US stocks drop, reversing the morning’s sharp gains, as itchy investors sell, the dollar rebounds and crude falls. DJIA loses 104 (1%) to 9868, its first back-to-back 100-point loss sessions since June; S&P 500 falls 13 (1.2%) to 1067, Nasdaq Comp drops 13 (0.6%) to 2142. Dollar rises, and crude falls below $79/barrel.
Financials, materials lead decliners.Verizon posts steep drop in earnings, as does RadioShack, although shares of the latter rise sharply.
You’re going to start hearing more people wondering if a top is in; of course, they (us included) have been wondering that since June.
It was a weird day. Stocks started off strong. But late in the morning they just nose-dived. John said it looked like a plan that took that couldn’t maintain altitude. There were conflicting reasons for the drop as well. Some argued it was the Journal’s story about Bank of America, and how much capital they’ll need to have before the government lets them pay back their TARP loan. Some thought it was stories about whether or not the home-buyer tax credit would get extended.
But it’s certainly no coincidence that the dollar rebounded, and stock and crude both fell. The dollar index jumped 0.8%, and it started rising late in the morning before making its big move.
No, nothing is quite so easy, but it sure seems that way these days.
Verizon’s getting squeezed from above and below, Marvell Tech’s outlook bolsters the idea that tech is recovering faster, and ING is looking to break off some pieces of the empire to help pay off its government loans.
How are we ever going to shove this into a Kindle?
Daily newspaper circulation continues its precipitous fall, giving the publishing industry yet another black eye.
Weekday circulation for 379 US dailies dropped 10.6% to 39.1M during the six months ended in September, according to the Audit Bureau of Circulation, a publishing industry group. The overall circulation figure hasn’t been this low since before World War II.
Nearly two-third of the country’s 25 largest publications posted circulation declines of 10% or more, highlighting the deepening trouble for the industry. The San Francisco Chronicle, Newark Star-Ledger and Dallas Morning News each lost more than 20% of their circulations, according to Editor & Publisher.
“The first double-digit circulation decline in history means only 12.9% of the US population buys a daily newspaper,” Reflections of a Newsosaur blogger Alan Mutter says. By comparison, 31% of the population bought newspapers in 1940.
Sunday circulation, which dropped by 7.5%, is now at its lowest point since 1945, “when the population was less than half the size it is today,” Mutter says.
My old Kentucky home (is worth an extra eight grand right now.)
Rumors circulating that Congress probably won’t extend the $8,000 tax credit for first-time home buyers, which is one of the things weighing on the market today (but, let’s face it, is ultimately the right thing to do.)
“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note. “The phase out is worse than a straight extension and probably worse for housing than the consensus.”
As we detailed earlier, recent housing starts and existing home sales data have been better-than-expected largely on the basis of the generous tax credit. Growth can arguably be attributed to the credit, meaning the recent trends become irrelevant if the credit doesn’t get extended.
Some market observers have even suggested a “cash-for-clunker like hangover” could hit the housing market if and when the credit gets phased out. As is evident in the auto industry, cash-for-clunkers didn’t exactly boost demand. It just pushed up demand so people who were already going to buy a car late this year or in 2010 decided to buy one earlier than expected.
Be sure to catch our column in today’s WSJ, “Earnings Reports Offer Stocks Lift.”
One of the things we noted is that earnings are running well ahead of “Street views,” and that generally, that kind of thing garners attention and headlines. To emphasize that point, I’ve seen at least three commentaries today that cited the stat (roughly 80% of companies so far have beaten estimates.)
But in most quarters, about two-thirds of the companies beat estimates anyhow, so this slight bump sounds better than it is. And, when you consider that analyst estimates have been coming down since last October (more on this later in the week,) then it’s a far less impressive statistic.
And, earnings are down about 11% from last year’s third quarter, itself no halcyon period, and sales are down almost 7%. And any upside’s essentially coming from cost-cutting; there’s little in the way of revenue growth or expansion. Cost-cutting essentially means laying off staff and shutting down factories; salaries being one of if not the biggest expense most companies have.
And that gets back to the heart of what we’ve been on about for some time: all of this debilitates the cycle of consumer-led sales that drive profit growth that leads to expansion that creates news jobs that drives up wages that drives demand that spurs even more profit growth.
Right now, that cycle’s going in reverse, regardless of how much federal largesse has been slathered onto it.
When we first started this blog, we had a small problem. We didn’t have any photographs. Dow Jones Newswires is, as the name implies, a wire service (that’s been around since the 1880s) and we never had any use for photographs. So we didn’t have contracts with the big photography houses, Getty, Corbis, the AP.
Sure, we could’ve just taken our images off the Internet, like so many others do, but seeing as we work for a for-profit company that cares about things like copyright law, the idea of stealing somebody else’s copyrighted was out.
Now, plenty of blogs don’t have any artwork, and it seemed like we wouldn’t either. And then I remembered the public domain.
There exists millions of images in the public domain, photographs that either reside in public collections or for which the copyright expired. And the best collection, the richest, turns out to be owned by, well, us: the Library of Congress has an online database of about 1.2 million images, with photographs going back to the very birth of photography. And they have specialized sites that comprise specific topics, like the Great Depression.
That last, given everything going on today, struck a nerve with us. We started going to that collection constantly, and it just seemed like every time we wanted an image to illustrate whatever subject we were writing about, we could find one there.
Another busy week on tap for 3Q earnings reports, and a fair amount of economic data due as well.
Regional manufacturing reports, readings on home prices and new home sales, durable goods data, first look at 3Q GDP and gauges on consumer sentiment all out this week.
By the way, while US investors fixate on profit reports and scour for hints of stabilization in the economy, they seem to be disregarding geopolitical risks altogether. Bombings in Baghdad yesterday and political events in Afghanistan should serve as reminders that there’s still a lot of trouble percolating out there that shouldn’t be ignored.
US dollar index shaded lower. S&P futures up about a point; DJ futures up 9. Ten-year lower, yield at 3.50%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
