Top 10 News Items 8/9-8/13: Fed Gives Green Light on QE; Cisco Shares Tumble as Earnings Disappoint; M&A Activity Strong This Week
Here is a recap of the top news items from this week on Wall Street:
1. On Wednesday the Fed left interest rates unchanged, but indicated they would be reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. Effectively, the Fed has been given the flexibility to purchase treasuries as inflation has trended lower in recent quarters and will "be subdued for some time." Stocks fell sharply from Monday to Wednesday and remained depressed during the last two trading sessions of this week as volume was very light.
2. Cisco (Nasdaq: CSCO) fell a jaw-dropping 10% on Thursday of this week as Q4 results and guidance disappointed the Street. The tech-bellweather reported EPS of $0.43, ex-items, 1 cent better than the analyst estimate of $0.42. Revenue for the quarter was $10.8 billion, which compares to the estimate of $10.87 billion. Looking ahead, Cisco guided Q1 sales to about $10.64-$10.83 billion. Following the quarterly report, one analyst said the Cisco results confirm a tech slowdown.
3. M&A was very hot this week as we had numerous big name deals: Nabors (NYSE: NBR) buys Superior Well Services (Nasdaq: SWSI), Endo Pharma (Nasdaq: ENDP) acquires Penwest Pharma (Nasdaq: PPCO), Emergent Biosolutions (AMEX: EBS) to buy Trubion Pharma (Nasdaq: TRBN), IBM (NYSE: IBM) agrees to buy Unica (Nasdaq: UNVA) and Blackstone (NYSE: BX) will buy Dynegy (NYSE: DYN).
4. Initial jobless claims for last week rose to 484,000, higher than the 465,000 the Street had been looking for. Continuing claims, meanwhile, were slightly lower than the economist estimate: 4.452 million vs. 4.535 million. While pundits are constantly looking for any indication of an improving jobs recovery, data suggests that this may still be far off.
5. This week GM's Ed Whitacre announced that he will step down from his CEO position but remain as the auto-makers Chairman. Director Dan Akerson will replace the exec at the helm of the rebounding GM.
6. The IPO for MakeMyTrip (Nasdaq: MMYT) went off without a hitch this week: after pricing at the high of end of its expected $12-$14 range, the stock opened at $19 only to surge to over $26 by Thursday's close. Shares fell about 5% on Friday as traders took profits, however, the downside was modest compared to the IPO's strong performance on its first day of trading.
7. NVIDIA (Nasdaq: NVDA) shares rose about 5% on Friday of this week as the company reported Q2 results on Thursday. Despite the move higher, NVIDIA's quarterly results missed the Street estimates: EPS came in at 3c, 8c lower than the analyst consensus, while sales were $811.2 million, vs. the consensus of $837.26 million.
8. In the Retail sector, the following companies reported quarterly numbers: Macy's (NYSE: M), Kohl's (NYSE: KSS), Nordstrom (NYSE: JWN) and JC Penney (NYSE: JCP).
9. The economy in the 16 countries that use the euro grew faster-than-expected in the second quarter, led by Germany growing at the fastest pace seen since the country reunified 20 years ago. The report from the Eurozone on Thursday showed that the economy in the region expanded by 1 percent sequentially in the second quarter. Germany posted a 2.2% growth rate while Greece's economy shrunk 1.5% during the quarter.
10. Elsewhere on the earnings front, strength in Disney's (NYSE: DIS) Cable and Movie segments helped the company report 67c in EPS and $10.002 billion in sales. Despite the nice beat, shares of Disney sold-off about 3% on Wednesday after the earnings report Tuesday night.
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1. On Wednesday the Fed left interest rates unchanged, but indicated they would be reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. Effectively, the Fed has been given the flexibility to purchase treasuries as inflation has trended lower in recent quarters and will "be subdued for some time." Stocks fell sharply from Monday to Wednesday and remained depressed during the last two trading sessions of this week as volume was very light.
2. Cisco (Nasdaq: CSCO) fell a jaw-dropping 10% on Thursday of this week as Q4 results and guidance disappointed the Street. The tech-bellweather reported EPS of $0.43, ex-items, 1 cent better than the analyst estimate of $0.42. Revenue for the quarter was $10.8 billion, which compares to the estimate of $10.87 billion. Looking ahead, Cisco guided Q1 sales to about $10.64-$10.83 billion. Following the quarterly report, one analyst said the Cisco results confirm a tech slowdown.
3. M&A was very hot this week as we had numerous big name deals: Nabors (NYSE: NBR) buys Superior Well Services (Nasdaq: SWSI), Endo Pharma (Nasdaq: ENDP) acquires Penwest Pharma (Nasdaq: PPCO), Emergent Biosolutions (AMEX: EBS) to buy Trubion Pharma (Nasdaq: TRBN), IBM (NYSE: IBM) agrees to buy Unica (Nasdaq: UNVA) and Blackstone (NYSE: BX) will buy Dynegy (NYSE: DYN).
4. Initial jobless claims for last week rose to 484,000, higher than the 465,000 the Street had been looking for. Continuing claims, meanwhile, were slightly lower than the economist estimate: 4.452 million vs. 4.535 million. While pundits are constantly looking for any indication of an improving jobs recovery, data suggests that this may still be far off.
5. This week GM's Ed Whitacre announced that he will step down from his CEO position but remain as the auto-makers Chairman. Director Dan Akerson will replace the exec at the helm of the rebounding GM.
6. The IPO for MakeMyTrip (Nasdaq: MMYT) went off without a hitch this week: after pricing at the high of end of its expected $12-$14 range, the stock opened at $19 only to surge to over $26 by Thursday's close. Shares fell about 5% on Friday as traders took profits, however, the downside was modest compared to the IPO's strong performance on its first day of trading.
7. NVIDIA (Nasdaq: NVDA) shares rose about 5% on Friday of this week as the company reported Q2 results on Thursday. Despite the move higher, NVIDIA's quarterly results missed the Street estimates: EPS came in at 3c, 8c lower than the analyst consensus, while sales were $811.2 million, vs. the consensus of $837.26 million.
8. In the Retail sector, the following companies reported quarterly numbers: Macy's (NYSE: M), Kohl's (NYSE: KSS), Nordstrom (NYSE: JWN) and JC Penney (NYSE: JCP).
9. The economy in the 16 countries that use the euro grew faster-than-expected in the second quarter, led by Germany growing at the fastest pace seen since the country reunified 20 years ago. The report from the Eurozone on Thursday showed that the economy in the region expanded by 1 percent sequentially in the second quarter. Germany posted a 2.2% growth rate while Greece's economy shrunk 1.5% during the quarter.
10. Elsewhere on the earnings front, strength in Disney's (NYSE: DIS) Cable and Movie segments helped the company report 67c in EPS and $10.002 billion in sales. Despite the nice beat, shares of Disney sold-off about 3% on Wednesday after the earnings report Tuesday night.
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