STOCKS SLIP: Here’s What You Need To Know

MYLES UDLAND

OCT. 7, 2014

REUTERS/Carlos Barria

A woman walks down a flight of stairs as barricades used by protesters to block an area around the government headquarters are seen, in Hong Kong October 6, 2014. Pro-democracy protests in Chinese-controlled Hong Kong subsided on Monday as students and civil servants returned to school and work after more than a week of demonstrations.

Stocks lost ground on Monday in a session that saw little in the way of economic data as the stocks opened the day higher, fell to their lows near noon and closed with modest losses.

First, the scoreboard:

• Dow: 17,002.47, -7.2, (-0.04%)
• S&P 500: 1,965.82, -2.1, (-0.1%)
• Nasdaq: 4,455.85, -19.7, (-0.4%)

And now, the top stories on Monday:

1. The biggest story on Monday was news that computer giant Hewlett-Packard would split itself up into two separate businesses comprised of its PC and printer unit and its corporate hardware and services business. The PC-printer unit will be called HP and the remaining units will be called Hewlett-Packard Enterprise. Current HP CEO Meg Whitman will be the CEO of HP Enterprise and serve as Chairman of the HP board. Business Insider’s Julie Bort broke down what the two companies will look like on a standalone basis. This breakup will also result in even more layoffs from the company, with its new layoff target getting upped to 55,000. 

2. GT Advanced Technologies, which makes sapphire displays, announced it would file for bankruptcy protection on Monday. GT Advanced, which last year signed a $578 million supply agreement with Apple, said that it would remain in business. Following the announcement, shares of GT Advanced fell about 90% to trade near $1.00. 

3. The huge drop in shares of GT Advanced on Monday indicated that the market was caught largely by surprise following the announcement, and at least one analyst that Business Insider spoke to on Monday wrote that it appears possible that Apple pulled the plug on its agreement with GT. Jeffrey Osborne, an analyst at Cowen & Co., wrote that Apple had the ability to call its loan made to GT, and the GT’s cash position in June and what it reported on Monday make it seem likely that this took place. As of Monday, however, this was unconfirmed from either company. 

4. It was another active day for companies involved in developing Ebola treatments, as shares of Tekmira Pharmaceuticals fell sharply after the stock was downgraded and after Chimerix announced that the FDA approved the company’s drug, brincidofovir, for potential use in patients with Ebola. Tekmira, which was gained more than 100% through the summer, was downgraded by analysts at Leerink, who cited the company’s lofty valuation. On Monday, a Spanish nurse tested positive for Ebola in the first case transmitted in Europe. 

5. On Monday, the Federal Reserve released its latest Labor Market Conditions Index, or LMCI, a composite of 19 labor market indicators that Fed Chair Janet Yellen has cited as indicating the labor market’s broad improvement but still lingering weakness. The LMCI reading came in at 2.5 up from 2 the prior month, and this latest update follows Friday’s jobs report, which showed that nonfarm payrolls grew by 248,000 in September while the unemployment rate fell below 6% for the first time since the summer of 2008. 

6. A report from Bloomberg on Monday said that 95% of profits from companies in the S&P 500 have been returned to shareholders either in the form of dividends or share buybacks in 2014. 

7. Hilton sold the landmark Waldorf Astoria New York hotel to Chinese insurer Anbang Insurance Group for $1.95 billion. As part of the deal, Hilton will continue to manage the hotel for the next 100 years. 

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.