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Wall Street Edges Down as Investors Take Breather From Rally

August 5, 2013 by

The SP 500 has risen for five of the past six weeks, gaining more than 7 percent over that period. The index closed at an all-time high on Friday despite a disappointing read on the labor market, which showed that hiring slowed in July.

Given that advance, further gains may be difficult to come by at these levels, especially with the corporate earnings season largely over.

In the latest read on the services sector, the Institute for Supply Management’s July non-manufacturing index came in at 56, above expectations of 53 and over the previous month’s read of 52.2. Stocks were little impacted by the data.

“Growth continues to be anemic, even as we’re at record levels in the market, suggesting we’re overbought on some levels,” said Mark Martiak, senior wealth strategist at Premier/First Allied Securities in New York.

While the recent payroll report was weaker than expected, some investors were encouraged that it meant the U.S. Federal Reserve was more likely to hold steady with its monetary stimulus, which has contributed to the SP’s gain of almost 20 percent this year.

Tyson Foods rose 3.5 percent to $29.50 before the bell after giving a full-year revenue outlook that was above expectations.

The Dow Jones industrial average was down 54.26 points, or 0.35 percent, at 15,604.10. The Standard Poor’s 500 Index was down 3.43 points, or 0.20 percent, at 1,706.24. The Nasdaq Composite Index was down 1.90 points, or 0.05 percent, at 3,687.69.

The SP 500 is about 1 percent above its 50-day moving average of 1,690.57, which could serve as a support level against further losses.

In the Nasdaq, losses were limited by Priceline.com Inc, which rose 1.6 percent to $922.73 after JPMorgan raised its price target on the stock from $830 to $1,040.

Qualcomm Inc fell 1.5 percent after Piper Jaffray downgraded the stock to “neutral” from “overweight.”

U.S. shares of HSBC Holdings Plc fell 5.3 percent to $54.90 after the company reported a drop in revenue, hurt by slower emerging markets.

Of the 391 companies in the SP 500 that have reported earnings for the second quarter, 67.8 percent have topped analyst expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 percent have reported revenue above estimates, more than in the past four quarters but below the historical average.

In other company news, U.S.-listed shares of Compugen Ltd jumped 49 percent to $8.15 after the company announced it would enter a cancer research partnership with Bayer AG.

The New York Times Co agreed to sell The Boston Globe for $70 million in cash, less than a tenth of what the media company paid when it bought the newspaper for $1.1 billion in 1993. Shares dipped 0.4 percent to $11.88.

Analysts said that millions of Time Warner Cable subscribers in New York, Los Angeles and Dallas could be without CBS Corp programming for several weeks as the companies appear no closer to settling a fee dispute.

Shares of Time Warner Cable rose 0.6 percent to $117.78 while CBS was flat at $54.55.

(Editing by W Simon and Nick Zieminski)

Article source: http://www.nytimes.com/reuters/2013/08/05/business/05reuters-markets-stocks.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Stocks Move Ahead

January 22, 2013 by Leave a Comment

Stocks turned from negative to positive on Wall Street over the course of Tuesday at the start of a busy week for corporate earnings after major indexes notched five-year highs.

In afternoon trading, the Standard Poor’s 500-stock index was 0.3 percent higher, the Dow Jones industrial average added 0.3 percent, and the Nasdaq composite index rose 0.1 percent. Both the Dow and S.P. 500 closed last week at their highest levels so far in this earnings season, with the gains largely coming on better-than-expected results.

But despite bullish statements from major companies, including big banks, many investors were worried other reports would reflect economic uncertainty in the fourth quarter.

“The market has been pleased with earnings thus far, and it is encouraging to see a cyclical company like DuPont show revenue strength,” said Adam Sarhan, chief executive of Sarhan Capital in New York, “but I’m waiting on more tech and energy earnings until I come down one way or the other on this season.”

DuPont reported revenue that was ahead of Wall Street expectations, sending shares up 0.9 percent. However, slumping demand for pigment and solar panel parts hurt fourth-quarter profit.

Travelers Companies gained 3 percent after forecasting higher premiums across its businesses, though it also posted earnings that fell by half from insurance losses related to Hurricane Sandy.

Johnson Johnson, the diversified health company, fell 0.8 percent after forecasting 2013 earnings below expectations, while Verizon Communications gained 0.6 percent after reporting a steep loss on pension liabilities and charges related to Hurricane Sandy.

All four companies are Dow components.

Over all, fourth-quarter earnings among the S.P. 500 companies are forecast to have risen 2.5 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast from a week ago but well below the 9.9 percent fourth-quarter earnings forecast from Oct. 1, the data showed.

Monday was a market holiday for Martin Luther King Jr.’s Birthday in the United States. President Obama, at his inauguration for a second term on Monday, called for aggressive action on climate change, economic equality and the federal budget.

Markets have recently been pressured by uncertainty stemming from Washington about the federal debt limit and spending cuts that could hamper American economic growth. Republican leaders in the House of Representatives said they aim to pass on Wednesday a nearly four-month extension of the country’s debt limit, allowing the government to borrow enough to meet its obligations during that period.

In New York trading, Research in Motion jumped 10.6 percent a day after its chief executive said the company may consider strategic alliances with other companies after introducing devices powered by RIM’s new BlackBerry 10 operating system.

Article source: http://www.nytimes.com/2013/01/23/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

DealBook: Weak Quarter Weighs on JPMorgan’s 2011 Profit

January 13, 2012 by Leave a Comment

JPMorgan Chase's credit card business and commercial lending operation showed signs of improving.Justin Sullivan/Getty ImagesJPMorgan Chase’s credit card business and commercial lending operation showed signs of improving.

JPMorgan Chase kicked off bank earnings season on Friday with news that its quarterly profit dropped 23 percent last year, results that weighed on the full-year profit.

The bank turned a $19 billion profit in 2011, up 9 percent from $17.4 billion a year earlier, as its credit card business and commercial lending operation showed signs of improving. The results amounted to $4.48 a share, up from $3.96 a share last year.

But the profit engine stalled in the fourth quarter, when JPMorgan earned $3.7 billion, or 90 cents a share, down 23 percent from the same quarter a year earlier. The results matched analysts’ estimates for the period.

The fourth-quarter slump was owed in part to declining revenue and a slowdown in JPMorgan’s sprawling investment bank, which suffered from the sluggish economic recovery in the United States and concerns that the European debt crisis would sweep across the Continent.

The investment bank booked a $567 million accounting loss in the fourth quarter tied to the perceived riskiness of its own debt, reversing a one-time gain from the previous quarter that propped up earnings across Wall Street. In all, the unit’s profit sank 52 percent to $726 million in the fourth quarter.

Shares of JPMorgan were down more than 3 percent, to about $35.55, in morning trading.

Despite the turmoil in the fourth quarter, Jamie Dimon, JPMorgan’s chairman and chief executive, highlighted the firm’s gradual progress since the financial crisis. He also sounded a note of cautious optimism about the broader economic recovery.

“We have a mild recovery that might actually be strengthening,” Mr. Dimon said in a conference call with reporters, adding that the comeback appears to be “broad.”

The bank’s earnings report comes a day after Mr. Dimon announced the second major shuffling of his management team in a year. Among the changes, Jay Mandelbaum, head of strategy and business development, will leave the bank. And Barry Zubrow, JPMorgan’s risk management chief who guided the bank through the financial crisis, will now head corporate regulatory affairs.

With the steady growth in profit last year, JPMorgan has emerged from the crisis as one of Wall Street’s most dominant firms. In 2011, JPMorgan stripped Bank of America of its title as the nation’s biggest bank by assets. Bank of America is still struggling to shed the legacy of the subprime mortgage mess.

“JPMorgan is in the best position for no other reason than they don’t have the troubles that Bank of America has,” said Jim Sinegal, an analyst with the research firm Morningstar.

While JPMorgan had some recent bright spots in its core businesses, the gains were padded by the bank’s decision to set aside $730 million in fewer reserves for loan losses. Additions to the reserve are an expense.

Much of the change came from reserves held for the bank’s credit card portfolio, which has steadily improved. The move also benefited Chase Retail Financial Services, the bank’s consumer banking arm that offers everything from mortgages to checking accounts. The unit earned $533 million in the fourth quarter, up from $459 million a year earlier.

Commercial lending was a particular strong point for the bank. The unit’s profit rose to a record $643 million, a 21 percent increase from the prior year, as lending to corporations grew for the sixth consecutive quarter.

“I believe that you are seeing real loan growth,” Mr. Dimon said on the conference call. “And I think that will continue.”

But his bank’s earnings improvement last year was overshadowed by the fourth-quarter woes and a drop in revenue. Revenue fell to $99.8 billion, down from $104.8 billion last year, as new federal rules reined in fees tied to overdrafts and debit cards. The $567 million accounting loss also weighed down revenue.

The revenue struggles are not unique to JPMorgan, a diversified bank seen as a gauge for the performance of Wall Street. When the nation’s other big banks — Goldman Sachs, Morgan Stanley, Citigroup and Bank of America — report earnings next week, most are expected to detail similar slowdowns in revenue.

“It’s hard to think of a bright spot on the revenue side,” Mr. Sinegal said. “That issue is going to linger.”

Article source: http://feeds.nytimes.com/click.phdo?i=d710d9b241fa91b827c3b950d0151213

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Markets Unsteady After Jobs Data

June 6, 2011 by Leave a Comment

The Dow Jones industrial average shed 37.65 points, or 0.3 percent, to 12,113.61. The S. P. 500 dropped 6.11 points, or 0.5 percent, to 1,294.05. And the Nasdaq composite index lost 2.79 points, or 0.1 percent, to 2,729.99.

World markets were weak on Monday, with a leading European index down for a fourth straight session and the Nikkei average off 1.2 percent to an 11-week low. Tokyo Electric Power Company hit new lows and fanned bearish sentiment in the wake of soft data out of the United States on Friday.

The broad-based S. P. index has fallen 4.5 percent since a recent high at the start of May and is trading at six-week lows after falling through key technical support levels. Investors are eyeing the index’s low for April.

”The next two support levels, the important ones, are April 18 1,294.70, and then thereafter the March 16 1,249.05,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. ”Whether the support levels hold or not, there is still no demand for stocks.”

A much weaker-than-expected jobs report on Friday was the latest disappointing economic news to hit sentiment. The S. P. 500 fell 2.3 percent for the week, its worst since August. The index ended Friday with its fifth straight week of losses.

Mr. Kaufman said the recent falls had made stock valuations their most attractive since November, which could be a catalyst to drive the market higher ahead of second-quarter earnings season in July.

In one potential bright spot for investors, Steven P. Jobs, the chief executive of Apple who has been on medical leave, was scheduled to take to the stage in San Francisco on Monday and could take the wraps off an Internet-based music streaming service. The shares rose 0.9 percent to $346.66 in early trading.

Brent crude fell 1 percent to $114.77 a barrel on concern about demand ahead of a crucial meeting of the Organization of the Petroleum Exporting Countries later this week. Signs that high prices are eroding demand in the West are worrying a group of OPEC’s core members.

Article source: http://feeds.nytimes.com/click.phdo?i=34fe93aa0178c816eabbee609557f09d

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Banks Gaining a Foothold in the Still-Fragile Economy

April 13, 2011 by Leave a Comment

Loan losses are easing and all the large banks have returned to profitability. Lending is slowly picking up. Even dividend increases have resumed at some institutions. Over all, the industry’s first-quarter earnings are expected to rise about 2.4 percent from a year ago, when banks begin announcing results this week, according to analyst estimates compiled by Thomson Reuters.

That is the good news. But for all the signs that the financial sector is back, formidable challenges remain.

Investors will get their best glimpse yet of the new financial landscape — known as the New Normal in banker-speak — when JPMorgan Chase begins the earnings season on Wednesday. Much of the attention is likely to focus on the ability of banks to increase revenue amid many tough new regulations, volatile markets and a still-fragile economy where housing prices have yet to rebound.

These trends, analysts say, could further divide the industry between the weak and the strong, as banks with more diversified businesses and lower operating costs gradually pull ahead of the pack.

“There are going to be the haves and have-nots,” said Paul Miller, a banking analyst at FBR Capital Markets. “Revenue pressures will be across the board so the winners will be those who run their banks more efficiently.”

JPMorgan Chase and Well Fargo, for example, are both expected to report strong per share profits for the first quarter. Analysts are predicting that those two institutions will have to set aside less money to cover future losses, and perhaps even reverse earlier provisions for losses, increasing their earnings.

Citigroup and Bank of America, which have been much slower to recover from the financial crisis, are expected to report a decrease in earnings per share from a year ago. Wall Street firms, like Goldman Sachs and Morgan Stanley, could also see a falloff in profit amid weaker trading and investment banking results.

All the while, revenue is expected to drop considerably. Goldman Sachs, Morgan Stanley and Citigroup are expected to have revenues fall sharply from the first quarter of 2010, when unusually strong trading helped prop up their earnings. JPMorgan and Wells Fargo could also experience a falloff in revenue as new rules limit their ability to generate income from overdraft fees and other banking fees.

The New Normal will be taxing for even the best-managed lenders. But the biggest questions surround the mortgage business and the weak housing sector, which continues to impede the industry’s recovery.

Banks are still reckoning with the fallout from the foreclosure debacle, when sloppy documentation practices and inadequate staffing to cope with the deluge of troubled home loans created an enormous mess.

Federal regulators are expected to order the banks to make sweeping changes to their mortgage collection and foreclosure practices, which will sharply drive up expenses. Meanwhile, banks continue to shift billions of dollars into reserves to cover possible penalties by the state attorneys general as well as the cost of resolving several immense private investor lawsuits.

Business issues loom, too. Mortgage originations were down about 30 percent in the first quarter after the refinancing boom during the third and fourth quarters of 2010, when interest rates were near record lows.

With rates widely expected to climb higher, even normally bullish home builders are bracing for a dismal spring. And there is no sign that housing prices have bottomed out.

In fact, as the backlog of foreclosed properties piles up, some analysts expect that the banks will be forced to book billions of dollars in additional losses in the coming months if prices continue to dip.

“It’s setting up to be a pretty weak spring housing market,” said Frederick Cannon, a veteran banking analyst at Keefe, Bruyette Woods in New York. “We could get a scare in the second quarter in terms of the value of foreclosed properties on the banks’ balance sheets.”

New regulations, especially those governing derivatives and debit card fees, are also expected to take a big bite out of revenue in the first quarter. What is more, many banks have increased spending on new computer systems and added more compliance workers as they have moved to adapt their businesses to the new rules.

Meanwhile, the Wall Street operations that have fueled the revenues of the biggest banks over the last few years are starting to flatten out. On average, investment banking fees could drop 10 to 15 percent from the previous quarter, although some banks may record outsize gains from big deals. JPMorgan, for example, helped advise and arrange financing for ATT’s planned $39 billion acquisition of T-Mobile, among several other large transactions.

Trading revenue remains a wild card. A year ago, the four biggest Wall Street banks had an unusually strong first quarter, when there was not a single day during the period in which they posted a trading loss.

During the first three months of 2011, the only consistent thing was a lack of consistency, with fears over the nuclear disaster in Japan, uprisings in the Middle East and lingering concerns about sovereign debt in Europe and even in the United States all weighing on the markets.

Article source: http://feeds.nytimes.com/click.phdo?i=a1db1a55b417e7b764ae497f29f32a2b

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