GO
Loading...

Will The Weak Consumer Put Lid On Rally?

On Tuesday both the Dow and S&P closed lower amid chatter that consumers are growing reluctant to open their wallets.

That sentiment was amplified by weaker than expected results from P&G just a few days after Colgate-Palmoliverocked the market.

Investors are interpreting these results as evidence that companies that sell even the most basic, everyday products are struggling because of broader economic worries.

How should you be positioned now?

Instant Insights with the Fast Money traders

Everywhere investors turn they hear that the consumer is pulling back, says Tim Seymour. Domestically, I’m watching the jobs report Friday, he says. I think it will be telling.

I’m also watching data out of China, Seymour adds. I’m hearing concerns that CPI coming out in the middle of August will show China is pulling back on stimulus. If we get that view I’d watch out for resource stocks.

If you’re broadly bullish right now history may not be on your side, adds Steve Grasso. September is the worst month for market performance dating back to 1942. And looking at the technicals, until we break 1131 – the June 21st intra-day high we’re in a trend of lower highs.

It seems to me the whole rally is based on a belief the Fed is going to step in and infuse the economy with lliquidity, muses Brian Kelly. But according to CNBC's Steve Liesman, markets might be getting ahead of themselves in anticipating some bold new moves from the Fed. I’m getting a little more cautious.

And if you’re looking for weak consumer trades I’d look at TJX as well as GameStop where video game players can trade in their games, Kelly says.


----------

AFTER HOURS ACTION: BARNES & NOBLE

Shares of Barnes & Noble surged 26% in extended trade after the world's largest specialty bookseller, said it was reviewing a possible sale as its board believes its shares are significantly undervalued.

Specifically, the company announced formation of a special committee of four independent directors to consider all options for increasing shareholder value.

The company's founder and top shareholder Leonard Riggio has told the board he would consider being part of a wider investor group that could buy the company.

Barnes & Noble has come under increasing pressure from larger retail rivals including Amazon and Walmart . Its sales have also suffered as more readers turn to digital books on devices like Amazon's Kindle and Apple's iPad.

What should you make of it?

The adoption of the e-reader has been so fast, reminds Karen Finerman. It can’t bode well for a brick and mortar such as Barnes & Noble.

----------

AFTER HOURS ACTION ELECTRONIC ARTS

In extended trade shares of Electronic Arts gained as much as 5% after the company reported better-than-expected results, led by sales of "FIFA" soccer. The company also reaffirmed its full-year outlook.

Looking at the numbers, Electronic Arts reported a net profit of $96 million, or 29 cents a share in the fiscal first quarter ended June 30, versus a year-ago net loss of $234 million or 72 cents a share.

Excluding items, the company posted a loss of 24 cents a share, better than the consensus analyst estimate for a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.

What’s the trade?

I have a client that’s always bullish ERTS into the holiday season, says Steve Grasso. He likes it up to $18.

----------

AFTER HOURS ACTION: PRICELINE

Shares of Priceline surged 15% in the aftermarket after the online travel site posted quarterly profit above analyst forecasts as bookings jumped 43 percent, led by international bookings and hotel reservations.

Looking at the numbers, Priceline said its second-quarter net profit was $115 million, or $2.26 per share -- up from $67 million, or $1.38 per share, a year earlier, when the travel industry was in the grip of an economic downturn.

Excluding one-time items, Priceline's profit was $3.09 per share -- above analysts' average estimate of $2.65, according to Thomson Reuters I/B/E/S.

What should you make of it?

I think Priceline is sitting in the sweetspot allowing Americans to book short vacations at inexpensive prices, says Anthony Scaramucci.

----------

AFTER HOURS ACTION: WHOLE FOODS

Shares of Whole Foods tumbled in extended trade after the company said it may miss Street estimates.

What’s the takeaway?

We’ve seen these big branded products companies disappoint; most notably P&G, says Karen Finerman. It can’t be good for a company such as Hain which sells premium products at Whole Foods.

*Hear more about Whole Foods from CNBC's Jane Wells. Watch the video above!

----------

FED OUTRAGE: HOW CAN BERNANKE GO BACKWARDS?

Weak economic data fueled concerns that the Fed will reverse its exit strategy and go back to buying Treasuries and mortgage-backed securities.

Peter Boockvar, equity strategist at Miller Tabak is outraged by the possibility!

Get all the details. Watch the video now!





______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On August 3rd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (F); Finerman owns (AAPL); Finerman owns (BAC); Finerman’s firm owns (BAC); Finerman owns (BP); Finerman’s firm owns (BP); Finerman owns (C); Finerman owns (CVS); Finerman’s firm owns (CVS); Finerman owns (FLS); Finerman’s firm owns (FLS); Finerman’s firm owns (GLW); Finerman owns (JPM); Finerman’s firm owns (JPM); Finerman’s firm owns (KFT); Finerman’s firm owns (PLCE); Finerman’s firm owns (RIMM); Finerman’s firm owns (SKS); Finerman's firm owns (ARM); Finerman's firm owns (LEA); Finerman & Finerman's firm owns (RIMM); Finerman's firm owns (WMT); Finerman's firm owns (DAN); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST); Kelly owns (BP) puts

For Anthony Scaramucci
Scaramucci and SkyBridge Capital owns (F)
Scaramucci and SkyBridge Capital owns (PFE)
Scaramucci and SkyBridge Capital owns (WMT)
Scaramucci and SkyBridge Capital owns the S&P 500 Index
Scaramucci and SkyBridge Capital owns the U.S. Dollar

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (DYN)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TBT)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

For Brian Kelly
Accounts managed by Kanundrum Capital own (RIMM) call spread
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXI
Accounts managed by Kanundrum Capital own Euros
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (OIH)
Accounts managed by Kanundrum Capital own (PFE)
Accounts managed by Kanundrum Capital own (INTC
Accounts managed by Kanundrum Capital are short the U.S. Dollar

Peter Boockvar
***No Disclosures***

Colin Gillis
***No Disclosures***

Scott Nations
***No Disclosures***



CNBC.com with wires

Symbol
Price
 
Change
%Change
DJIA
---
S&P 500
---
AMZN
---
BKS
---
CP
---
GME
---
HAIN
---
PCLN
---
PG
---
TJX
---
WMT
---
CL
---
AAPL
---

Featured

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report