STOCKS RALLY, OIL JUMPS, GOLD TANKS: Here’s What You Need To Know

SAM RO

 NOV. 6, 2014

REUTERS/Carlo Allegri

A man who gave his name as “The Golden Child” remains motionless until people put a tip in his basket in the subway in the Manhattan borough of New York.

Republicans took control of Congress on Tuesday in what one Democratic strategist characterized as a “F—ing. Bloodbath.” Markets weren’t too fazed. In fact, the Dow actually hit a new high.

First, the scoreboard:

• Dow: 17,484.5, +100.6, (+0.5%)
• S&P 500: 2,023.4, +11.3, (+0.5%)
• Nasdaq: 4,620.7, -3.4, (-0.0%)

And now, the top stories on Tuesday:

1. “It doesn’t get old, right?” NYSE floor governor Rich Barry said. “The Dow hit another all-time high this morning and the S&P 500 came within about a point from doing the same… For those of you keeping score, the Dow is on pace for its 20th record close of the year, while the S&P 500 is shooting for its 36th record closing high of 2014″

2. Today’s rally comes amid encouraging data on jobs ahead of Friday’s official jobs report. According to ADP, US companies added 230,000 private jobs in October. This was up from 225,000 in September, and it was stronger than the 220,000 expected by economists. “The job market is steadily picking up pace,” Moody’s Analytics’ Mark Zandi noted. “Job growth is strong and broad-based across industries and company sizes. At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth.”

3. The ISM services index slipped to 57.1 in October, which was a bit lower than the 58.0 level expected. Still, the number still reflects a healthy pace of growth. What really raised eyebrows was the employment sub-index, which jumped 1.1 points to 59.6, the highest level since August 2005. “This appears to be consistent with payroll growth of 450,000 per month, which is not going to happen,” Pantheon Macroeconomics’ Ian Shepherdson said. Shepherdson tweaked his model and estimated that the ISM report actually signaled about 300,000 new jobs in October, which is way ahead of the 225,000 forecast by economists surveyed by Bloomberg.

4. Gold prices settled at $1.145.70, down 1.9% for the day. The yellow metal got as low as $1.137.10, its lowest level since April 2010. This came as the dollar strengthened. The DXY climbed 0.5%.

5. Meanwhile, WTI crude oil prices jumped 2% after a report showing inventories climbed by less than expected. The EIA reported oil stockpiles increased by just 460,000 barrels last week. Analysts surveyed by Bloomberg were looking for 2.35 million barrels.

STOCKS RALLY, GOLD TUMBLES: Here’s What You Need To Know

SAM RO

 OCT. 31, 2014

REUTERS/U.S. Geological Survey

A slow-moving lava flow from the Kilauea Volcano burns vegetation as it approaches a property boundary in a U.S. Geological Survey (USGS) image taken near the village of Pahoa, Hawaii, October 28, 2014.

The stock market extended its rebound back toward all-time highs.

First, the scoreboard:

• Dow: 17,196.4, +222.1, (+1.3%)
• S&P 500: 1,994.6, +12.3, (+0.6%)
• Nasdaq: 4,554, +5.0, (+0.1%)

And now, the top stories on Wednesday:

1. The Dow far outpaced the rest of the market because of Visa, which surged 10% after its better-than-expected earnings announcement. Because it’s a price-weighted index, the 21-point rally in the Visa is adding a full 134 points to the Dow. (Currently, a 1-point move in the Dow translates to a 6.42195-point move in the Dow.)

2. US GDP grew at a 3.5% pace in Q3, beating expectations for 3.0% growth. Personal consumption climbed 1.8%, which was a bit lighter than the 1.9% expected. Real final sales (GDP less the change in private inventories) jumped 4.2%, up from 3.2% in Q2.

3. Notably, government spending jumped 4.6%, adding 0.83 percentage points to the GDP growth rate. “After being such a massive drag on the economy in recent years, the public sector is now a big positive,” Capital Economics’ Paul Ashworth said.

4. Different economists were surprised by different components of the GDP report. “The big upside surprise in the data is the residential investment component, where the 1.8% increase is impossible to square with the monthly construction data — we expected a 10% drop — and a downward revision in due course is a decent bet,” Pantheon Macroeconomics’ Ian Shepherdson noted.

5. Initial jobless claims climbed to 287,000 from 284,000 a week ago. This was a bit higher than the 285,000 expected. The four-week moving average sat at 281,000, the lowest level since 2000. “Looking past weekly volatility, trend initial jobless claims remain at extremely low levels and are consistent with our outlook for further improvement in labor markets,” Barclays’ Jesse Hurwitz said.

6. Gold fell below $1,200 again for the first time in a month. The yellow metal fell from around $1,215 to as low as $1,196.

STOCKS RALLY, IBM TANKS: Here’s What You Need To Know

MYLES UDLAND

 OCT. 21, 2014

REUTERS/Catherine Benson

Stocks finished the day higher on Monday as the Dow closed with the smallest gains as a more than 7% decline in shares of tech giant IBM dragged down the index. Both the S&P 500 and Nasdaq opened the week with gains.

First, the scoreboard:

• Dow: 16,386.80, +6.4, (+0.04%)
• S&P 500: 1,903.21, +16.4, (+0.8%)
• Nasdaq: 4,313.85, +55.9, (+1.3%)

And now, the top stories on Monday:

1. IBM had a big earnings miss on Monday morning and the stock finished the day down more than 7%. IBM reported earnings per share of $3.68, missing expectations for $4.32, on revenue of $22.4 billion, which also missed expectations and was a 4% decline over last year. IBM shares were down about 7% in pre-market trade and stayed there for most all of the trading session on Monday, and the decline in IBM weighed on the Dow, which falls 6.42195 for every 1-point move in one of the index’s stocks.

2. The IBM decline wasn’t just about the numbers, which were disappointing, but also about the commentary from IBM CEO Ginni Rometty, who said in the company’s earnings press release that the company, “saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry.” Back in July, hedge fund manager Stanley Druckenmiller said that IBM was the “poster child” for poor corporate behavior that engaged in financial engineering rather than investing in their business.

3. The Robin Hood Investor Conference was held Monday in New York, and among the big hedge fund names who gave some investment thoughts were David Einhorn, who recommended SunEdison, as well as going long Greek banks Alpha Bank and Piraeus Bank, according to Business Insider’s Julia LaRoche. Einhorn also said being short French debt.

4. In an interview with New York Magazine, noted tech investor Marc Andreessen said that the American middle class is an accident of history, as it was the only major industrial country that wasn’t bombed during World War II. 

5. Apple is set to report earnings after the market close on Monday, and per Business Insider’s Jay Yarow, expectations are for earnings per share of $1.31, revenue of $39.85 billion, iPhone sales of 38 million units, iPad sales of 13 million units, with expectations for the company’s fourth quarter currently at $63.52 billion. BI will have full live coverage of the report after the market close. 

6. In a note to clients over the weekend, Goldman Sachs’ David Kostin said that a potential pause in the pace of corporate buybacks could explain the recent pullback in the S&P 500. “Most companies are precluded from engaging in open-market stock repurchases during the five weeks before releasing earnings,” Kostin wrote. “For many firms, the beginning of the blackout period coincided with the S&P 500 peak on September 18. So the sell-off occurred during a time when the single largest source of equity demand was absent.” Kostin still sees the S&P 500 finishing the year at 2,050 as buybacks pick up into year-end. 

7. Monday marks the 27-year anniversary of Black Monday, the day the Dow fell more than 22% in the worst single day drop in its history. Here are some memories of the event from Gluskin Sheff’s David Rosenberg, who said it was the scariest thing he’s seen in his time on Wall Street, and a quick recap of how Nightly Business Report covered the crash. 

STOCKS RALLY, DOW JUMPS 263: Here’s What You Need To Know

SAM RO

OCT. 18, 2014

Wikimedia Commons

It’s been over a week since we’ve seen a decent rally in the stock market.

First, the scoreboard:

• Dow: 16,380.3, +263.1, (+1.6%)
• S&P 500:1,886.7, +24.0, (+1.2%)
• Nasdaq:4,258.4, +41.0, (+0.9%)

And now, the top stories on Thursday:

1. Friday’s rally was led by the large-cap companies with the Dow Jones Industrial Average and S&P 500 outperforming. General Electric rose 2.3% and Honeywell jumped 4.2% after announcing strong financial results. The Russell 2000 — an index of small and mid-cap stocks — closed down 0.2%.

2. “It has been an insane week for stocks, that’s for sure,” NYSE floor governor Rich Barry said. “[T]he market traded down 747 points from Monday’s highs to Wednesday’s lows — then reversed by 545 points from Wednesday’s low to today’s session-highs… Amazing.”

3. Housing starts jumped 6.3% in September to an annualized rate of 1.017 million. This was stronger than the 1.00 million pace expected. The growth was driven in the multi-family sector of the housing market.  “Tight mortgage credit has resulted in all net new household formations continuing to go into rental units, driving multi-family to the highest share of new home construction (36% average this year) in thirty years,” Morgan Stanley’s Ted Wieseman noted. “With no immediate relief in sight for tight mortgage credit conditions and improving job prospects probably supporting some improvement in sluggish rates of household formations — running about 500,000 a year still versus an underlying demographic trend closer to 1 million — we look for the apartment share of starts to continue rising going forward as overall starts move higher.” Homebuilder stocks DR Horton, PulteGroup, and Lennar all surged.

4. The University of Michigan’s preliminary consumer confidence index unexpectedly jumped to a 7-year high of 86.4 in October from 84.6 in September. Economists were forecasting a decline to 84.0. This came despite escalating worries about things like the Ebola virus outbreak. However, Capital Economics’ Paul Diggle noted “the preliminary survey results pre-date the recent equity market sell-off, so the final survey reading could come in substantially lower.”

STOCKS RALLY: Here’s What You Need To Know

MYLES UDLAND

 AUG. 14, 2014

REUTERS/Jason Reed

U.S. Secretary of State John Kerry speaks with five-year-old Dara Edwards, the daughter of an American staffer at the U.S. Consulate in Sydney, as he meets embassy and consular staff in Sydney.

Stocks surged despite some disappointing economic data, both from the U.S. and overseas.

First, the scoreboard:

• Dow: 16,652.25, +91.7, (+0.5%)
• S&P 500: 1,946.94, +13.2, (+0.7%)
• Nasdaq: 4,433.61, +44.4, (+1%)

And now, the top stories on Wednesday::

1. Retail sales for July were flat compared to June, the worst reading in six months. Economists were expecting retail sales to climb 0.2%. Excluding autos and gas, retail sales were up 0.1%, missing expectations for a 0.4% gain. “Clothing increased 0.4% primarily on the extreme discounting at related stores as many retailers rid the shelves of summer apparel, making way for the back-to-school season — the second largest season after Christmas holiday spending,” said Bloomberg economists Richard Yamarone and Josh Wright. Ian Shepherdson of Pantheon Macroeconomics said the report was “A bit disappointing but the trend is OK and August should be better.” 

2. Overnight, Japan reported second quarter GDP that fell 6.8% on an annualized basis. The drop was expected, as Japan enacted a new consumption tax in April, but is still a severe decline for the world’s third-largest economy, which grew 6.1% annualized in the first quarter.

3. In addition to the poor retail sales report, retail giant Macy’s reported earnings and revenue that disappointed, and shares of the company fell more than 5%. Macy’s reported earnings per share of $0.80, missing the $0.86 that was expected by analysts on revenue of $6.27 billion, which also missed the $6.3 billion Wall Street was looking for. Macy’s said it failed to make up for its poor sales performance in the first quarter, and now sees full-year sales up 1.5%-2%.

4. SeaWorld shares got absolutely crushed, falling more than 34% after the theme-park operator reported disappointed earnings and revenue. Attendance at the company’s park also continues to lag in the wake of CNN’s controversial documentary “Blackfish,” which brought to light questions regarding the treatment of Orca whales. In the second quarter, SeaWorld’s attendance was up 0.3% from the prior year, but this compared to year-ago attendance that fell 9%. Year-to-date, attendance at SeaWorld parks is down 4.3%.

5. Brazilian presidential candidate Eduardo Campos was killed in a plane crash on Wednesday as it was preparing to land in bad weather. Following the report, Brazil’s Ibovespa stock index fell as much as 2%, but eventually pared most of these losses. Campos was currently third in the polls, and Tony Volpon at Nomura said these developments don’t change his view of the election, which he expects to be won by Aécio Neves.

6. John Deere shares fell nearly 2% after the agribusiness giant said it expects revenue to fall 6% compared to last year. The company also gave an update on its view of the global agriculture market and the global economy.

7. Shares of King Digital fell more than 23% after the maker of the popular Candy Crush mobile game last night reported revenues that disappointed. The company also announced a surprising $150 million special dividend and said its revenue for the full-year would be below current expectations. Analysts at Deutsche Bank downgraded shares of King following the report, noting that among other games, the Kim Kardashian: Hollywood game creates intense competitions for the company.

8. The latest mortgage applications report from the Mortgage Bankers Association showed that, on a seasonally adjusted basis, mortgage applications fell 2.7% for the week ended August 8. Following the report, Quicken Loans vice president Bill Banfield said, “While bond pricing was relatively flat and mortgage-backed security prices did little to move interest rates around last week, we did see a slight drop in both refinance and purchase activity. Overall, purchase volume has been unable to reach last year’s levels.”