David Moenning's Daily State of the Markets: 04/27
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Overall Analyst Rating:
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Dividend Yield: 0.5%
EPS Growth %: -0.7%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
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An Apple a Day
Good morning. In the good old days when tech was bubbling higher, an earnings report as strong as Apple’s (Nasdaq: AAPL) would have sent investors stampeding to the buy button yesterday. It wouldn’t have mattered what you bought in the tech sector, because a big-name winner from the likes of Apple would have sent tech stocks higher across the board. Thus, the phrase "An Apple a day keeps the bears at bay" was born. And while the report from Mr. Jobs and company was definitely impressive and the stock did pop higher by 3.7% to a new all-time high, it was the results from some old school names such as General Motors (NYSE: GM), Ford (NYSE: F), Exxon Mobil (NYSE: XOM), and 3M (NYSE: MMM) that were responsible for yet another new high for the Dow Jones Industrial Average.
Ok, that’s the headline; but in reality, stocks did very little yesterday as the bulls decided to take a break in front of this morning’s GDP report. Yes, the Dow did manage add another 15 points to the record, and the Russell 2000 and S&P Small-Cap and Mid-Cap indices also eeked out record closes. And the NASDAQ did add 6 points to close at a new six-year high. However, with the S&P 500 and the NYSE indices actually finishing in the red on the day, it is tough to get overly excited about the action.
Other than the slew of corporate earnings, there wasn’t much else in the way of news yesterday. And speaking of earnings, 22 of the 30 Dow stocks have reported earnings, with 16 of those reports (or 73%) coming in better than expected. Thus, when you do the math, it is easy to see that earnings are indeed coming in better than analysts had been looking for.
Turning to the macro view, the latest Beige Book report indicated that the economy is growing at no better than average pace right now as most Fed districts reported only modest growth. It wasn’t terribly shocking that the report showed softness in the housing market. However, loan demand wasn’t as bad as one might have expected as consumers appear to be looking to refinance those adjustable rate mortgages. And the good news is that banks are making the loans.
Turning to this morning, the macro theme is back in focus as the government takes its first shot at estimating the growth of the economy in the first quarter. The report was just released, so let’s take a look. GDP for Q1 came in at just 1.3%, which was well below the consensus expectations for an annualized rate of 1.8%. Next, Personal Consumption also came in light with a gain of 1.8%, when analysts had been looking for an increase of 3.5%. And finally, the price index, which is a measure of inflation, was up 4% versus expectations for a reading of 3%.
Stock traders are not happy with the news as stagflation is the first word that comes to mind from this report. Obviously, traders will dig a little deeper into the data, but at first blush it looks like the bears have reason to smile today.
Running through the rest of the pre-game indicators, the major foreign markets were all a little lower overnight. Gold futures are moving up this morning by $1.80 and are trading at $679.80. In the oil pits, crude futures are lower by $0.21 with the latest quote at $64.85. Interest rates are a moving down a little this morning on the weaker than expected GDP number with the yield on the 10-year currently trading at 4.67%. And finally, with about an hour before the bell, stock futures in the U.S. are looking to move lower at the open. The Dow futures are currently off by 46 points; the S&P’s are about 4 points underwater, while the NASDAQ also looks to be about 5 points below fair value at the moment
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Broadcom (NASDAQ: BRCM) – Reported $0.10 vs. $0.09
Developers Diversified Realty (NYSE: DDR) – Reported $0.91 vs. $0.86
Federated Investors (NYSE: FII) – Reported $0.51 vs. $0.50
Hartford Financial (NYSE: HIG) – Reported $2.61 vs. $2.37
KLA-Tencor (NASDAQ: KLAC) – Reported $0.76 vs. $0.78
Microsoft (NASDAQ: MSFT) – Reported $0.49 vs. $0.46
Sandisk (NASDAQ: SNDK) – Reported $0.19 vs. $0.18
MEMC Electronic Materials (NYSE: WFR) – Reported $0.71 vs. $0.69
Today’s Earnings Before the Bell:
Alltel (NYSE: AT) – Reported $0.63 vs. $0.66
Cameron Intl (NYSE: CAM) – Reported $0.88 vs. $0.81
Carpenter Technology (NYSE: CRS) – Reported $2.53 vs. $2.44
Cummins (NYSE: CMI) – Reported $1.42 vs. $0.92
Coventry Health Care (NYSE: CVH) – Reported $0.80 vs. $0.80
Chevron (NYSE: CVX) – Reported $1.86 vs. $1.68
Goodyear Tire (NYSE: GT) – Reported $0.11 vs. $0.23
National Oilwell Varco (NYSE: NOV) – Reported $1.55 vs. $1.32
Simon Property Group (NYSE: SPG) – Reported $1.37 vs. $1.30
Waste Management (NYSE: WMI) – Reported $0.43 vs. $0.36
News, Upgrades/Downgrades/Brokerage Research:
Microsoft (NASDAQ: MSFT) – Upgraded at CIBC, C
KLA-Tencor (NASDAQ: KLAC) – Upgraded at First Albany
Nortel (NYSE: NT) – Downgraded at Goldman Sachs
Netgear (NASDAQ: NTGR) – Upgraded at Goldman Sachs
Sandisk (NASDAQ: SNDK) – Goldman Sachs raises price target
AMR Corp (NYSE: AMR) – Downgraded at JP Morgan
US Airways (NYSE: LCC) – Downgraded at JP Morgan
Continental Airlines (NYSE: CAL) – Downgraded at JP Morgan
JetBlue (NASDAQ: JBLU) – Downgraded at JP Morgan
UAL Corp (NASDAQ: UAUA) – Downgraded at JP Morgan
Rio Tinto (NYSE: RTP) – Upgraded at Merrill Lynch
Amazon.com (NASDAQ: AMZN) – Downgraded at Stifel
Broadcom (NASDAQ: BRCM) – Downgraded at UBS
XM Satellite Radio (NASDAQ: XMSR) – Upgraded at UBS
Sirius Satellite Radio (NASDAQ: SIRI) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: GS, AAPL, WFR, SPG, CAM
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Good morning. In the good old days when tech was bubbling higher, an earnings report as strong as Apple’s (Nasdaq: AAPL) would have sent investors stampeding to the buy button yesterday. It wouldn’t have mattered what you bought in the tech sector, because a big-name winner from the likes of Apple would have sent tech stocks higher across the board. Thus, the phrase "An Apple a day keeps the bears at bay" was born. And while the report from Mr. Jobs and company was definitely impressive and the stock did pop higher by 3.7% to a new all-time high, it was the results from some old school names such as General Motors (NYSE: GM), Ford (NYSE: F), Exxon Mobil (NYSE: XOM), and 3M (NYSE: MMM) that were responsible for yet another new high for the Dow Jones Industrial Average.
Ok, that’s the headline; but in reality, stocks did very little yesterday as the bulls decided to take a break in front of this morning’s GDP report. Yes, the Dow did manage add another 15 points to the record, and the Russell 2000 and S&P Small-Cap and Mid-Cap indices also eeked out record closes. And the NASDAQ did add 6 points to close at a new six-year high. However, with the S&P 500 and the NYSE indices actually finishing in the red on the day, it is tough to get overly excited about the action.
Other than the slew of corporate earnings, there wasn’t much else in the way of news yesterday. And speaking of earnings, 22 of the 30 Dow stocks have reported earnings, with 16 of those reports (or 73%) coming in better than expected. Thus, when you do the math, it is easy to see that earnings are indeed coming in better than analysts had been looking for.
Turning to the macro view, the latest Beige Book report indicated that the economy is growing at no better than average pace right now as most Fed districts reported only modest growth. It wasn’t terribly shocking that the report showed softness in the housing market. However, loan demand wasn’t as bad as one might have expected as consumers appear to be looking to refinance those adjustable rate mortgages. And the good news is that banks are making the loans.
Turning to this morning, the macro theme is back in focus as the government takes its first shot at estimating the growth of the economy in the first quarter. The report was just released, so let’s take a look. GDP for Q1 came in at just 1.3%, which was well below the consensus expectations for an annualized rate of 1.8%. Next, Personal Consumption also came in light with a gain of 1.8%, when analysts had been looking for an increase of 3.5%. And finally, the price index, which is a measure of inflation, was up 4% versus expectations for a reading of 3%.
Stock traders are not happy with the news as stagflation is the first word that comes to mind from this report. Obviously, traders will dig a little deeper into the data, but at first blush it looks like the bears have reason to smile today.
Running through the rest of the pre-game indicators, the major foreign markets were all a little lower overnight. Gold futures are moving up this morning by $1.80 and are trading at $679.80. In the oil pits, crude futures are lower by $0.21 with the latest quote at $64.85. Interest rates are a moving down a little this morning on the weaker than expected GDP number with the yield on the 10-year currently trading at 4.67%. And finally, with about an hour before the bell, stock futures in the U.S. are looking to move lower at the open. The Dow futures are currently off by 46 points; the S&P’s are about 4 points underwater, while the NASDAQ also looks to be about 5 points below fair value at the moment
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Broadcom (NASDAQ: BRCM) – Reported $0.10 vs. $0.09
Developers Diversified Realty (NYSE: DDR) – Reported $0.91 vs. $0.86
Federated Investors (NYSE: FII) – Reported $0.51 vs. $0.50
Hartford Financial (NYSE: HIG) – Reported $2.61 vs. $2.37
KLA-Tencor (NASDAQ: KLAC) – Reported $0.76 vs. $0.78
Microsoft (NASDAQ: MSFT) – Reported $0.49 vs. $0.46
Sandisk (NASDAQ: SNDK) – Reported $0.19 vs. $0.18
MEMC Electronic Materials (NYSE: WFR) – Reported $0.71 vs. $0.69
Today’s Earnings Before the Bell:
Alltel (NYSE: AT) – Reported $0.63 vs. $0.66
Cameron Intl (NYSE: CAM) – Reported $0.88 vs. $0.81
Carpenter Technology (NYSE: CRS) – Reported $2.53 vs. $2.44
Cummins (NYSE: CMI) – Reported $1.42 vs. $0.92
Coventry Health Care (NYSE: CVH) – Reported $0.80 vs. $0.80
Chevron (NYSE: CVX) – Reported $1.86 vs. $1.68
Goodyear Tire (NYSE: GT) – Reported $0.11 vs. $0.23
National Oilwell Varco (NYSE: NOV) – Reported $1.55 vs. $1.32
Simon Property Group (NYSE: SPG) – Reported $1.37 vs. $1.30
Waste Management (NYSE: WMI) – Reported $0.43 vs. $0.36
News, Upgrades/Downgrades/Brokerage Research:
Microsoft (NASDAQ: MSFT) – Upgraded at CIBC, C
KLA-Tencor (NASDAQ: KLAC) – Upgraded at First Albany
Nortel (NYSE: NT) – Downgraded at Goldman Sachs
Netgear (NASDAQ: NTGR) – Upgraded at Goldman Sachs
Sandisk (NASDAQ: SNDK) – Goldman Sachs raises price target
AMR Corp (NYSE: AMR) – Downgraded at JP Morgan
US Airways (NYSE: LCC) – Downgraded at JP Morgan
Continental Airlines (NYSE: CAL) – Downgraded at JP Morgan
JetBlue (NASDAQ: JBLU) – Downgraded at JP Morgan
UAL Corp (NASDAQ: UAUA) – Downgraded at JP Morgan
Rio Tinto (NYSE: RTP) – Upgraded at Merrill Lynch
Amazon.com (NASDAQ: AMZN) – Downgraded at Stifel
Broadcom (NASDAQ: BRCM) – Downgraded at UBS
XM Satellite Radio (NASDAQ: XMSR) – Upgraded at UBS
Sirius Satellite Radio (NASDAQ: SIRI) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: GS, AAPL, WFR, SPG, CAM
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
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