News

Wall Street Wrap – Gold Shines Higher as Johnson & Johnson misses their Top Line

By Robert Perrego, at 4:37 pm on October 13th, 2009

The market oscillated around zero with no direction as gold climbed to a new all time high.  Johnson & Johnson (NYSE: JNJ) reported earnings this morning and beat their expected earnings number $1.20 to $1.13.  The fact that their top line, or revenues, dropped by 5% to $15.08 billion caused concern and dropped the stock 2.43% (-$1.52, $61.01).  Most companies beat their expected earnings number in the second quarter of this year by cutting costs, but most all did not hit their top line revenues number.  This drop in revenues for businesses across the board is a contracting of the business base and does not bode well for the company, the future of the market, or the economy.

A slightly larger share of a shrinking pie does not thrill investors as there can only be so much of your company costs, employees and infrastructure that can be cut before earnings and revenues continue to decline.  For example, if firms are cutting into their R&D budgets in order to hit that earnings target, what they are doing is sacrificing possible future sales and growth.  The financial media has been talking about this need for companies to start showing some type of expansion in business and not just more efficiency belt tightening.  Economists seem to all be in agreement that the recession ended in the second quarter, and the market has had a very powerful rally from the March lows.

The market did not have much movement today as the Dow fluctuated from positive to negative finishing down 14.74 points (-0.14%, 9871.06) and the S&P 500 lost 3.00 points (-0.27%, 1073.19).  The Nasdaq 100 was up marginally, gaining 0.64 points (+0.03%, 1730.27).  All sectors moved fractionally today with the leader to the downside being finance off 0.9%.  The best performing sector was consumer cyclicals up 0.44%.

New York Spot Gold was up $5.90 (+0.56%, $1,062.60) at 4:05 p.m.  Spot traded as high as $1,066.50 before the market even opened this morning and traded back up to $1,065, during the day ticking new all time high trades.  The dollar was weak most the morning but at 2 p.m. the PowerShares Deustche Bank Dollar ETF (NYSE: UUP) ripped higher in what looks a lot like a short covering scare.  This shows that dollar shorts may be getting a bit hair trigger and nervous, and if so, we may be nearing the low in the dollar for awhile.  Even with this short-lived rip, the UUP finished down 5 cents (-0.22%, $22.57).

Nymex crude is pushing $75, gaining 88 cents today (+1.2%, $74.14) on the dollar weakness.  If oil breaks thorough $75 higher numbers are coming as there has been this upper limit on the trading range since the middle of June.

Tomorrow at 8:30 a.m. we get Retail Sales (-2.1%, 0.3% less autos – expected), at 10 a.m. Business Inventories (-0.9%) and Thursday the dreaded Jobless Claims at 8:30 a.m. (520K).

Major company earnings expected tomorrow are; (ABT, 0.90, before market open), (CCK, 0.79, after the close), (HST, 0.08, bmo), (JPM, 0.49, bmo), (GWW, 1.34, bmo) and (XLNX, 0.22)

Tags: , , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – The NFL stays with IBM, Another 2009 high for The Dow and Google

By Robert Perrego, at 5:13 pm on October 12th, 2009

International Business Machines (NYSE: IBM) renewed its marketing and services agreement with the National Football League and their shares continued higher to close at a new 2009 high.  Google Inc. (NSDQ: GOOG) was upgraded last week by Oppenheimer and today Goldman Sachs, J.P. Morgan, Deutsche Bank, Thomas Weisel and Kaufman Bros. got on the bandwagon by either raising their price targets or overall rating.  With all these analysts pushing all this positive news, sparked by Google CEO Eric Schmidt stating he sees the end of the slowdown in Internet advertising, the stock jumped $7.79 today (+1.50%, $524.04).  Google has an all time closing high price of $741.79 from back in November of 2007 and is still $217 below.  IBM’s all time high close of $130 is less than $3 above today’s close (+$1.11, +0.88%, $12.04) so this might make you wonder who may be the king of tech.  Would it be the more volatile Internet search and advertising behemoth or the IT services and management king?

Many stocks traded or closed at 2009 highs as the Dow Jones jumped up early, trading as high as 9931, before fading and closing up 20.89 points at 988.80 (+0.21%).  The S&P 500 also closed at a new 2009 high adding 4.7 points (+0.43%, 1076.19) with the Nasdaq 100 still just points away from making new highs (+1.81, +0.10%, 1729.63).  The energy sector was tops today adding 1.28% with no other sectors up more than fractionally.

The dollar was weak and this propelled gold and oil to strong days.  The energy sector was strong as Nymex crude jumped $1.50 a barrel (+2.09%, $73.14, 4:21 p.m.)  Oil has been in a trading range of $65 to $75 since June but recent dollar weakness may break oil out to the upside, just as gold broke out to new all time highs last week.

New York Spot Gold traded up $6.40/ounce to $1,055.30 (+0.61%) leaving the precious metal less than 0.7% from its all time high trade.  Kitco.com reports that $2.65 of today’s gold rise was due to dollar weakness while the remaining $3.75 of appreciation is a result of ‘predominant buying’.

Everyone likes a winner so now momentum buyers are jumping into gold, and this also brings the inevitable ‘wall-of-worry’ of a sudden sell-off.  Looking at the chart of the SPDR Gold Shares ETF (NYSE: GLD), I see a stock that has traded sideways and consolidated for seven months now, between $87 and $98.  It is common to see a stock breaking out of a sideways channel rise the height of the channel. The consolidation trading range channel that the GLD has been in for the last seven months is targeting:  ($98-$87) + $98 = $109.  The GLD trades roughly equal to 1/10th the price of New York Spot minus $2 for fees, thus the trend channel is calling for gold at $1,110 an ounce.

There were no economic releases today as the Government was shut down for Columbus Day, the banks and the bond market were closed and trading volume in the stock market was light.

Tomorrow we get earnings from Intel (NSDQ: INTC), Johnson & Johnson (NYSE: JNJ) and CSX Corporation (NYSE: CSX).  While Intel and J&J are Dow components and will give us more insight into their respective sectors, CSX should be watched closely.  What CSX has to say about the level of commerce and the amount of product being shipped is a very good bell-weather of how the overall economy is performing.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – Abbott and Xerox go Shopping

By Robert Perrego, at 5:16 pm on September 28th, 2009

Merger Monday returned in force today as Abbott Laboratories (NYSE: ABT) put up $6.6 billion cash to buy Solvay SA’s pharmaceutical unit and Xerox Corp. (NYSE: XRX) placed a stock and cash bid for Affiliated Computer Systems (NYSE: ACS) totaling $6.4 billion.  Cisco Systems Inc. (NSDQ: CSCO) caught an upgrade and, with no real bad news today, the market was off to the races.

Abbott currently markets TriCor and Trilipix cholesterol drugs in the United States and pays Solvay royalties, and this acquisition now gives them full global rights to these drugs.  Abbott sells $1.34 billion worth of TriCor/Trilipix and now this acquisition gives them full participation in the lucrative cholesterol drug space.  Abbott gained $1.25 on the day (+2.64%, $48.58) as the market approved of the deal, possibly because the deal is for cash for a proven money making franchise and no dilutive new shares will be used.

Xerox sounds like they are taking a page from the International Business Machines (NYSE: IBM), Hewlett Packard Co. (NYSE: HPQ) and Dell Inc. (NSDQ: DELL)  playbook by expanding into the software and services space and diversifying their business away from producing technical machinery and hardware.  The initial price for ACS was a 33% premium but dropped as Xerox shares lost $1.29 today (-14.45%, $7.68).  Each share of ACS will receive $18.60 per share in cash plus 4.935 Xerox shares.  ACS gained 13.98% on the day (+$1.25, $53.86).

Tech behemoth Cisco Systems got upgraded to ‘overweight’ from ‘equal weight‘ by Barclay’s and jumped 4.37% today (+$0.99, $23.61), further energizing the tech sector.

The Dow Jones Industrial Average gained 124.17 points (+1.28%, 9789.36) and the S&P 500 was up 18.60 points (+1.78%, 1062.98).  The Nasdaq 100 was the percentage gain winner edging out the S&P 500 up 1.79% (+30.44, 1724.59).

Even with the action in tech, finance led the sector race up 3.96% with tech and energy running even both up 2.06%.  Inside the finance sector, the life/health insurance space was strongest gaining 5.42%, with the Principal Financial Group (NYSE: PFG) adding 8.41% (+$2.17, $27.97) even in the face of a Bernstein downgrade.

Gold was up early, but traded off to finish relatively unchanged at $990.00 an ounce (4:40 p.m.) as the dollar rallied mid-day.  Oil gained 82 cents to trade $67.10 at 4:40 p.m.  The dollar index future, the DXY, was up 34 cents to close at 76.99 (+0.44%).

There were no economic releases today, but the week is full with major releases starting with Consumer Confidence tomorrow at 10:00 a.m. (expected 57.0), 2Q first revision of GDP on Wednesday at 8:30 a.m. (exp. -1.2%), Jobless Claims Thursday morning at 8:30 a.m. (exp. 537K) and the Employment Situation on Friday at 8:30 a.m. (exp. -170K, 9.8%).  Besides these headline numbers, there are many other housing, manufacturing and personal finance numbers to fill the week with twists and surprises.

Let’s hope the run up today gives us enough

Tags: , , , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – DELL, AIG and E-Trade make Moves on a Slow Day

By Robert Perrego, at 4:50 pm on September 21st, 2009

As detailed in last Friday’s RakedInSights “Wall Street Wrap,” E-Trade Financial Corp. (NSDQ: ETFC) has been in play with everything from debt for equity swaps, canceled insider selling, debt upgrades and stock upgrades.  Today, on a light volume down day for the market, E-Trade traded up as high as $2.04 or +10.9% and closed at $1.99 on over three times its average daily volume.  E-Trade is in play, and so was American International Group Inc. (NYSE: AIG) on a story that the lawmaker that chairs the Government Reform Committee might make it easier for the insurer to repay its federal obligations.

AIG recently fired up from the low 30’s to the mid 50’s in a matter of days (see past RakedInsights for more details) on a massive short squeeze.  Well, newsflash, this all could be happening again.  As the first squeeze ripped AIG higher on positive company news that caught the short sellers napping, the stock simply traded up too high and I would not be surprised if the shorts got back in sensing a profit opportunity.  This latest news, as AIG is into the government for some $129 billion or so, sounds like a very real positive catalyst for the stock that should send any remaining shorts running for cover.   AIG closed up $8.49 or +21.27% at $48.40.

DELL Inc. (NSDQ: DELL) offered $30 a share cash for Perot Systems Corporation (NYSE: PER), which is a 68% premium to Friday’s closing price.  It seems DELL could be following International Business Machines (NYSE: IBM) and Hewlett Packard (NYSE: HPQ) out of the pure computer hardware business.  Just as HP bought Electronic Data Systems, ironically another company started by Ross Perot, DELL’s acquisition of Perot Systems will diversify their revenue streams, bringing the one time pure personal computer play into the information technology services and business solutions space.

The more predictable and contracted multi-year revenue streams from IT services and business solutions can give a company a higher P/E, and thus a higher stock price, as this stabilization of revenues translates into less risk for the stockholder.

The very large 68% premium bid could be that high as DELL was making sure no one else was going to come in and bid on Perot.  DELL did not want to take the chance of another company entering a bidding war, possibly taking their new strategic direction away from them.  Hit ‘em fast and hard.  DELL closed at $16.01 (-4.07%) and  Perot Systems closed up $11.65 at $29.56 (+65.04%).

The Dow dropped 41.34 points today (-0.42%, 9778.86) and we had a split market with the Nasdaq closing positive (+6.34, +0.36%, 1731.58) on the DELL buy out.  The S&P 500 lost 3.64 points (-0.34%, 1064.66).

The energy sector led the way lower losing 1.01% with finance losing 0.88% and the industrials down 0.73%.  Consumer non-cyclicals were up 0.28%.

Gold opened down double digits as the dollar opened strong today.  New York Spot Gold traded as low as $995.20 an ounce before trading up on mid-day dollar weakness, and was last seen trading at $1,003.10 an ounce (4:20 p.m.).  Oil dropped 3.24% or $2.33 a barrel on the dollar strength, trading at $69.61 a barrel at 4:29 p.m.

Tomorrow we get ICSC-Goldman Store Sales and Redbook reports before the open.  There is a Federal Reserve Open Market Committee meeting on Wednesday and their interest rate decision is expected at 2:15 p.m.  Interest rates are expected to remain unchanged.

Tags: , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – IBM 52 Week High and GE on a Roll

By Robert Perrego, at 4:53 pm on September 16th, 2009

The Market posted a strong rally today closing at 2009 highs for all three major indexes.  Today’s rally was the strongest we have seen in 4 weeks with many 52 week highs in individual stocks including International Business Machines (NYSE: IBM), Google Inc. (NSDQ: GOOG), Apple Inc. (NSDQ: AAPL) and 3M Company (NYSE: MMM).  The dollar traded down to new lows and gold closed at an all time high.

The Dow Jones Industrial Index added 108.30 points (9791.71, +1.11%) and the Nasdaq 100 rose 24.20 (1723.73, +1.42%) with the S&P 500 leading the charge gaining 1.53% and adding 16.13 points to close at 1068.76.  Strength was seen across the board with new 52 week highs in stocks from all sectors of the market.

The strongest sector today was finance jumping 3.78% with energy up 2.74% and consumer cyclicals posting a 1.66% gain.  The super regional banks were strongest within the financials with SunTrust Banks Inc. (NYSE: STI) up 5.93%.  Yesterday, SunTrust CEO James Wells III stated that the banks underlying financial condition is stabilizing and that he wants to repay TARP loans as soon as possible.  The strong showing in consumer cyclicals shows an appetite for risk and return and a positive underlying bullish perception of the market.

The dollar traded lower again and is entering the lowest trading range it has been in since the the summer of 2008.  The PowerShares DB US Dollar Bull ETF (NYSE: UUP) is within 1% of its all time low close and closed at its 52 week low trade today.  Since September 4rth the UUP, which is structured to mirror the value of the dollar, has dropped 2.62%.  New York Spot Gold traded as high as $1,021.80 today and was last seen trading at $1.017.90 an ounce up 1.06%, leaving it less than $17 from its all time high trade.

The most commonly cited reason for strength in gold is the current dollar weakness.  There is speculation that foreign governments and investors are using gold as a hedge against their dollar holdings.  If a foreign investor, be it a hedge fund, mutual fund, government or individual investor, is invested in U.S. stocks to make money on this latest market run, they basically own dollars.  Their investment thesis is assumed to be that by owning gold alongside their stocks, hopefully this can protect them against the losses they will see when they swap dollars back into whatever their home currency is when they sell any stock.

Oil gained $1.58 a barrel trading at $72.36 at 4:45 p.m.

Federal Reserve Chairman Ben Bernanke stated yesterday that the “recession is very likely over”, and he made this statement without mentioning raising interest rates.  This statement may have given a buy signal to money that has been sitting on the sidelines fueling this rally.

General Electric Co. (NYSE: GE) added 6.25% today (+$1.00, $17.00) and has seen its market capitalization increase by over $24 billion in the last three trading days.  IBM traded up 2.06% and closed at $121.82, a 52 week high.  Other tech giants Apple Inc. (+3.83%, +$6.71, $181.87) and Google Inc. (+2.25%, +$10.75, $488.29) both closed at new 52 week highs along with Dow Jones component 3M, which rose 70 cents or 0.93 % finishing up at $75.38.

On the economic calendar we have Housing Starts (600K expected) and Jobless Claims (575K exp.) before the open tomorrow and the Philly Fed Survey at 10 p.m. (8.0 exp.).

Tags: , , , , , , , , , , , , , , , , , , ,

« Older Entries
Newer Entries »