July 6, 2022

Weak Reports Have a Silver Lining, and Shares Rise

For now, bad news is good for the stock market.

Investors judged that the latest weak economic reports would make it more likely that the Federal Reserve would continue to stimulate the economy and support a rally on Wall Street.

On Monday, the Institute for Supply Management said that a measure of United States manufacturing fell in May to its lowest level since June 2009 as overseas economies slumped and weak business spending reduced new factory orders.

The index of manufacturing activity fell to 49 last month, from 50.7 in April. That is the lowest level in nearly four years and the first time the index has dipped below 50 since November. A reading under 50 indicates contraction.

That helped convince investors that the Fed would not slow its $85 billion bond-buying program. Speculation that the central bank was ready to ease that stimulus program, a major impetus for this year’s rally in stocks, has caused trading to become volatile in the last two weeks.

The Standard Poor’s 500-stock index fell in the morning after the manufacturing report was published at 10 a.m. It moved between gains and losses for much of the day, then climbed decisively in the last hour of trading.

The good-news-is-bad-news interpretation of economic reports may support stocks in the short term, but the economy has to keep improving for stocks to reach new highs, said Alec Young, a global equity strategist at SP Capital IQ.

“This was a big miss on the I.S.M. report,” Mr. Young said. “Regardless of what it means for the Fed, ultimately you’re buying a stream of earnings and you want to see the economy doing well.”

Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, helped allay investors’ concerns that the central bank was poised to stop the stimulus. He told Bloomberg Television on Monday that Fed officials remained committed to the stimulus program.

Manufacturing has struggled this year as nations with weak economies have slowed imports from the United States. Europe remains in a recession and is buying fewer American goods. In the first three months of the year, American exports to Europe fell 8 percent compared with the same period a year ago.

Businesses have also reduced the pace of investment in areas like equipment and computer software. A gauge of new orders fell to 48.8, its lowest level in nearly a year. Production and employment also declined.

A separate report on Monday said a measure of Chinese manufacturing dropped last month to 49.2, from 50.4 in April. As with the institute’s index, a reading below 50 indicates contraction. The figure added to signs that a resurgence of China’s economy, the world’s second largest after the United States, might be losing momentum.

The S. P. 500-stock index climbed 9.68 points. to 1,640.42, up 0.59 percent. The Dow Jones industrial average rose 138.46 points, to 15,254.03, a gain of 0.92 percent. The Dow got a lift from Merck, which rose nearly 4 percent.

The Nasdaq composite index, which is heavily weighted with technology stocks, rose 9.45 points, to 3,465.37, an increase of 0.27 percent.

The yield on the 10-year Treasury note barely changed from late Friday, closing at 2.13 percent, with the benchmark up 1/32, to 96 20/32. The yield climbed as high as 2.17 percent in early trading, then fell as low as 2.09 percent after the manufacturing report was released.

Despite the advance Monday, signs are emerging that this year’s rally may be starting to falter. The S. P. 500 index closed higher for a seventh straight month in May, but the index also logged its first back-to-back weekly declines since November. On Friday, the Dow plunged 208 points, its worst drop in six weeks. The Dow is still up 16.4 percent this year, and the S. P. 500 is 15 percent higher.

Article source: http://www.nytimes.com/2013/06/04/business/daily-stock-market-activity.html?partner=rss&emc=rss

Slim Gains in Markets Ahead of Earnings Reports

Stocks gained for a second straight week as companies began releasing earnings reports, keeping the Standard Poor’s 500-stock index within a fraction of its highest level in five years.

The S. P. 500 was little changed Friday, gaining 5 points during the week to close at 1,472.05. On Thursday, the index was at 1,472.12, its highest level since December 2007.

The Dow Jones industrial average rose 17.21 points, to 13,488.43. The Nasdaq composite index rose 3.87 to 3,125.63. For the week, the Dow rose 53 points and the Nasdaq rose 24 points.

Companies have started to report earnings for the fourth quarter of 2012, but no clear pattern has emerged as yet. The aluminum company Alcoa gave stocks a lift after it reported earnings late Tuesday that matched analysts’ expectations and said that demand was increasing. Investors were unimpressed by Wells Fargo’s record profits Friday, choosing instead to focus on the sustainability of those earnings.

“You’ve been hearing comments that earnings season is going to show a continued contraction in the rate of growth,” said Robert Pavlik of Banyan Partners. “People are conflicted, they are worried, but at the same time they don’t want to be missing out on the action” in the market.

Analysts expected fourth-quarter earnings for S. P. 500 companies to grow by 3.3 percent, according to the latest data from SP Capital IQ. That was a better growth rate than the previous quarter, but it was considerably weaker than the 8.4 percent rate in the same period last year.

Stock in Wells Fargo, the first major bank to report earnings, dropped after it reported a 25 percent increase in fourth-quarter earnings. Its shares fell 30 cents, or 0.9 percent, to $35.10. JPMorgan Chase, Goldman Sachs, U.S. Bancorp, Citigroup and Bank of America were among the financial companies set to report earnings next week.

Financial stocks were the best-performing group in the S. P. 500 last year, gaining 26 percent. Other companies reporting next week include eBay and Intel.

The Treasury’s benchmark 10-year note rose 9/32, to 97 27/32, and the yield fell to 1.87 percent from 1.90 percent late Thursday.

Article source: http://www.nytimes.com/2013/01/12/business/stocks-slip-after-5-year-high.html?partner=rss&emc=rss

Shares Rise as Companies Report Earnings

Stocks rose on Wall Street on Wednesday after corporate earnings reports got off to a good start.

The Dow Jones industrial average climbed 61.66 points to 13,390.51. The Standard Poor’s 500-stock index gained 3.87 points to 1,461.02, and the Nasdaq composite rose 14 to 3,105.81.

Stocks are facing their first big challenge of the year as companies start to report earnings for the fourth quarter of 2012. Throughout last year, analysts cut their outlook for earnings growth in the period and now expect them to rise by 3.21 percent, according to data from SP Capital IQ.

“Maybe earnings expectations were a little too low,” Ryan Detrick, a strategist at Schaeffer’s Investment Research, said. “You don’t need to have great earnings, you just need to beat those expectations” for stocks to rally, he said.

Early indications were decent. The aluminum maker Alcoa reported late Tuesday that it swung to a profit for the fourth quarter, with earnings that met Wall Street’s expectations. The company brought in more revenue than analysts had expected, and the company predicted rising demand for aluminum this year as the aerospace industry gains strength. Alcoa is usually the first Dow component to report earnings every quarter.

Despite the better revenue number, Alcoa’s stock performance Wednesday was lackluster. It traded higher for part of the day, then ended down 2 cents at $9.08 a share.

Other companies fared better after reporting earnings. Helen of Troy, which sells personal care products under brands like Dr. Scholl’s and Vidal Sassoon, rose 2.7 percent, up 90 cents to $34.43 after reporting a 15 percent increase in quarterly net income.

Boeing was the biggest gainer of the 30 stocks in the Dow. It jumped 3.5 percent, up $2.63 to $76.76, after two days of sharp declines set off by new problems for its 787 Dreamliner. Boeing said it had “extreme confidence” in the plane even as federal investigators tried to determine the cause of a fire on Monday aboard an empty Japan Airlines plane in Boston and a fuel leak in another Japan Airlines 787 on Tuesday.

The wireless network operator Clearwire rose 7.2 percent, or 21 cents, to $3.13, after Dish network made an unsolicited offer to buy the company, which has already agreed to sell itself to Sprint. Dish rose 88 cents to $36.85, and Sprint fell 9 cents to $5.88.

The online education company Apollo Group fell 7.8 percent after reporting a sharp decline in fall term student sign-ups at the University of Phoenix, which it operates. The stock fell $1.62, to $19.32 a share.

Interest rates were steady. The Treasury’s benchmark 10-year note rose 1/32, to 97 29/32, and the yield was unchanged at 1.86 percent.

Article source: http://www.nytimes.com/2013/01/10/business/daily-stock-market-activity.html?partner=rss&emc=rss

DealBook: Expedia Plans to Split Into Two

Expedia, the online travel company, said on Thursday that it would split into two companies, with its TripAdvisor business becoming a separate business.

The company said it either spin off TripAdvisor to shareholders or would reclassify Expedia’s stock. A spin-off, if approved, is expected to be completed in the third quarter.

Shares of Expedia surged in after-hours trading. But the credit-ratings agency Standard Poor’s warned that it might cut Expedia’s ratings as a result. “The transaction could raise Expedia’s adjusted debt leverage to mid-2x, assuming all existing debt remains in place at Expedia,” Andy Liu, a credit analyst with S.P., said in a statement. Expedia has more than $1.6 billion in debt, according to Capital IQ.

Expedia was spun off from IAC/InterActiveCorp, the Internet conglomerate, in 2005. Barry Diller, the chairman of IAC, is also chairman of Expedia.

In December, Mr. Diller and John C. Malone of Liberty Media reached an agreement to separate their mutual interests, with Liberty giving up its voting stake in IAC for cash and two business units. But Mr. Diller and Mr. Malone remained intertwined at Expedia, in which Liberty holds a 17.6 percent stake.

The company’s statement announcing the split said that “it is expected that Expedia’s dual-class equity capital structure and the governance arrangements between Barry Diller and Liberty Media will be mirrored at TripAdvisor following the transaction.”

The announcement comes a week after Expedia resolved a dispute with American Airlines that had kept the airline’s fares and schedules off Expedia’s Web sites.

Expedia also owns Hotels.com and Hotwire. It has a market value of $6.2 billion. TripAdvisor Media Network accounts for about 11 percent of the company’s annual revenue, according to Thomson Reuters.

Corporate splits have been nearly as active as acquisitions in recent months. Expedia’s plan follows announcements by ITT, Fortune Brands, Marathon Oil and Sara Lee to divide their businesses.

Article source: http://feeds.nytimes.com/click.phdo?i=5f536d0054e47c57e5e616257d145ce1