STOCKS SLIP: Here’s What You Need To Know

MYLES UDLAND

 SEP. 30, 2014

REUTERS/Bobby Yip

A student provides supplies on a tram track as thousands of students occupy a main street at Causeway Bay shopping district in Hong Kong September 29, 2014.

Stocks fell on Monday after opening sharply lower following a turbulent week and protests in Hong Kong that broke out over the weekend and pressured Asian stocks overnight.

First, the scoreboard:

• Dow: 17, 068.33, -44.8, (-0.2%)
• S&P 500:1,978.35, -4.5, (-0.2%)
• Nasdaq: 4,506.31, -5.8, (-0.1%)

And now, the top stories on Monday:

1. The latest report on personal income and outlays showed that “core” personal consumption expenditures, or PCE, which is the Federal Reserve’s preferred measure of inflation and excludes the more volatile prices of food and gas, rose 0.1% month-over-month. On a year-over-year basis, “core” PCE rose 1.5%. Personal spending rose 0.5% in August and personal income rose 0.3%. Following the report, Ian Shepherdson at Pantheon Macro said, “In one line: Autos drive August spending up, but Q3 will look pedestrian… Assuming no revisions, that implies Q3 consumption will rise by only 1.6% annualized, down from 2.5% in Q2.”

2. Pending home sales in August fell more than expected, falling 1% against expectations for pending home sales to fall 0.5%. On a year-over-year basis, pending home sales fell 4.1% in August. Lawrence Yun, chief economist at the National Association of Realtors, said of the report: “Fewer distressed homes at bargain prices and the acknowledgment we’re entering a rising interest rate environment likely caused hesitation among investors last month. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”

3. The Dallas Fed’s latest manufacturing report beat expectations, coming in at 10.8 against estimates for a 10.5 reading, and the report said, “Perceptions of broader business conditions were more optimistic this month.”

4. Stocks opened lower on Monday and clawed back most of those gains, but on Monday Business Insider’s Joe Weisenthal noted a few reasons why the sell-off might be different this time. Short-term Treasury yields have been increasing steadily this year, and Dan Greenhaus of BTIG wrote that the speed at which market sentiment shifted from bullishness to bearishness could find this character of this market changing in ways some investors may not expect. 

5. Greenlight Capital’s David Einhorn is the largest shareholder of Einstein Noah Restaurant group, which agreed to be acquired for $20.25 per share in deal worth about $374 million. All told, it was a pretty good day for Einhorn.

6. GoPro shares were on a tear again on Monday, gaining more than 11% and bringing the share price above $90 for the first time. It’s been about three months since the wearable camera company went public at $24 per share, and Business Insider’s Henry Blodget did some quick math to show GoPro investors what kind of revenue and profit performance the company might need to justify its current stock price. 

7. Over the last year or so, the idea of “secular stagnation,” that the world economy is facing a new limit on potential future growth has become popular among economists after Larry Summers first discussed the idea at the IMF last year. On Monday, Deutsche Bank’s Torsten Slok circulated an email that said with economic headwinds fading and expectations for economic growth of more than 3% over the next six quarters, secular stagnation is over.

8. The Russian ruble, as well as the Russian stock market, have been getting crushed as the Russian economy starts to really feel the pain of Western sanctions. On Monday, the ruble fell to about 39.4 against the US dollar, its worst level in more than 10 years.