Friends
Earnings are definitely moving stocks this week, but in sometimes confusing directions. For example, YUM Brands (Taco Bell, KFC and Pizza Hut) was struggling mightily into its earnings report yesterday afternoon, but rallied hard today after posting a “not as bad as expected” report. On the other hand the shares of AT&T and Proctor &Gamble were soaring into earnings, but hit a wall today and caused most of the damage in the Dow Jones Industrial Average. Again, we always are interested in whether a company’s shares are priced correctly when their earnings are released.
Another interesting feature of today’s action was the rotation (at least for one day) away from staples and healthcare and into industrials and more economically sensitive shares. Now whether this will last more than a day remains to be seen, but could it be a sign of things to come when/if the economy actually recovers and interest rates begin to tick upward?
Anyway, for the day, the Dow Jones Industrial Average was down 43 points to close at 14,676. The S&P 500 was virtually flat to finish the day at 1578. Gold was up $20 to trade at $1429 per ounce, while oil was up $2.35to trade at $91.53 per barrel WTI. We still have the S&P eyeing the upper end of our trading range.
Oh, and by the way, Apple’s earnings were actually better than expected, but analysts are mortified that they don’t have a new product coming out until the fall at the earliest. Yes, they raised their dividend and will be buying back shares (at least using some of that cash hoard), but the stock needs a new product cycle before analyst would jump back on board. Remember though, these are the same guys who said the stock was going to $1000 per share (when it was trading at $700). Now they hate it at $400. Take it for what it’s worth.
Have a nice evening everyone.
