval from its lenders to continue negotiations through May 22 to “develop a financing strategy and structure that better reflects the economic impact" of COVID-19. The company, which operates rental car business, many located at airports around the country, is on the ropes and close to filing Chapter 11 reorganization bankruptcy.
Shares of the company, which had reached a 52-week high of 20.29 on February 20, have slid to three dollars in May, closing at 3.01 on Tuesday.
Also on the ropes are retailers Nordstrom (JWN), closing 16 stores permanently, and J. Crew (private), which filed for chapter 11 on Tuesday. Neiman Marcus is reportedly close to chapter 11, and rumors that JC Penny's is in talks with lenders are circulating. An avalanche of store closings, restructurings, and bankruptcies are expected in the sector over the next few weeks and months.
Amid all the chaos, most analysts still insist that major banking firms, such as Bank of America (BAC), wells Fargo (WFC), Citi (C), and JP Morgan (JPM), are all well enough capitalized to survive cascading defaults in commercial real estate, residential real estate, consumer brands, lines of credit, credit cards, student loans and other funding vehicles.
Others are not so certain, expecting rather that the entire edifice of global debt is about to become torn down amid a worldwide pandemic and depression resulting in the collapse of fiat currencies, governments, and central banks.
Whatever your individual outlook, it may be wise to amplify that to the downside by orders of magnitude.
At the Close, Tuesday, May 5, 2020:
Dow: 23,883.09, +133.33 (+0.56%)
NASDAQ: 8,809.12, +98.41 (+1.13%)
S&P 500: 2,868.44, +25.70 (+0.90%)
NYSE: 11,135.40, +79.12 (+0.72%)
Showing posts with label dividend. Show all posts
Showing posts with label dividend. Show all posts
Wednesday, May 6, 2020
Wednesday, April 29, 2020
Recession Arrives as First Quarter GDP Contracts By 4.8%; Companies Cutting Dividends at Record Pace
Dispensing with the usual diatribe over coronavirus and the botched government response, today's edition of Money Daily will focus on stocks that pay out quarterly dividends, the mother's milk of investing, as Larry Kudlow might phrase it.
But first, US first quarter 2020 GDP was just announced at 8:30 am ET, and the result was as Money Daily predicted, a decline of 4.8%. A few weeks back, various analysts from the likes of Bank of America Merrill Lynch and Goldman Sachs were making projections for second quarter GDP losses, somewhat overlooking what we considered obvious: a negative number for 1Q GDP. While the corporate analysts were busy downplaying the effect of a nationwide lockdown on business activity, they were missing an existential point.
Assuming that the second quarter was going to be in the red, a decline in first quarter GDP would satisfy the textbook requirement for a recession, which is two consecutive quarters of declining GDP growth. The definition is something of a non sequiter because nothing in nature actually grows at a negative rate. A truer definition might be worded as "two consecutive quarters of contraction," and that's now in play meaning one might as well assume that there's already a recession, and it started roughly the second week of February, when the world started to become focused on coronavirus and how to halt its spread.
Thus, we have the first quarter contraction of 4.8%, which will be revised twice, in late May and again in late June, though the number is so far into the red that there's no practical probability of it being revised into the positive. Second quarter GDP will be an outright train wreck. Figure on something on the order of -40% just for openers. That kind of number will have even the most ardent equity investor seeking safe harbor and scurrying away from stocks. Even today's figure should give everyone pause, and, in normal times, stocks would be falling into the ocean, but, thanks to the generosity of the Federal Reserve, the major indices will likely post more gains.
Underscoring the absurdity of the Fed's fool's errand - one in which they will bankrupt themselves - stock futures all soared higher on this morning's GDP announcement. How's that for in-your-face obstinance and stupidity?
Along with higher stock prices (unbelievable), the political ramifications are stupendous. This places the economy and a recession as front-and-center issues for the election season. Second quarter results will be in place come late July, and they will be undeniably ugly, since April was a complete washout and May isn't going to look much better. There are still vast swaths of the economy that are not operating at even 50% of optimal productivity and others that are not operating at all. Small businesses were shut down across the country for roughly six weeks to the tune of hundreds of billions of dollars in lost revenue and GDP, to say nothing of the lack of velocity in the economy. From late March through all of April and into May, velocity was basically stalled out.
What this means in terms of elections is the very real possibility of a President Biden and a takeover by the Democrats of the Senate, which would give the socialist movement firm footing in the three important branches of the federal government, the presidency, the House, and the Senate, which spells doomsday for America because socialist ideology will only exacerbate the already horrid condition of money-printing and profligate spending. It's doubtful that any of this has been factored into the Wall Street calculations. Current prices on the major indices and in "recovering" individual stocks reflect that, glowingly.
With the opening bell just minutes away, Money Daily will wrap here for Wednesday morning, cutting a little short the look at dividend stocks.
Wolf Richter of WolfStreet.com penned a noteworthy post on Tuesday, titled, Dividend Massacre in This Crisis is Already Breaking Records, But it Just Started, within which he details the number of companies which have already slashed or canceled their dividend payouts and how 2020 compares to other recent years in which dividends were targeted, 2001, 2008, and 2009.
What investors often lose sight of in times of financial turmoil is how mathematics deceives and often leads to false conclusions when considering buying a particular stock.
Picking up this theme on Thursday, along with the latest unemployment figures, the 30 stocks that comprise the Dow Jones Industrial Average - all of which pay dividends - will be examined, with considered opinion on whether or not these companies will maintain, increase, reduce or cancel their normal dividend payouts.
For today, the recession has arrived, though many in the know already think we're at the beginning of what is being hailed as "The Greater Depression."
At the Close, Tuesday, April 28, 2020:
Dow: 24,101.55, -32.23 (-0.13%)
NASDAQ: 8,607.73, -122.43 (-1.40%)
S&P 500: 2,863.39, -15.09 (-0.52%)
NYSE: 11,319.70, +54.86 (+0.49%)
But first, US first quarter 2020 GDP was just announced at 8:30 am ET, and the result was as Money Daily predicted, a decline of 4.8%. A few weeks back, various analysts from the likes of Bank of America Merrill Lynch and Goldman Sachs were making projections for second quarter GDP losses, somewhat overlooking what we considered obvious: a negative number for 1Q GDP. While the corporate analysts were busy downplaying the effect of a nationwide lockdown on business activity, they were missing an existential point.
Assuming that the second quarter was going to be in the red, a decline in first quarter GDP would satisfy the textbook requirement for a recession, which is two consecutive quarters of declining GDP growth. The definition is something of a non sequiter because nothing in nature actually grows at a negative rate. A truer definition might be worded as "two consecutive quarters of contraction," and that's now in play meaning one might as well assume that there's already a recession, and it started roughly the second week of February, when the world started to become focused on coronavirus and how to halt its spread.
Thus, we have the first quarter contraction of 4.8%, which will be revised twice, in late May and again in late June, though the number is so far into the red that there's no practical probability of it being revised into the positive. Second quarter GDP will be an outright train wreck. Figure on something on the order of -40% just for openers. That kind of number will have even the most ardent equity investor seeking safe harbor and scurrying away from stocks. Even today's figure should give everyone pause, and, in normal times, stocks would be falling into the ocean, but, thanks to the generosity of the Federal Reserve, the major indices will likely post more gains.
Underscoring the absurdity of the Fed's fool's errand - one in which they will bankrupt themselves - stock futures all soared higher on this morning's GDP announcement. How's that for in-your-face obstinance and stupidity?
Along with higher stock prices (unbelievable), the political ramifications are stupendous. This places the economy and a recession as front-and-center issues for the election season. Second quarter results will be in place come late July, and they will be undeniably ugly, since April was a complete washout and May isn't going to look much better. There are still vast swaths of the economy that are not operating at even 50% of optimal productivity and others that are not operating at all. Small businesses were shut down across the country for roughly six weeks to the tune of hundreds of billions of dollars in lost revenue and GDP, to say nothing of the lack of velocity in the economy. From late March through all of April and into May, velocity was basically stalled out.
What this means in terms of elections is the very real possibility of a President Biden and a takeover by the Democrats of the Senate, which would give the socialist movement firm footing in the three important branches of the federal government, the presidency, the House, and the Senate, which spells doomsday for America because socialist ideology will only exacerbate the already horrid condition of money-printing and profligate spending. It's doubtful that any of this has been factored into the Wall Street calculations. Current prices on the major indices and in "recovering" individual stocks reflect that, glowingly.
With the opening bell just minutes away, Money Daily will wrap here for Wednesday morning, cutting a little short the look at dividend stocks.
Wolf Richter of WolfStreet.com penned a noteworthy post on Tuesday, titled, Dividend Massacre in This Crisis is Already Breaking Records, But it Just Started, within which he details the number of companies which have already slashed or canceled their dividend payouts and how 2020 compares to other recent years in which dividends were targeted, 2001, 2008, and 2009.
What investors often lose sight of in times of financial turmoil is how mathematics deceives and often leads to false conclusions when considering buying a particular stock.
Picking up this theme on Thursday, along with the latest unemployment figures, the 30 stocks that comprise the Dow Jones Industrial Average - all of which pay dividends - will be examined, with considered opinion on whether or not these companies will maintain, increase, reduce or cancel their normal dividend payouts.
For today, the recession has arrived, though many in the know already think we're at the beginning of what is being hailed as "The Greater Depression."
At the Close, Tuesday, April 28, 2020:
Dow: 24,101.55, -32.23 (-0.13%)
NASDAQ: 8,607.73, -122.43 (-1.40%)
S&P 500: 2,863.39, -15.09 (-0.52%)
NYSE: 11,319.70, +54.86 (+0.49%)
Tuesday, September 10, 2019
Stocks Flat; Britain Should Leave The EU ASAP
Markets - whatever is left of them - seemed to be running on fumes Monday, as no Trump tweets nor economic news were sufficient to move stocks in general either way.
This kind of quiet may be just what investors are seeking: less volatility, less media madness, a more sanguine environment and some degree of security and safety. With all the talk of recession, the past few months have spooked some of the more ardent longs, but the market is still not conducive to short trades in any form.
One could conclude from recent action that stocks will hold their ground and move to new highs, as has been the case throughout the run from 2009 (buy the dip philosophy), and with another 1/4 point rate cut from the Fed a sure thing next week, that is the likely trading strategy for the day-trader and short-termer. Long term investors should be seeking value or growth, best, a combination of the two. With interest rates so low, dividend-yielding stocks with long track records are the safest and surest, plus, many will survive well under difficult conditions, should a recession actually arrive.
Central banks still have control of markets, a condition that may persist for quite a long time. It should serve memory well to reconsider the aftermath of the 2008 crash, wherein central banks coordinated to save everything, even unworthy companies, from default.
This might be a prime time to move from passive to active investing, with individual stocks preferred over ETFs or mutuals. Expect some noisy ups and downs over the next few months, though the next major event is Brexit, with a hard-line, no-deal escape from the EU by Great Britain set for October 31 by Boris Johnson, the most recent Prime Minister of the country.
It's been more than three years since jolly ole' England voted to leave the EU. Parliamentarians and stubborn bureaucrats have delayed the wishes of the people for too long and the wait may soon be over. Anything short of England removing itself from the EU - without onerous conditions - will be very bad for markets. The hyperbole of the media and those on the "remain" side of the issue have played the hysterics card for all it's worth.
Time is up. Populism should prevail in England and the result of leaving the EU, while dramatic, does not have to be traumatic.
At the Close, Monday, September 9, 2019:
Dow Jones Industrial Average: 26,835.51, +38.05 (+0.14%)
NASDAQ: 8,087.44, -15.64 (-0.19%)
S&P 500: 2,978.43, -0.28 (-0.01%)
NYSE Composite: 12,960.72, +27.34 (+0.21%)
This kind of quiet may be just what investors are seeking: less volatility, less media madness, a more sanguine environment and some degree of security and safety. With all the talk of recession, the past few months have spooked some of the more ardent longs, but the market is still not conducive to short trades in any form.
One could conclude from recent action that stocks will hold their ground and move to new highs, as has been the case throughout the run from 2009 (buy the dip philosophy), and with another 1/4 point rate cut from the Fed a sure thing next week, that is the likely trading strategy for the day-trader and short-termer. Long term investors should be seeking value or growth, best, a combination of the two. With interest rates so low, dividend-yielding stocks with long track records are the safest and surest, plus, many will survive well under difficult conditions, should a recession actually arrive.
Central banks still have control of markets, a condition that may persist for quite a long time. It should serve memory well to reconsider the aftermath of the 2008 crash, wherein central banks coordinated to save everything, even unworthy companies, from default.
This might be a prime time to move from passive to active investing, with individual stocks preferred over ETFs or mutuals. Expect some noisy ups and downs over the next few months, though the next major event is Brexit, with a hard-line, no-deal escape from the EU by Great Britain set for October 31 by Boris Johnson, the most recent Prime Minister of the country.
It's been more than three years since jolly ole' England voted to leave the EU. Parliamentarians and stubborn bureaucrats have delayed the wishes of the people for too long and the wait may soon be over. Anything short of England removing itself from the EU - without onerous conditions - will be very bad for markets. The hyperbole of the media and those on the "remain" side of the issue have played the hysterics card for all it's worth.
Time is up. Populism should prevail in England and the result of leaving the EU, while dramatic, does not have to be traumatic.
At the Close, Monday, September 9, 2019:
Dow Jones Industrial Average: 26,835.51, +38.05 (+0.14%)
NASDAQ: 8,087.44, -15.64 (-0.19%)
S&P 500: 2,978.43, -0.28 (-0.01%)
NYSE Composite: 12,960.72, +27.34 (+0.21%)
Monday, September 17, 2018
Apple Leads Dow, Stocks Lower On Valuation, Dividend Yield Concerns
It's not like Apple (AAPL) isn't a rock-solid stock. The Cupertino, California-based company which has given the world smartphones, smart watches and really zippy computers isn't the world's largest company by market cap for nothing.
The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.
Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.
Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.
Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.
Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.
The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).
Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.
Dow Jones Industrial Average September Scorecard:
At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)
The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.
Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.
Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.
Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.
Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.
The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).
Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.
Dow Jones Industrial Average September Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 9/4/18 | 25,952.48 | -12.34 | -12.34 |
| 9/5/18 | 25,974.99 | +22.51 | +10.17 |
| 9/6/18 | 25,995.87 | +20.88 | +31.05 |
| 9/7/18 | 25,916.54 | -79.33 | -48.28 |
| 9/10/18 | 25,857.07 | -59.47 | -107.75 |
| 9/11/18 | 25,971.06 | +113.99 | +6.24 |
| 9/12/18 | 25,998.92 | +27.86 | +34.10 |
| 9/13/18 | 26,145.99 | +147.07 | +181.17 |
| 9/14/18 | 26,154.67 | +8.68 | +189.85 |
| 9/17/18 | 26,062.12 | -92.55 | +97.30 |
At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)
Sunday, February 25, 2018
Stocks Stage Strong Rebound To Finish Week Green
While volatility has subsided for the time being, so also has volume, down significantly since the crash-like VIX episode at the beginning of the month. Some may be taking the view that gains on the Dow and other indices are positive, regardless of volume, but the number of shares bought since the early February wash-out are far below those sold during that earlier episode.
Market breadth - gainers versus losers - along with a track of new highs and lows - will continue to help determine short-term direction in the market. Friday's positive close brought the Dow back beyond the 50% Fibonacci retracement though gains for the week were rather modest.
Interest rates remain elevated as compared to a month ago and a year ago, and bond yields will also go a long way toward determining trader conviction. The Dow is the index to watch most closely, because all of the stocks comprising the industrial average pay dividends, some of them at or better than current 10-year treasury yields.
The confounding factor of rising rates and falling stock prices is that dividend yields actually rise in the short term, but that may be seen as a false hope indicator. If companies are not only losing value to stockholders, the real possibility of declining earnings could also erupt into slashing of dividends as companies scramble to horde or save cash.
Considering the massive size of stock repurchases in recent years, the scenario exists that companies could find themselves in a real bind, forced to sell shares back to the public at lower prices than at which they were repurchased, causing an erosion in earnings and a potentially vicious negative feedback loop.
The most savvy investors will be looking for companies which have repurchased inordinate amounts of their own shares and are therefore exposed to a wicked downward price spiral.
If bond yields stabilize at or near current levels (below three percent on the 10-year-note) such a condition will not appear, but stabilizing yields in an environment in which the Fed has telegraphed its intention to raise the federal funds rate and sell (form $20 to $60 billion a month this year) into the market at the same time should - in an ideal, actual free market - cause yields to continue climbing.
Stocks may be nearing a dangerous Rubicon, whereas buyers of bonds should experience bargain prices and healthier yields going forward.
Dow Jones Industrial Average February Scorecard:
At the Close, Friday, February 23, 2018:
Dow Jones Industrial Average: 25,309.99, +347.51 (+1.39%)
NASDAQ: 7,337.39, +127.31, (+1.77%)
S&P 500: 2,747.30, +43.34 (+1.60%)
NYSE Composite: 12,884.11, +172.36 (+1.36%)
For the Week:
Dow: +90.61 (+0.36%)
NASDAQ: +97.93 (+1.35%)
S&P 500: +15.08 (+0.55%)
NYSE Composite: +9.75 (+0.08%)
Market breadth - gainers versus losers - along with a track of new highs and lows - will continue to help determine short-term direction in the market. Friday's positive close brought the Dow back beyond the 50% Fibonacci retracement though gains for the week were rather modest.
Interest rates remain elevated as compared to a month ago and a year ago, and bond yields will also go a long way toward determining trader conviction. The Dow is the index to watch most closely, because all of the stocks comprising the industrial average pay dividends, some of them at or better than current 10-year treasury yields.
The confounding factor of rising rates and falling stock prices is that dividend yields actually rise in the short term, but that may be seen as a false hope indicator. If companies are not only losing value to stockholders, the real possibility of declining earnings could also erupt into slashing of dividends as companies scramble to horde or save cash.
Considering the massive size of stock repurchases in recent years, the scenario exists that companies could find themselves in a real bind, forced to sell shares back to the public at lower prices than at which they were repurchased, causing an erosion in earnings and a potentially vicious negative feedback loop.
The most savvy investors will be looking for companies which have repurchased inordinate amounts of their own shares and are therefore exposed to a wicked downward price spiral.
If bond yields stabilize at or near current levels (below three percent on the 10-year-note) such a condition will not appear, but stabilizing yields in an environment in which the Fed has telegraphed its intention to raise the federal funds rate and sell (form $20 to $60 billion a month this year) into the market at the same time should - in an ideal, actual free market - cause yields to continue climbing.
Stocks may be nearing a dangerous Rubicon, whereas buyers of bonds should experience bargain prices and healthier yields going forward.
Dow Jones Industrial Average February Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 2/1/18 | 26,186.71 | +37.32 | +37.32 |
| 2/2/18 | 25,520.96 | -665.75 | -628.43 |
| 2/5/18 | 24,345.75 | -1,175.21 | -1,803.64 |
| 2/6/18 | 24,912.77 | +567.02 | -1,236.62 |
| 2/7/18 | 24,893.35 | -19.42 | -1,256.04 |
| 2/8/18 | 23,860.46 | -1,032.89 | -2288.93 |
| 2/9/18 | 24,190.90 | +330.44 | -1958.49 |
| 2/12/18 | 24,601.27 | +410.37 | -1548.12 |
| 2/13/18 | 24,640.45 | +39.18 | -1508.94 |
| 2/14/18 | 24,893.49 | +253.04 | -1255.90 |
| 2/15/18 | 25,200.37 | +306.88 | -949.02 |
| 2/16/18 | 25,219.38 | +19.01 | -930.01 |
| 2/20/18 | 24,964.75 | -254.63 | -1184.64 |
| 2/21/18 | 24,797.78 | -166.97 | -1351.61 |
| 2/22/18 | 24,962.48 | +164.70 | -1186.91 |
| 2/23/18 | 25,309.99 | +347.51 | -839.40 |
At the Close, Friday, February 23, 2018:
Dow Jones Industrial Average: 25,309.99, +347.51 (+1.39%)
NASDAQ: 7,337.39, +127.31, (+1.77%)
S&P 500: 2,747.30, +43.34 (+1.60%)
NYSE Composite: 12,884.11, +172.36 (+1.36%)
For the Week:
Dow: +90.61 (+0.36%)
NASDAQ: +97.93 (+1.35%)
S&P 500: +15.08 (+0.55%)
NYSE Composite: +9.75 (+0.08%)
Monday, November 13, 2017
Stocks Stumble Early, Rally for Minor Gains; GE Tumbles, Halves Dividend
Stocks continue to show weakness on a day-to-day basis, with implicit underpinning via central bank purchases, much as was the case today as General Electric (GE) posted horrifying third quarter numbers which cost the stock more than seven percent of its market capitalization [19.02, -1.47 (-7.17%)].
The company cut its annual dividend in half, from $0.24 to $0.12, and announced a broad-based restructuring, shedding up to $20 billion of its core assets.
Jeff Immelt, former CEO and Chairman of the Board, had been under pressure from investors to make changes until his ouster just weeks ago.
There's speculation that General Electric could be bounced from the Dow Jones Industrial Average, a position its held since November 7, 1907, having fallen by as much as 35% in the past year while the overall market has posted strong gains. GE is the oldest continuous member of the blue chip index.
GE's hammering at the open no doubt contributed to the dour mood in the early going, but stocks regained their footing and gradually advanced throughout the somewhat lackluster session.
The Dow closed at a new all-time high last Tuesday, but has been subdued since. With the year of 2017 drawing to a close and many fund managers closing their books (or already having done so), it will be interesting to watch the movement of the major indices over the coming weeks and through the holiday season.
Black Friday is a mere 11 days off. Gobble, gobble.
At the Close, Monday, November 13, 2017:
Dow: 23,439.70, +17.49 (+0.07%)
NASDAQ: 6,757.60, +6.66 (+0.10%)
S&P 500 2,584.84, +2.54 (+0.10%)
NYSE Composite: 12,316.83, -5.78 (-0.05%)
The company cut its annual dividend in half, from $0.24 to $0.12, and announced a broad-based restructuring, shedding up to $20 billion of its core assets.
Jeff Immelt, former CEO and Chairman of the Board, had been under pressure from investors to make changes until his ouster just weeks ago.
There's speculation that General Electric could be bounced from the Dow Jones Industrial Average, a position its held since November 7, 1907, having fallen by as much as 35% in the past year while the overall market has posted strong gains. GE is the oldest continuous member of the blue chip index.
GE's hammering at the open no doubt contributed to the dour mood in the early going, but stocks regained their footing and gradually advanced throughout the somewhat lackluster session.
The Dow closed at a new all-time high last Tuesday, but has been subdued since. With the year of 2017 drawing to a close and many fund managers closing their books (or already having done so), it will be interesting to watch the movement of the major indices over the coming weeks and through the holiday season.
Black Friday is a mere 11 days off. Gobble, gobble.
At the Close, Monday, November 13, 2017:
Dow: 23,439.70, +17.49 (+0.07%)
NASDAQ: 6,757.60, +6.66 (+0.10%)
S&P 500 2,584.84, +2.54 (+0.10%)
NYSE Composite: 12,316.83, -5.78 (-0.05%)
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