19 Oct 2012 AMC
Market Summary
What a treacherous Friday... With major Tech companies like Google, Microsoft, IBM, Intel and AMD announcing disappointing earnings, it's really a big concern whether the technology stock are still about to lead the economy.
Heavy industrial companies like Caterpillar, General Electric and well known fast food chain MacDonald also missed their earnings.
The only stock in the DOW that managed to stay afloat despite such heavy sell down is Honeywell. Nonetheless, I would reckon the sell off to be a little over board. Wiping out gains made for the past 3 days.
As of present moment, 120 of the S&P 500 companies announced earnings.
Out of which,
71(58.2%) beat earnings.
15(12.5%) Met earnings
34(28.3%) missed earnings.
having another 380 companies in the S&P 500 companies to announce earnings. It will got quite a bit of volatility to go through...
Market Internals
Something interesting to note over here is the total volume in the NYSE. Averaging around 600 million shares traded, the day was well below the average volume. Bulls are definitely not in the market on Friday.
Leaders and Laggards
It seems that the utilities is the only sector not having more than 1% loss...
Technical Updates
Both SPX and DOW hit their support once again while NASDAQ continues to go into a downtrend. With NASDAQ going down like a rock, i reckon SPX and DOW might go into the same trend soon.
Commentaries
|
Commodities
Treasuries
As expected... the treasuries rallied amidst the bearish day...
Weekly Analysis
Week 38
Technical Updates
Oh well... I'm still right in my weekly outlook... and the expiration Friday still slightly bullish...
Commentaries
Weekly Wrap
Dow -205.43 at 13343.51, Nasdaq -67.25 at 3005.62, S&P -24.15 at 1433.19
Today's session was dominated by the sellers as disappointing third quarter earnings continued to roll in. Equities opened lower, and spent the majority of the session sliding to fresh lows. The sell-off came to an end once the S&P 500 hit the 1,430 level 90 minutes ahead of the close. The index then staged a minor bounce during the final hour before closing with a loss of 1.7%.
The technology sector was the weakest performer, Advanced Micro Devices (AMD 2.18, -0.44) reported a loss of $0.20, which was $0.04 worse than the Capital IQ consensus estimate. In addition, the company's revenue of $1.27 billion was in-line with Capital IQ analyst expectations. Also of note, the second largest manufacturer of microprocessors issued downside guidance for the fourth quarter, and announced restructuring plans in order to improve profitability. AMD shares settled lower by 16.8%.
Marvell Technology (MRVL 7.56, -1.26) slid 14.3% after lowering its third quarter guidance. The company now expects revenue to fall between $765 million and $785 million. This is down from the previous range of $800 million to $850 million, and below the Capital IQ consensus estimate of $815.58 million. The management commented on the lowered expectations by saying that "the continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated." The guidance cut was met with a slew of downgrades as Credit Suisse, Credit Agricole, JP Morgan, Lazard, Jefferies, Deutsche Bank, and FBR Capital all lowered their rating of the semiconductor manufacturer.
On the upside, SanDisk (SNDK 44.02, +1.16) advanced 2.7% after beating on earnings and revenues. The flash memory maker reported earnings of $0.48, which was $0.14 ahead of the Capital IQ consensus estimate. Meanwhile, the company's revenue of $1.27 billion was ahead of the $1.22 billion expected by the Capital IQ consensus. Additionally, Piper Jaffray upgraded the stock to ‘overweight' from ‘neutral' following the earnings release.
Looking at industrials, General Electric (GE 22.03, -0.78) slipped 3.4% after reporting earnings and revenues below Capital IQ consensus. However, the management noted that the company is performing well, and is on track to deliver double-digit earnings growth in 2012.
Caterpillar (CAT 83.86, -2.76) slid 3.2% after reporting a 6.0% increase in retail sales of machines during September. The rate appears to be slowing as sales growth during the previous two months was reported at 13.0% in August and 14.0% in July. Note that Caterpillar will report its third quarter results before Monday's open.
On the upside, freight carrier Forward Air (FWRD 32.54, +1.93) gained 6.3% after beating Capital IQ earnings estimates by $0.01, and reporting in-line revenue at $143.5 million. In addition, the company issued in-line guidance for the fourth quarter as it expects its earnings to fall between $0.48 and $0.52. Following the report, Wolfe Trahan upgraded the stock to ‘outperform' from ‘peer perform.'
Staffing firm ManpowerGroup (MAN 39.53, +3.55) surged 9.9% after beating top and bottom line expectations. In addition, the company raised its fourth quarter guidance above Capital IQ consensus.
Quick service restaurants saw weakness following disappointing earnings from McDonald's (MCD 88.72, -4.14) and Chipotle (CMG 242.97, -42.96).
McDonald's dropped 4.5% after its earnings of $1.43 fell short of the Capital IQ consensus estimate of $1.47. Meanwhile, the company's revenues were reported at $7.15 billion, which was in-line with the Capital IQ consensus.
Meanwhile, Chipotle plunged 15.0% after missing on both earnings and revenues. The management commented on the upcoming quarter by saying they do not expect food inflation to be an issue. Following the earnings report, Wedbush downgraded the stock to ‘neutral' from ‘outperform' with a $270 price target. Peers Buffalo Wild Wings (BWLD 83.92, -2.21), Panera Bread (PNRA 161.85, -7.69), and Starbucks (SBUX 45.68, -1.72) all registered losses between 2.6% and 4.5%.
The Dow Jones Transportation Average shed 1.4%, and outperformed the remaining industrials. Kansas City Southern (KSU 78.43, +1.05) was the lone advancer among the twenty transportation stocks. The rail operator settled higher by 1.4% after reporting earnings of $0.82, which was $0.03 below Capital IQ consensus estimates. Meanwhile, the company's third quarter revenue of $577.4 million was in-line with the Capital IQ consensus. Peers CSX (CSX 21.10, -0.26), Norfolk Southern (NSC 65.64, -1.06), and Union Pacific (UNP 123.77, -1.57) all lost between 1.2% and 1.6%.
Overseas Shipholding Group (OSG 3.25, -0.29) was the weakest transportation component. The oil tanker operator slid 8.2% after trading near its all-time low of $3.13.
Existing home sales for September hit an annualized rate of 4.75 million units, which is stronger than the rate of 4.70 million units that had been generally expected by the Briefing.com consensus. The pace for September is down from the prior month rate of 4.83 million units.
Third Quarter Earnings Season Enters Full Force
The first busy week of the Q3 earnings season has concluded, featuring many bellwethers in the financial, technology and industrial sectors. As expected, earnings are down year over year. Meanwhile, last quarter's trend of most companies beating earnings expectations and missing sales estimates has held up.
Banks once again came in with relatively solid results, due in part to the Fed's accommodations. Financials have reported modest sequential improvements amid meager economic growth.
However, disappointing reports from high profile, large cap names like Intel (INTC 21.26, -0.40), IBM (IBM 193.36, -1.60), Google (GOOG 681.79, -13.21), Microsoft (MSFT 28.64, -0.85), General Electric (GE 22.03, -0.78), and McDonald's (MCD 88.72, -4.14) have since stolen the headlines and added to bearish sentiment.
So far, earnings from the 117 companies in the S&P 500 that have reported third quarter results are down approximately 4.0% year-over-year. Roughly 63.0% have beat earnings expectations while only 38.0% of companies have beat sales estimates. At the same juncture last quarter, about 68.0% of companies had beat earnings expectations while 42.0% beat sales expectations.
Looking to next week, about 700 companies covered by Briefing.com are expected to report Q3 results, including more than 150 companies in the S&P 500. Apple (AAPL 609.84, -22.80) will report on Thursday afternoon.
Weekly Recap: Stocks Rise Ahead of Friday's Sell-off
On Monday, equities got off to a slow start as the major averages spent the first 90 minutes near their respective unchanged levels. The day's economic data was mixed, and did little to move the markets. After early indecision, the three indices rose to their session highs, and maintained those levels into the afternoon. The S&P 500 saw brief afternoon weakness before late-day buying lifted the index to a gain of 0.8%. Financial stocks showed strength after Citigroup (C 37.16, -1.26) beat its earnings expectations by $0.07 and reported revenue of $19.4 billion.
Tuesday's session opened on a higher note after reports indicated Spain may be willing to ask for access to precautionary credit. The reports were followed by comments out of Germany which suggested the country's officials believe additional hurdles remain in Spain's way. Separate reports indicated the old continent's other troubled sovereign, Greece, is far from reaching an agreement with the Troika on its next bailout tranche. The European news did little to curb optimism as buyers lifted the major averages to midday highs, which were maintained into the close. As a result the S&P 500 registered a gain of 1.0%. Citigroup advanced 1.6% after announcing Chief Executive Officer, Vikram Pandit, and President and Chief Operating Officer, John Havens, have resigned. The resignations were effective immediately and the company's board elected Michael Corbat as the new CEO.
Wednesday's session began on a negative note after two technology bellwethers reported disappointing earnings. However, the cautious sentiment was short-circuited when the housing starts report revealed its highest reading since 2008. The major averages reacted by staging a steady climb to their respective session highs. A brief afternoon stumble followed, but the move was promptly retraced as the S&P 500 returned to its prior level, and closed higher by 0.4%. The technology sector was the worst performing group in the S&P 500 and Intel (INTC 21.26, -0.40) slipped 2.5% despite beating its earnings and revenue expectations.
On Thursday, stocks opened modestly lower after the weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 681.79, -13.21) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%. Google fell 8.0% after its earnings were reported at $9.03, which fell $1.63 short of the Capital IQ consensus estimate. Meanwhile, revenues came in at $11.87 billion, which represents a shortfall of about $540 million when compared to the Capital IQ analyst forecast.
The technology sector was the weakest performer, Advanced Micro Devices (AMD 2.18, -0.44) reported a loss of $0.20, which was $0.04 worse than the Capital IQ consensus estimate. In addition, the company's revenue of $1.27 billion was in-line with Capital IQ analyst expectations. Also of note, the second largest manufacturer of microprocessors issued downside guidance for the fourth quarter, and announced restructuring plans in order to improve profitability. AMD shares settled lower by 16.8%.
Marvell Technology (MRVL 7.56, -1.26) slid 14.3% after lowering its third quarter guidance. The company now expects revenue to fall between $765 million and $785 million. This is down from the previous range of $800 million to $850 million, and below the Capital IQ consensus estimate of $815.58 million. The management commented on the lowered expectations by saying that "the continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated." The guidance cut was met with a slew of downgrades as Credit Suisse, Credit Agricole, JP Morgan, Lazard, Jefferies, Deutsche Bank, and FBR Capital all lowered their rating of the semiconductor manufacturer.
On the upside, SanDisk (SNDK 44.02, +1.16) advanced 2.7% after beating on earnings and revenues. The flash memory maker reported earnings of $0.48, which was $0.14 ahead of the Capital IQ consensus estimate. Meanwhile, the company's revenue of $1.27 billion was ahead of the $1.22 billion expected by the Capital IQ consensus. Additionally, Piper Jaffray upgraded the stock to ‘overweight' from ‘neutral' following the earnings release.
Looking at industrials, General Electric (GE 22.03, -0.78) slipped 3.4% after reporting earnings and revenues below Capital IQ consensus. However, the management noted that the company is performing well, and is on track to deliver double-digit earnings growth in 2012.
Caterpillar (CAT 83.86, -2.76) slid 3.2% after reporting a 6.0% increase in retail sales of machines during September. The rate appears to be slowing as sales growth during the previous two months was reported at 13.0% in August and 14.0% in July. Note that Caterpillar will report its third quarter results before Monday's open.
On the upside, freight carrier Forward Air (FWRD 32.54, +1.93) gained 6.3% after beating Capital IQ earnings estimates by $0.01, and reporting in-line revenue at $143.5 million. In addition, the company issued in-line guidance for the fourth quarter as it expects its earnings to fall between $0.48 and $0.52. Following the report, Wolfe Trahan upgraded the stock to ‘outperform' from ‘peer perform.'
Staffing firm ManpowerGroup (MAN 39.53, +3.55) surged 9.9% after beating top and bottom line expectations. In addition, the company raised its fourth quarter guidance above Capital IQ consensus.
Quick service restaurants saw weakness following disappointing earnings from McDonald's (MCD 88.72, -4.14) and Chipotle (CMG 242.97, -42.96).
McDonald's dropped 4.5% after its earnings of $1.43 fell short of the Capital IQ consensus estimate of $1.47. Meanwhile, the company's revenues were reported at $7.15 billion, which was in-line with the Capital IQ consensus.
Meanwhile, Chipotle plunged 15.0% after missing on both earnings and revenues. The management commented on the upcoming quarter by saying they do not expect food inflation to be an issue. Following the earnings report, Wedbush downgraded the stock to ‘neutral' from ‘outperform' with a $270 price target. Peers Buffalo Wild Wings (BWLD 83.92, -2.21), Panera Bread (PNRA 161.85, -7.69), and Starbucks (SBUX 45.68, -1.72) all registered losses between 2.6% and 4.5%.
The Dow Jones Transportation Average shed 1.4%, and outperformed the remaining industrials. Kansas City Southern (KSU 78.43, +1.05) was the lone advancer among the twenty transportation stocks. The rail operator settled higher by 1.4% after reporting earnings of $0.82, which was $0.03 below Capital IQ consensus estimates. Meanwhile, the company's third quarter revenue of $577.4 million was in-line with the Capital IQ consensus. Peers CSX (CSX 21.10, -0.26), Norfolk Southern (NSC 65.64, -1.06), and Union Pacific (UNP 123.77, -1.57) all lost between 1.2% and 1.6%.
Overseas Shipholding Group (OSG 3.25, -0.29) was the weakest transportation component. The oil tanker operator slid 8.2% after trading near its all-time low of $3.13.
Existing home sales for September hit an annualized rate of 4.75 million units, which is stronger than the rate of 4.70 million units that had been generally expected by the Briefing.com consensus. The pace for September is down from the prior month rate of 4.83 million units.
Third Quarter Earnings Season Enters Full Force
The first busy week of the Q3 earnings season has concluded, featuring many bellwethers in the financial, technology and industrial sectors. As expected, earnings are down year over year. Meanwhile, last quarter's trend of most companies beating earnings expectations and missing sales estimates has held up.
Banks once again came in with relatively solid results, due in part to the Fed's accommodations. Financials have reported modest sequential improvements amid meager economic growth.
However, disappointing reports from high profile, large cap names like Intel (INTC 21.26, -0.40), IBM (IBM 193.36, -1.60), Google (GOOG 681.79, -13.21), Microsoft (MSFT 28.64, -0.85), General Electric (GE 22.03, -0.78), and McDonald's (MCD 88.72, -4.14) have since stolen the headlines and added to bearish sentiment.
So far, earnings from the 117 companies in the S&P 500 that have reported third quarter results are down approximately 4.0% year-over-year. Roughly 63.0% have beat earnings expectations while only 38.0% of companies have beat sales estimates. At the same juncture last quarter, about 68.0% of companies had beat earnings expectations while 42.0% beat sales expectations.
Looking to next week, about 700 companies covered by Briefing.com are expected to report Q3 results, including more than 150 companies in the S&P 500. Apple (AAPL 609.84, -22.80) will report on Thursday afternoon.
Weekly Recap: Stocks Rise Ahead of Friday's Sell-off
On Monday, equities got off to a slow start as the major averages spent the first 90 minutes near their respective unchanged levels. The day's economic data was mixed, and did little to move the markets. After early indecision, the three indices rose to their session highs, and maintained those levels into the afternoon. The S&P 500 saw brief afternoon weakness before late-day buying lifted the index to a gain of 0.8%. Financial stocks showed strength after Citigroup (C 37.16, -1.26) beat its earnings expectations by $0.07 and reported revenue of $19.4 billion.
Tuesday's session opened on a higher note after reports indicated Spain may be willing to ask for access to precautionary credit. The reports were followed by comments out of Germany which suggested the country's officials believe additional hurdles remain in Spain's way. Separate reports indicated the old continent's other troubled sovereign, Greece, is far from reaching an agreement with the Troika on its next bailout tranche. The European news did little to curb optimism as buyers lifted the major averages to midday highs, which were maintained into the close. As a result the S&P 500 registered a gain of 1.0%. Citigroup advanced 1.6% after announcing Chief Executive Officer, Vikram Pandit, and President and Chief Operating Officer, John Havens, have resigned. The resignations were effective immediately and the company's board elected Michael Corbat as the new CEO.
Wednesday's session began on a negative note after two technology bellwethers reported disappointing earnings. However, the cautious sentiment was short-circuited when the housing starts report revealed its highest reading since 2008. The major averages reacted by staging a steady climb to their respective session highs. A brief afternoon stumble followed, but the move was promptly retraced as the S&P 500 returned to its prior level, and closed higher by 0.4%. The technology sector was the worst performing group in the S&P 500 and Intel (INTC 21.26, -0.40) slipped 2.5% despite beating its earnings and revenue expectations.
On Thursday, stocks opened modestly lower after the weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 681.79, -13.21) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%. Google fell 8.0% after its earnings were reported at $9.03, which fell $1.63 short of the Capital IQ consensus estimate. Meanwhile, revenues came in at $11.87 billion, which represents a shortfall of about $540 million when compared to the Capital IQ analyst forecast.
Next Week In View
Quite a heavy data week coming from both Europe and the US. FOMC statement and other countries' central bank data is coming on wednesday... and it's gonna be a big market mover...
I reckon the week to be flat leading to wednesday and after that... It's depending on Ben Bernanke..
Market Call(Week 41): FLAT to upside
Market Call(22 Oct 2012): FLAT to upside
