More new shorts were added in Nasdaq stocks in the end of March, but they declined on NYSE names.» Read More
Senators Obama and Clinton are all about the economy today. The battle between the two Democratic candidates has heated up in the last weeks with issues on race and Obama's former pastor and Clinton's incorrect recollection of Bosnia sniper fire, but today the candidates focus on our sweet spot, the economy.
Obama has criticized Republican candidate John McCain on his views on the economy as hands off, and that "He said the best way for us to address the fact that millions of Americans are losing their homes is to just sit back and watch it happen."
-Obama's remarks are in reference to McCain's speech on Tuesday where he stated that government assistance to homeowners should be temporary and that the government should not bail out banks or borrowers who act irresponsibly.
Obama today called for a new $30B stimulus package to deal with the mortgage crisis, and Clinton has proposed a $30B relief package to ease the housing and credit crises. Obama speaks to Maria Bartiromo today on CNBC, and gave an economic speech at Cooper Union in New York City.
Does market performance or overall economic perception influence Presidential elections? In the 27 Presidential elections since the inception of the Dow (1896), Republicans have been elected 15 times, Democrats 12 times. We isolated the performance prior to and after Republican and Democratic administrations, and did not find a significant difference 1-year prior to the election, or the year after the election/first term. However, when economic and social issues dominated as with the Depression, Prohibition and war, in the below case World War I or Vietnam, the Oval office did switch parties.
-87% of the times Republicans were elected, the Dow was up in the 12 months prior to the election, 75% of the times up over 5%
-75% of the times Democrats were elected, the Dow was up in the 12 months prior to the election, 67% of the times up over 5%
-The oval office switched parties 10 times, only three times with a negative Dow in the preceding 12 months:
*In 1920, the Dow was down 28% for the 12 months going into the election when Republican Warren Harding was elected (Beginning of Prohibition) his predecessor was Democrat Woodrow Wilson
*In 1932, the Dow was down 43% for the 12 months going into the election when Democrat FDR was elected (the Great Depression), his predecessor was Republican Herbert Hoover
*In 1960, the Dow was down 8% for the 12 months going into the election when Democrat JFK was elected, his predecessor was Republican Dwight Eisenhower
*The Dow & S&P 500 have been positive for the 12 months leading up to every election since 1960, the NASDAQ has been positive since 1984 regardless of whether the executive branch was GOP or DEM.
With the Financials having been beaten up so much lately, their yields (annual dividends divided by share price) are looking quite tempting. Of course some of these are not sustainable. For example, Bear Stearns tops the list with a whopping 11.4% yield. JP Morgan Chase's takeover of Bear will put an end to that. Currently JPM has a yield of ~3.5%.
Here are the top 20 yielding stocks of the S&P 500 as of yesterday's closing prices.
Makes software for running businesses. Purchase of BEA Systems expands offerings to include middleware -- software that helps different programs speaks to each other.
Reports Q3 earnings Wednesday 3/26 at approx. 405p ET. Conference call at 5p ET.
A couple of days ago, I ran a screen of tech stocks that have been beaten down in the past few months but have projected double digit growth. Now I am expanding that screen to look at the entire S&P 500 .
Year to date, the S&P 500 is down ~8%. Telecoms and Tech are the two worst performing sectors, down 15% and 13% YTD respectively. Materials and Consumer Staples, while down 2% and 3% respectively, lead the pack. Here are S&P 500 stocks that may be on the cheap, down over 30% in the past three months but with double digit earnings growth forecasts for the next fiscal year.
With the big rallies of the past few days, many are wondering if we have hit a bottom. If history is any guide, the biggest returns come within the first few months of troughs. It's no wonder why so many traders try to spot the bottom.
Looking back at past recessions and market swings, a large percent of the major indices' first year gains come within the first 3 months of the bottom. For recessions over all, the Dow has put up on average 48% of its first year gains within 3 months of the recession ending and 73% within 6 months. The S&P 500 is even more extreme with 76% of its first year gains met within 3 months of the recession ending.
Of course, these are averages. The 2001 recession did not follow this pattern, but other recent recessions and major market swings did. Here are some examples:
Dow After Black Monday - 1987:
Dow After Long Term Capital Collapse - 1998:
So the debate goes on as to whether we are at a bottom. In the meantime, the tech sector has been amongst the the biggest winners in this recent rally with Broadcom, Unisys, NVIDIA, Qualcomm and JDS Uniphase up the most this week.
With the NASDAQ soaring today, Dennis Kneale just pointed out on Power Lunch that there are many tech stocks that have been beaten up in the past few months but still have significant growth forecasts. The S&P 500 Information Technology Sector is down ~13% YTD and is the second worst performing sector overall. Within the sector, the Internet Software and Services Group is down ~22% while the Semiconductors Group is the only sub-sector up for the year.
Here is a screen of some tech stocks that may be on the cheap, down over 15% in the past three months but with double digit earnings growth forecasts for the next fiscal year.
For the short week ending Thursday, March 20, 2008 the US Markets ended up. Market moving events included the JPMorgan Chase proposed takeover of Bear Stearns and a Fed rate cut of 75 basis points. The Dow gained 420 points on Tuesday, only to give back 293 points the next day. A rally today kept the Dow, S&P, and NASDAQ up 3.43%, 3.21%, and 2.06% for the week, their best performance in 7 weeks.
Next week, the markets will watch for the economic data including Durable Goods, GDP, and Personal Income numbers. Earnings from Lennar will give another read on the housing sector.
- The Dow, S&P and Nasdaq all gained over 3.5% on Tuesday on the news of the Fed's rate cut, lost over 2% on Wednesday and gained 2% on Thursday. The Dow had its 4th biggest point gain in history since July 29, 2002; and the S&P had its first daily gain over 4% since 2002.
- On Monday, the CBOE Volatility Index remained above the 30-value mark to hit 32.24 signaling continued investor uncertainty and high volatility, but came down with the market rally on Tuesday.
- Earnings news helped the rallies this week with Goldman Sachs , Lehman Brothers , Morgan Stanley , Nike and FedEx all beating analyst estimates.
- The Federal Reserve cut its key Target rate to a three-year low by 3/4 of a percent to 2.25%, and lowered its discount rate by 3/4 of a percent to 2.5%.
- The Producer Price Index (PPI) increased 0.3% in February, while the Core PPI, which excludes food and energy prices, rose 0.5% during the same period. Economists expected a 0.2% rise in the Core PPI.
- Weekly jobless claims were worst than expected, as initial claims increased to 378,000 matching its highest level since October 2005. Weekly jobless claims were up by 22,000 from the prior week.
- The New York Fed manufacturing index fell to a record-low of –22.23 in March. The prior lowest level was recorded in November 2001, with a reading of –19.6.
- The Philadelphia Fed Business Activity Index slightly rose in March to –17.4 from –24 in the prior month, better than the expected reading of –18.
Housing and Mortgages:
- The Mortgage Bankers Association (MBA) Purchase Index for the March 14 week fell by 1% to 365.0 compared to 368.8 applications the prior week; refinancing applications tumbled 4.6% on a week-to-week basis.
**Mortgage rates came down as the average 30-year fixed mortgage rate decreased to 5.98% from 6.37% the prior week.
- Housing starts fell 0.6% in February to a seasonally adjusted 1.065 million annual rate, while building permits dropped 7.8%.
Sectors & Indexes:
- JPMorgan Chase plans a takeover of Bear Stearns (BSC) for $2 a share or $236 million.
- Citigroup (C) plans to lay-off an additional 2,000 employees from its banking unit.
- Goldman (GS), Lehman (LEH), and Morgan Stanley (MS) reported better than expected earnings raising hopes that the credit crunch is near its end.
- Delta (DAL) and United Airlines (UAL) unrolled plans to offset high-fuel prices. Last week, all the major carriers increased round-trip fares by as much as $50.
- The Delta pilot union rejected Northwest's (NWA) idea of submitting to arbitration plans for integrating their seniority lists as part of their merger talks.
Corporate Actions / M&A:
- Visa opened its IPO on the New York Stock Exchange and raised a record $17.86 billion, or $44 a share.
- The Chicago Mercantile Exchange (CME) announced its agreement to acquire Nymex Holdings (NMX) for approximately $9.4 billion.
- H&R Block agreed to sell its sub-prime mortgage arm, Option One Mortgage Corp., to investor Wilbur Ross in a deal that could reach more than $1 billion.
Commodities fell sharply as demand expectations fell due to a slowing economy and the end of the heating oil season arrives.
- Gold April contracts set new record closes of $1002.6 on Monday and $1004.3 on Tuesday. It also hit a record intraday high of $1033.9 an ounce on Monday. Gold tumbled at the end of the week and settled on Friday at $920 an ounce, a fall of 7.95% for the week.
- Crude Oil for May delivery closed down $0.70 to $101.84 a barrel after hitting an intraday low of $98.65 and declined -6.35% for the week.
*The national average price of gasoline fell by $0.40 to $3.275 per gallon, according to AAA and the Oil Price Information Services.
- Natural Gas for April delivery rose by 4.1 cents today to $9.065, but shed 8.14% for the week.
- Heating Oil for April delivery fell by almost 4 cents to $2.9772,and closed down 5.38% for the week.
- Platinum lost $9.7 and settled at $1877.3 an ounce, and it is down 9.57% for the week.
- Wheat for May delivery closed down at $9.87 1/2 per bushel, and fell 17.12% for the week.
- Cocoa had the worst week of major commodities, down 20.8% for the week.
- The US dollar rose to a weekly high against the Euro, or 2.82% off its intraday high price of $1.5901 per euro on Monday. In recent trading, the cost of one Euro equaled $1.5438.
- The US Dollar modestly rose against the Japanese Yen for the week, briefly crossing the 100-yen level on Thursday, but slipped back to 99.02 yen.
- The British Pound depreciated to $1.9820 per dollar on Thursday as the dollar was helped by new negative assessments of European fundamentals.
- The greenback recovered from historic lows against the Swiss Franc, as the dollar appreciated 3.85% from an all time low of .9729 on Monday. One US Dollar purchased as much as 1.0165 Francs on Thursday.
- The US Dollar rebounded against its all time lows versus the New Zealand Dollar last Friday, and appreciated 2.37% from its lows on Monday. One Dollar purchased .7916 New Zealand Dollars during late trading on Thursday.
- The Pound is trading at an all time high versus the Euro, with one Pound purchasing 1.2875 Euros.
· The Dow ended up 410.23 or 3.43% for the week
-Friday, the Dow closed at 12,361.32 up 261.66 or 2.16%
-The Dow is Negative YTD down -6.81%
-The Dow is off by -1,803.21 or -12.73% from the market peak on October 9th of 14,164.53
· The NASDAQ ended up 45.62 or 2.06% for the week
-Friday, the NASDAQ Composite closed at 2,258.11 up 48.15 or 2.18%
-The NASDAQ is Negative YTD down -14.86%
-The NASDAQ is off by -601.01 or -21.02% from the market peak on October 31 of 2,859.12
· The S&P 500 ended up 41.37 or 3.21% for the week
-Friday the S&P 500 closed at 1,329.51 up 31.09 or 2.39%
-The S&P is Negative YTD down -9.46%
-The S&P is off by -235.64 or -15.06% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Thursday, March 20, 2008:
S&P 500 Financials Sector (.GSPF) Up 37.99 or 11.93%
S&P 500 Telecomm Services Sector (.GSPTS) Up 7.30 or 5.49%
S&P 500 Consumer Discretionary Sector (.GSPD) Up 11.07 or 4.69%
S&P 500 Industrials Sector (.GSPI) Up 11.00 or 3.39%
S&P 500 Consumer Staples Sector (.GSPS) Up 8.36 or 2.99%
S&P 500 Information Technology Sector (.GSPT) Up 8.60 or 2.52%
S&P 500 Health Care Sector (.GSPHC) Up 8.78 or 2.47%
S&P 500 Utilities Sector (.GSPU) Up 0.16 or 0.08%
S&P 500 Energy Sector (.GSPE) Down -22.07 or -3.93%
S&P 500 Materials Sector (.GSPM) Down -14.20 or -5.60%
S&P Top 10 Performers for the week ending Thursday, March 20, 2008:
Freddie Mac (FRE) Up 11.40 or 53.82%
Fannie Mae (FNM) Up 11.94 or 53.40%
Countrywide Financial Corp (CFC) Up 1.28 or 28.44%
JPMorgan Chase and Co (JPM) Up 9.43 or 25.81%
Morgan Stanley (MS) Up 10.12 or 25.59%
Lehman Brothers Holdings Inc (LEH) Up 9.39 or 23.92%
H and R Block Inc (HRB) Up 3.62 or 20.72%
Centex Corp (CTX) Up 4.19 or 20.49%
Pulte Homes (PHM) Up 2.43 or 19.85%
Circuit City Stores Inc (CC) Up 0.68 or 18.38%
S&P 10 Worst Performers for the week ending Thursday, March 20, 2008:
The Bear Stearns Companies Inc (BSC) Down -24.04 or -80.13%
CIT Group Inc (CIT) Down -5.60 or -36.77%
International Paper Co (IP) Down -5.58 or -17.30%
National City Corp (NCC) Down -2.15 or -16.35%
National Oilwell Varco Inc (NOV) Down -8.68 or -14.43%
Freeport-McMoRan Copper & Gold Inc (FCX) Down -14.53 or -14.30%
Newmont Mining Corp (NEM) Down -7.66 or -14.28%
Terex Corp (TEX) Down -7.69 or -11.55%
EOG Resources Inc (EOG) Down -13.83 or -10.97%
Monsanto Co (MON) Down -11.66 or -10.72%
Dow Top Performers for the week ending Thursday, March 20, 2008:
JPMorgan Chase and Co (JPM) Up 9.43 or 25.81%
Bank of America (BAC) Up 6.17 or 17.29%
Citigroup Inc (C) Up 2.72 or 13.75%
American Express Co (AXP) Up 4.97 or 12.12%
General Electric Co (GE) Up 3.67 or 10.85%
American International Group Inc (AIG) Up 3.83 or 9.30%
Home Depot Inc (HD) Up 2.31 or 8.97%
Wal-Mart Stores Inc (WMT) Up 3.41 or 6.84%
Verizon Communications (VZ) Up 2.30 or 6.80%
Coca Cola Co (KO) Up 3.51 or 6.10%
Dow Worst Performers for the week ending Thursday, March 20, 2008:
ALCOA Inc (AA) Down -3.71 or -9.66%
E I du Pont de Nemours and Co (DD) Down -1.53 or -3.26%
Chevron (CVX) Down –2.13 or -2.49%
Boeing (BA) Down -1.43 or -1.88%
Caterpillar Inc (CAT) Down -0.97 or -1.24%
Exxon Mobil Corp (XOM) Down -0.91 or -1.06%
McDonald's Corporation (MCD) Down -0.36 or -0.66%
Pfizer Inc (PFE) Down -0.05 or -0.24%
3M Company (MMM) Up 0.45 or 0.58%
Hewlett-Packard Co (HPQ) Up 0.58 or 1.26%
Key Earnings next week:
Monday: Walgreen(WAG), Tiffany (TIF), Phillips Van Heusen (PVH)
Tuesday: Commercial Metals (CMC), Jabil Circuits (JBL), Pep Boys (PBY)
Wednesday: Oracle (ORCL), Paychex (PAYX)
Thursday: ConAgra (CAG), Lennar (LEN) McCormick (MKC)
Friday: KB Home (KBH)
Economic Data next week:
Monday: Existing Home Sales
Tuesday: Consumer Confidence, ICSC-UBS Store Sales
Wednesday: Durable Orders, New Home Sales, Crude Inventories
Thursday: Chain Deflator (Final), GDP (Final)
Friday: Personal Income, Personal Spending
The US Markets end this volatile week to the upside with their best gains in 7 weeks.
It's been a tough start to the year with high volatility and last year's gains wiped away. But with the start of Spring and the Good Friday market holiday upon us, will the markets rebound as the leaves return to the trees? Looking back in history, the markets have gone up after the Easter break.
The Dow Jones Industrial Average
The S&P 500
The NASDAQ Composite
When the Dow was down for the year going into Easter weekend, the results were a bit more mixed. The Dow remained flat for the next 6 months, the S&P had average gains of roughly .5% three and six months out, and the Nasdaq faired best with average gains of 2.8% and 3.5% for the next 3 and 6 months.
Companies that could use the most "Spring" this year are Bear Stearns , Ambac , Sprint Nextel , and CIT which are all down over 50% YTD.