Sudden wealth part of Silicon Valley’s everyday
May 18, 2012
By MARCUS WOHLSEN | Associated Press – MENLO PARK, Calif. (AP) — In Silicon Valley , where sudden wealth is hardly something new and CEOs favor hoodies over bespoke blazers, Facebook ‘s IPO on Friday didn’t bring everyday life to a halt
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By MARCUS WOHLSEN | Associated Press –
MENLO PARK, Calif. (AP) — In Silicon Valley, where sudden wealth is hardly something new and CEOs favor hoodies over bespoke blazers, Facebook‘s IPO on Friday didn’t bring everyday life to a halt.
Employees weren’t popping champagne corks at company headquarters, at least not where anyone outside could see them. And locals had plenty to do —from finding a job to locating the next Facebook.
The company’s sprawling headquarters along the southern edge of San Francisco Bay was quiet except for security guards walking the parking lots, a dozen TV satellite trucks and an onslaught of reporters who were not allowed inside.
The morning began with a ceremony attended by a few dozen people in a courtyard in the center of campus known as Hack Square. Mark Zuckerberg rang the opening bell to start the Nasdaq Stock Market’s daily trading as chief operating officer Sheryl Sandberg, Nasdaq executives and other employees looked on.
Afterward, employees tried to get back to business as usual. That is, building a company under immense pressure to meet shareholders’ expectations. To remind everyone not to get caught up in the hoopla, Facebook’s 2,000 employees were given t-shirts that read “Stay focused & keep hacking.”
As is standard at large tech companies in Silicon Valley, employees were told not to talk to the press.
In the parking lot, venture capitalist Mark Siegel had come down to take a longing look at one that got away. Like many of his fellow technology startup investors with offices a short drive from Facebook on Silicon Valley’s famed Sand Hill Road, Siegel said he had chances to back Facebook early on but didn’t.
He said at the time, when competing social networks like Friendster and MySpace still had clout, it wasn’t clear that Facebook would come out on top.
“In hindsight, any price would have been a good price to pay,” said Siegel, a managing director at Menlo Ventures.
To avoid a similar fate in the future, Siegel’s firm is invested heavily in Internet and social media companies, including popular blogging service Tumblr.
As for the viability of Facebook as an investment now that it’s public, Siegel said he expects the stock to be in for a bumpy ride in the near future.
“I might buy a little, but I would buy it as a long-term hold,” he said. “It’s very fully valued, so I think in the short-term there’s going to be a lot of ups and downs.”
At a strip mall that includes the closest Starbucks to Facebook, the company’s stock was not the first thing on everyone’s minds. (Not that anyone at Facebook needs to come across the highway to Starbucks — gourmet coffee is just one of the company’s many meal perks.)
Ann House, 49, an education researcher at a nearby nonprofit, said the IPO would obviously mean more rich people in the area, but she’s been pleasantly surprised so far that the company’s recent move to its new headquarters hasn’t yet led to a big uptick in street traffic.
Though not a heavy Facebook user, she said the ads on the social network’s site have started to annoy her more. She expects the IPO won’t help.
“It probably means there’s going to be more advertising on the site, so I’ll use it less,” she said.
Claire Bonnar, 22, of Pacifica became a teenager shortly before Facebook first went online, but she doesn’t count herself among the Facebook generation. She has an account, but she said she only logs on once every few months. She said she communicates with her friends by text message and phone to avoid the headaches she witnessed among former co-workers who were heavy users.
“They’d always be in each others’ business,” she said. “I don’t want that kind of drama.”
Facebook’s IPO was also far from Bonnar’s mind as she focused on more pressing concerns. Laid off from her job at a San Diego hospital a few months ago, she came north to be with family. She works as a cashier at a San Francisco barbecue restaurant to make ends meet while she plots her next move.
An aspiring pharmacist, she had traveled the 30 miles from Pacifica to a job training center in Menlo Park that, by coincidence, receives money from Facebook. The company does community outreach since moving into its new headquarters, which borders on neighborhoods that are far from wealthy.
Bonnar said she doesn’t find it weird that Mark Zuckerberg, also in his 20s, has become one of the world’s richest men thanks to an online service she doesn’t even like.
“I think that it’s really awesome, actually. It sucks I’m not in his position.”
Nasdaq glitch confuses investors of Facebook IPO
May 18, 2012
By PALLAVI GOGOI | Associated Press – NEW YORK (AP) — Some investors who thought they had bought Facebook shares at the opening of trading were left without knowing for hours whether they had received the shares. The Securities and Exchange Commission is looking into the glitches in the trading of Facebook’s initial public offering around the time of its scheduled debut Friday on the Nasdaq Stock Market .
Originally posted here:
By PALLAVI GOGOI | Associated Press –
NEW YORK (AP) — Some investors who thought they had bought Facebook shares at the opening of trading were left without knowing for hours whether they had received the shares.
The Securities and Exchange Commission is looking into the glitches in the trading of Facebook’s initial public offering around the time of its scheduled debut Friday on the Nasdaq Stock Market.
The glitches caused traders problems changing and canceling their orders. Nasdaq said around noon that it was “investigating an issue in delivering trade execution messages” for Facebook stock.
The SEC will review the incident with Nasdaq “to determine its cause and steps that will be taken to address it,” agency spokesman John Nester said.
Technical glitches at the Nasdaq Stock Market had already delayed the trading of Facebook’s stock by half an hour. The stock, which was expected to start trading at 11 am, opened at 11:32 a.m. at $42.05 and ended the day at $38.23.
Joseph Saluzzi, co-founder of broker Themis Trading, said it’s understandable that a delay at the opening might occur with a large IPO like Facebook’s. “The problem is when people don’t know if they had bought or sold a certain number of shares and that affects how people manage risk,” Saluzzi said.
Brokers who might have wanted to sell after the IPO was priced weren’t sure if they had received a piece of the highly-anticipated offering from the online social networking phenomenon.
Nasdaq didn’t respond to requests for comment, but the exchange posted a message on one of its websites telling investors who had problems buying or selling Facebook stock between 11:11 and 11:30 a.m. to call Nasdaq before 5 p.m. with their order information.
“Our intention is to reach resolution of those trades today through an offline matching process,” Nasdaq said in a comment posted on its website. “If at the end of that process, a firm continues to have questions or concerns, the firm needs to submit a formal accommodation request to us through the normal channels.”
In March, there was a far worse technical foul-up at the intended IPO of BATS Global Markets Inc., a Kansas-based company that competes with Nasdaq Stock Market and the New York Stock Exchange in offering stock trading services.
BATS tried to list its stock on its own trading systems, but a series of snafus prevented the stock from ever opening for trading. The company wound up canceling its IPO and its CEO, Joe Ratterman, issued a public apology.
___
AP Business Writer Marcy Gordon contributed to this story from Washington,
SEC to look at Facebook trade glitches
May 18, 2012
Reuters – WASHINGTON (Reuters) – The Securities and Exchange Commission will review the Nasdaq trading glitches surrounding the initial public offering of Facebook Inc on Friday, an agency spokesman said.
More here:
Reuters –
WASHINGTON (Reuters) – The Securities and Exchange Commission will review the Nasdaq trading glitches surrounding the initial public offering of Facebook Inc on Friday, an agency spokesman said.
“As is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it,” SEC spokesman John Nester said in a statement.
(Reporting By Dave Clarke; Editing by Gary Hill)
US stock futures extend gains on unemployment data
May 10, 2012
Associated Press – NEW YORK (AP) — U.S. stock futures are higher with the government reporting that weekly jobless claims edged downward last week, suggesting that employers may accelerate hiring this month
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Associated Press –
NEW YORK (AP) — U.S. stock futures are higher with the government reporting that weekly jobless claims edged downward last week, suggesting that employers may accelerate hiring this month.
Weekly applications dropped 1,000 to a seasonally adjusted 367,000 in the week ending May 5, the Labor Department said Thursday. The previous week’s figure was revised up slightly.
The Dow Jones industrial average rose 48 points to 12,843. The Standard & Poor’s 500 gained 9.8 points to 1,360.8. The Nasdaq composite index rose 11.5 points to 2,630.75.
The four-week average for jobless claims, which economists use for a less volatile peek at the employment picture, fell 5,250 to 379,000. When that figure remains consistently below 375,000, it suggests that job growth is strong enough to lower the unemployment rate.
The numbers released by the Labor Department could dispel nascent fears that that strongest yearly start for hiring since the recession ended 2009 was sputtering.
Applications for unemployment benefits rose for most of last month in tandem with weaker hiring in March and April.
There are still signs, however, that companies are still digging out from the recession and a solid hiring environment has yet to take root.
Late Wednesday, a giant in the technology sector spooked the market with a sobering outlook on spending, particularly with Europe weighing on any global recovery.
Cisco Systems Inc. posted strong third-quarter profits, but shares tumbled 8 percent in premarket trading Thursday on dour comments about the willingness of corporations to make substantial investments.
CEO John Chambers said customers are waiting longer to close deals and they are spending less out of uncertainty about the economy, particularly in Europe and India.
“We are still in an uncertain environment economically,” Chambers told analysts in a conference call.
As talks to form a Greek government dragged into a fourth day, European markets fell.
The FTSE 100 index of leading British shares slipped 0.5 percent to 5,501 while Germany’s DAX fell 0.2 percent at 6,461. The CAC-40 in France was 1.2 percent lower at 3,081.
In the U.S., Kohl’s Corp. said Thursday that first-quarter profit tumbled 23 percent and the department store chain warned that it may fall short of Wall Street expectations in the second quarter.
The report comes a day after Macy’s reported first-quarter earnings. While first-quarter profit rose 38 percent, Macy’s shares tumbled after the department store left its guidance unchanged.
Though the company tends to give conservative guidance, investors took it as a sign of a potential slowdown in consumer spending, which accounts for about 70 percent of U.S. economic activity.
Wall St Week Ahead: All eyes on European elections
May 4, 2012
By Rodrigo Campos | Reuters – NEW YORK (Reuters) – After Wall Street ended its worst week of the year on Friday, U.S. stock investors will look across the Atlantic next week to take their cue from Europe as France and Greece go to the polls. That could offer some respite from a string of weak U.S
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By Rodrigo Campos | Reuters –
NEW YORK (Reuters) – After Wall Street ended its worst week of the year on Friday, U.S. stock investors will look across the Atlantic next week to take their cue from Europe as France and Greece go to the polls.
That could offer some respite from a string of weak U.S. economic data and the earnings season winding down.
Markets worldwide have closely watched developments in Europe for the past several months, with calls for austerity seen as positive for stocks as they seek to prevent a credit crisis in the region that could take down or deeply hurt the global economic recovery.
But an economic slowdown throughout the region has amplified calls for a change of direction.
In France, the prospect of a victory by Francois Hollande over conservative incumbent Nicolas Sarkozy, which would instate the country’s first Socialist president since 1995, initially alarmed some investors. Hollande’s win could be a hurdle to the German-led drive for austerity in Europe.
Adding to the markets’ jitters: Anti-bailout parties are expected to perform well in Greece’s vote on Sunday, raising the risk of more opposition to already unpopular reforms.
“There’s potential for uncertainty and instability in Europe,” said John Praveen, managing director of Prudential International Investment Advisors in Newark, New Jersey. “The market is pricing in extremely negative scenarios.”
Praveen said there is still room for a market rebound if Hollande, should he win the presidency, comes out with a more conciliatory tone that would ease investors’ fears about France‘s commitment to fiscal stability.
Investors are waiting to see if Hollande, who holds an advantage in polls over Sarkozy, will be able to square France’s need for fiscal reforms with his plans to promote growth.
“I’m not quite sure, regardless of who wins, does it say ‘sell the S&P’? … It just continues the uncertainty, no matter who wins,” said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.
TECHNICALS RULE IN A LIGHT WEEK
Technical levels could regain importance next week as the U.S. economic data calendar thins and fewer than 30 of the S&P 500 components are expected to report earnings.
“On no news, we all start looking at charts,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.
“We found support recently on the S&P near 1,360. If we violate that, it would be a bad sign,” he said.
The S&P 500 slipped below that level twice last month and bounced back, but has since found strong resistance at 1,400. The recent soft economic data, capped with Friday’s payrolls report showing the third straight month in which hiring had slowed, has dampened hopes for a convincing break upward.
The data dragged the market lower. The S&P 500 and the Nasdaq Composite posted their worst weeks this year. For the week, the Dow Jones industrial average dropped 1.4 percent, the Standard & Poor’s 500 Index slid 2.4 percent and the Nasdaq lost 3.7 percent.
The high points of next week’s economic calendar will come on Friday, with the U.S. Producer Price Index for April and the preliminary reading for May on consumer sentiment from the Thomson Reuters/University of Michigan surveys.
In terms of earnings, the top names next week include Dow components Walt Disney Co
Wednesday will also bring Macy’s
(Reporting by Rodrigo Campos, Additional reporting by Edward Krudy; Editing by Jan Paschal)
Hiring slowdown sends the stock market reeling
May 4, 2012
By PALLAVI GOGOI | Associated Press – NEW YORK (AP) — Stocks plunged Friday after the government reported that hiring slowed sharply last month. The report confirmed investors’ fears that the U.S. economic recovery may be faltering.
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By PALLAVI GOGOI | Associated Press –
NEW YORK (AP) — Stocks plunged Friday after the government reported that hiring slowed sharply last month. The report confirmed investors’ fears that the U.S. economic recovery may be faltering.
The losses in the market were widespread. The Dow Jones industrial average lost 168 points and the Nasdaq composite had its worst day since Nov. 9. Both the Nasdaq and the Standard & Poor’s 500 index closed out their worst weeks of the year. The Dow had its second-worst.
The dollar and U.S. Treasury prices rose as investors dumped risky assets and moved money into lower-risk investments. Energy stocks were among the hardest hit after the price of oil fell below $100 a barrel for the first time since February. Only one of the 10 industry groups in the S&P 500 rose, utilities, which investors tend to buy when they’re nervous about the economy.
“The jobs numbers were a disappointment,” said Phil Orlando, chief equity strategist at Federated Investors.
It was the third straight daily loss for the Dow, but it’s too early to know if it’s the start of a correction in the market. Even after its 1.4 percent decline this week, the Dow is still up 6.7 percent this year.
Investors are on edge about Europe once again as France and Greece both hold elections over the weekend. In France the socialist candidate Francois Hollande has a chance to unseat the incumbent Nicolas Sarkozy, who has been at the forefront of fashioning Europe’s efforts to prevent its share currency from collapsing.
Crude oil plunged $4 to $98.49 a barrel on worries that demand would drop because of a weakening world economy. It was the first time oil has dropped below $100 since February 13.
The late slump in the week was a stark contrast to Monday, when the Dow closed at its highest level in more than four years, propelled by a report that showed a pickup in manufacturing. All that became a distant memory after a slew of poor economic reports were released the rest of the week.
On Thursday major retailers including Costco and Macy’s reported that April sales inched up less that 1 percent, the worst performance since 2009. Thursday also brought news that U.S. service companies expanded their business more slowly in April.
The Dow closed down 168.32 points, or 1.3 percent, at 13,038. All 30 companies that make up the index fell, led by Bank of America and Cisco.
The S&P 500 fell 22.47 points, or 1.6 percent, to 1,369, while the Nasdaq index fell 67.96 points, or 2.2 percent, to 2,956.
For the week, the S&P lost 2.4 percent, the Nasdaq 3.7 percent.
The yield on the benchmark 10-year Treasury note dropped to 1.88 percent from 1.92 percent late Thursday as demand increased for safe investments. The yield hasn’t settled that low since early February.
The culprit for the distress in financial markets was a report from the Labor Department Friday showing that U.S. job growth slumped in April for a second straight month. The 115,000 jobs added in April and the 154,000 in March were down form an average of 252,000 a month from December through February.
Orlando noted that the first few months of the year were marked by a number of abnormal conditions including an uncharacteristically warm January and February. That led to a spurt in hiring which usually occurs in spring.
Retail sales and hiring were also affected by an earlier Easter, which fell on April 8 this year, 16 days earlier than last year. That pushed some retail sales ahead to March, leaving April’s numbers weaker than they might have been. Retailers also blamed a late Mother’s Day for pushing some sales out of April and into May. Unusually warm weather in February and March also pulled forward some sales that would have normally occurred in April.
“The surge in hiring and spending that usually occurs in March through April, occurred earlier in the year this year,” said Orlando. “We have to wait for economic numbers from May and June to get a better idea of the underlying strength of this economy.”
After the price of oil fell, energy company stocks turned lower in response. Southwestern Energy Co. fell 7 percent and Marathon Oil Corp. fell 3 percent.
In other trading:
— Warnaco Group Inc. dropped over 6 percent after the clothing maker lowered its 2012 forecast and said that its first-quarter net income fell, hurt by the weak European economy.
— Aon Corp. fell almost 6 percent after the insurance broker reported first-quarter net income fell 3 percent due to higher costs and unfavorable currency exchange rates.
— LinkedIn Corp. rose 7 percent after announcing late Thursday that its first-quarter profit more than doubled, topping expectations. The social networking company also announced an acquisition.
— Tilly’s Inc. climbed 8 percent in the clothing retailer’s debut on the New York Stock Exchange. Tilly’s sells surf-inspired and casual West Coast-styled clothing and accessories.
— Einstein Noah Restaurant Group Inc. soared 19 percent after the owner of bagel chain Noah’s Bagels said it is considering strategic alternatives, including a possible sale of the company
.
Wedbush starts Facebook with outperform rating
May 4, 2012
By Alexei Oreskovic and Supantha Mukherjee | Reuters – (Reuters) – As Facebook Inc prepares to market its $10.6 billion initial public offering to U.S. fund managers next week, brokerage Wedbush Securities set a $44-per-share price target that implies a potential capital gain of about 40 percent for IPO investors
Link:
By Alexei Oreskovic and Supantha Mukherjee | Reuters –
(Reuters) – As Facebook Inc prepares to market its $10.6 billion initial public offering to U.S. fund managers next week, brokerage Wedbush Securities set a $44-per-share price target that implies a potential capital gain of about 40 percent for IPO investors.
Facebook on Thursday set an indicative IPO price range of $28 to $35 a share, which would value the world’s largest online social network at $77 billion to $96 billion. Depending on how the roadshow for investors go, Facebook could begin trading on Nasdaq as soon as May 18.
Demand for Facebook shares will likely outstrip supply, Wedbush analyst Michael Pachter wrote in a research note, rating the stock “outperform”.
“We believe Facebook will capture an increasing percentage of spending on offline advertising, while growing its share of online advertising as well as usage continues to increase and advertisers become more comfortable with the cost effectiveness of online advertising,” Pachter said.
Not everyone on Wall Street is as bullish.
Steven Weinstein, an analyst with ITG Investment Research, said that Facebook’s existing lines of business do not have the horsepower to justify investing in the company at a nearly $100 billion valuation.
“Just to get a reasonable return, a stock like this has to double in six-ish years,” said Weinstein. “Right now they’re not on trajectory to get there,” he said, citing the deceleration in Facebook’s advertising business and the limited contribution from its payments business.
But he said Facebook has a lot of opportunities to find new sources of revenue growth, including mobile advertising and potentially creating an online advertising network. Weinstein published a report analyzing Facebook’s financials in April, though his firm does not provide a price target or rating on the stock.
In a note dated April 24, Pivotal Research Group had reduced the enterprise valuation of Facebook to $75 billion from $82 billion, saying Facebook’s first-quarter results were disappointing.
Wedbush is the first financial firm to weigh in with an official price target and rating on Facebook’s stock, as investors prepare for what is expected to be the largest IPO in Silicon Valley history.
Facebook’s high valuation will put it on par with large-cap technology powerhouses such as Cisco Systems Inc and Amazon.com Inc, making it certain to attract coverage from dozens of Wall Street analysts.
But analysts whose firms are involved in the IPO – Facebook’s prospectus lists 33 underwriters – are unlikely to initiate coverage of Facebook until several weeks after the offering because of securities regulations
(Reporting by Alexei Oreskovic in San Francisco and Supantha Mukherjee in Bangalore Editing by Richard Chang, Gary Hill)
Global stocks, oil slump on weak jobs data
May 4, 2012
By Herbert Lash | Reuters – NEW YORK (Reuters) – Global stocks swooned and crude oil tumbled on Friday after a weak U.S. jobs report and data that suggested a deeper recession across the euro zone than previously thought dented sentiment. Major U.S
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By Herbert Lash | Reuters –
NEW YORK (Reuters) – Global stocks swooned and crude oil tumbled on Friday after a weak U.S. jobs report and data that suggested a deeper recession across the euro zone than previously thought dented sentiment.
Major U.S. and European stock indexes fell more than 1 percent, U.S. crude oil slumped about 4 percent and government debt prices jumped after the Labor Department said American employers reduced hiring more than expected in April.
The week was the worst this year for Wall Street stocks, with energy leading the decline. The S&P energy index of 44 gas and oil-related companies fell 2.2 percent on fears a worsening economy would sap demand.
“We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption,” said Gene McGillian of Tradition Energy.
Just 115,000 workers were added to payrolls last month, or 55,000 less than economists expected. While the unemployment rate fell one-tenth of a point to 8.1 percent, a three-year low, that was only because the workforce shrank as people retired or stopped seeking work.
The third straight monthly decline in hiring growth spurred concerns that the U.S. economy is losing momentum and doused hopes that a stretch of strong winter hiring had signaled a turning point for the U.S. recovery.
The Dow Jones industrial average closed down 168.32 points, or 1.27 percent, at 13,038.27. The Standard & Poor’s 500 Index fell 22.47 points, or 1.61 percent, at 1,369.10. The Nasdaq Composite Index slid 67.96 points, or 2.25 percent, at 2,956.34.
The U.S. jobs data added to the gloomy tone from Europe, where purchasing managers’ indexes, primarily covering services, suggested a recession across the euro zone could extend to mid-year and be deeper than previously imagined.
Markit’s Eurozone Services PMI, which gauges business activity over a month, came in at 46.9 for April, sharply lower than 49.2 in March. Anything below 50 signifies contraction.
The JPMorgan Global Purchasing All-Industry Output Index of about 20 countries showed declines in April from March.
In Europe, the pan-European FTSEurofirst 300 index closed down 1.7 percent at 1,027.15, and the Euro STOXX 50 index fell 1.7 percent to 2,248.34 despite strong earnings from Royal Bank of Scotland
MSCI’s all-country world equity index fell 1.5 percent to 321.72.
Benchmark Brent crude in London fell to three-month lows around $113 a barrel, its steepest weekly fall since December, after the weak jobs report. Brent’s slide took three-day losses to more than 5 percent.
While the downbeat data weighed, traders said a combination of less-definitive factors – from confusion over margin changes to the breach of the 200-day moving average – compounded selling.
Brent futures settled down $2.90 at $113.18 a barrel, lows last seen in early February.
U.S. crude settled down $4.05 at $98.49 a barrel.
Some analysts said the jobs report, which followed weaker-than-expected services sector data this week, will fuel hopes for a third round of stimulus, or quantitative easing, by the Federal Reserve to keep rates low and to foster growth.
“The data in the U.S. is weakening somewhat. It puts into play that if the economy in the U.S. continues to weaken then QE3 will be on the table, so there are really no sellers of Treasuries,” said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.
The benchmark 10-year U.S. Treasury note rose 16/32 in price to yield 1.88 percent, and the 30-year U.S. Treasury bond gained almost a full point in price to yield 3.07 percent.
Gold rose as the weak data boosted bullion’s investment appeal on talk that a weaker economy might prompt further monetary easing by the Fed.
U.S. gold futures for June delivery settled up $10.40 an ounce at $1,645.20.
The dollar slipped against the yen in volatile trading after the payrolls number, with the U.S. currency down 0.45 percent at 79.83 yen.
The U.S. dollar index rose 0.33 percent at 79.481.
The euro was down 0.47 percent at $1.3088.
(Additional reporting by Richard Leong, Ryan Vlastelica, Julie Haviv, Matthew Robinson and Jonathan Leff, Reporting by Herbert Lash, Editing by James Dalgleish and Dan Grebler)
Stock Market News for April 30, 2012
April 30, 2012
Stronger-than-expected corporate earnings results negated concerns sparked off by dismal economic data to lift the benchmarks higher on Friday. Even though Friday’s gains were anything but robust, they were sufficient to take the Dow into the positive zone for the month. Corporate results not only pushed the benchmarks higher on Friday, but lifted the benchmarks to their best weekly performance since mid-March
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Stronger-than-expected corporate earnings results negated concerns sparked off by dismal economic data to lift the benchmarks higher on Friday. Even though Friday’s gains were anything but robust, they were sufficient to take the Dow into the positive zone for the month. Corporate results not only pushed the benchmarks higher on Friday, but lifted the benchmarks to their best weekly performance since mid-March. These gains are also attributable to encouraging housing data.
The Dow Jones Industrial Average (DJI) gained 0.2% and closed the day at 13,228.31. The Standard & Poor 500 (S&P 500) also gained 0.2% and finished Friday’s trading session at 1,403.36. The tech-laden Nasdaq Composite Index jumped 0.6% to move up to 3,069.20. The fear-gauge CBOE Volatility Index (VIX) edged up 0.5% and settled at 16.32. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were 6.2 billion shares, lower than this year’s daily average of 6.76 billion shares. Advancing stocks enjoyed an upper-hand over the decliners; as for every two stocks that gained on the NYSE, only one stock moved lower.
Amazon.com Inc. (AMZN) and Expedia Inc. (EXPE) both reported robust results that breezed past the Street estimates. For instance, Amazon reported earnings that were over 300% higher than what analysts had projected. This whopping earnings surprise helped Amazon end 15.8% higher at $226.85 a share. Expedia too came out with encouraging figures, beating earnings and revenue forecasts. Shares of Expedia soared 23.5%. These solid gains were well reflected by the broader markets as investors chose to ignore a dismal first-quarter GDP report.
The Bureau of Economic Analysis reported the “advance” estimate for gross domestic product (GDP) growth, where it stated: “Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the first quarter of 2012”. Consensus estimates had projected an increase of 2.5%. The less-than-expected increase could have been a drag on the sentiment, but the earnings results negated the concerns.
Corporate results have been largely positive so far. Thomson Reuters data confirms that roughly 73% of the companies have topped estimates till now. Considering the week ending on April 27, earnings have played a big role in boosting the benchmarks’ weekly performance. Justifying the earnings’ strength during the week, data from Thomson Reuters showed that S&P 500 earnings growth had moved to 7.2% during the week, up from 3.2% at the beginning of April.
Meanwhile, bellwethers like AT&T, Inc. (T), United Technologies Corp. (UTX) and 3M Co. (MMM) came out with strong results and lifted the broader sentiment. On Wednesday, tech-bellwether Apple Inc. (AAPL) joined the list after its earnings soared 92.2% year-on-year, while revenues jumped 59.0% year over year, and surpassed the Street’s estimates by a wide margin. The iPhone and iPad maker’s robust results powered the Nasdaq to its best performance this year, and eventually the tech-laden index posted its best weekly gains in almost three months. Encouraging housing data on Thursday also added to the benchmarks’ gains for the week and the Dow, S&P 500 and Nasdaq jumped 1.5%, 1.8% and 2.3%, respectively, for the week. The Dow and S&P 500 had their best weekly run since March 16.
Weekly gains can also be attributed to e the Federal Reserve Chairman’s comments on Wednesday that the central bank “would not hesitate” to bolster the economy if needed. After a meeting with Federal Open Market Committee in Washington, Ben Bernanke had said: “We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target”. As investors hoped for a third-round of bond purchases, Bernanke fuelled optimism by saying: “Those tools remain very much on the table and we will not hesitate to use them should the economy require that additional support”.
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US STOCKS-S&P 500 rallies for week on Amazon, Expedia results
April 27, 2012
By Caroline Valetkevitch | Reuters – (Updates close with details, quote) * Amazon , Expedia surge after results beat forecasts * First-quarter U.S.
See more here:
By Caroline Valetkevitch | Reuters –
(Updates close with details, quote)
* Amazon, Expedia surge after results beat forecasts
* First-quarter U.S. GDP misses forecast
* Procter & Gamble drops after earning
* Indexes up: Dow 0.2 pct, S&P 0.2 pct, Nasdaq 0.6 pct
NEW YORK, April 27 (Reuters) – U.S. stocks advanced on
Friday and posted their best weekly gains in a month as
stronger-than-expected earnings from Amazon.com and
Expedia Inc reinforced confidence in corporate
performance.
Wall Street managed a fourth day of gains as the strong
earnings season outweighed a surprisingly weak reading on
first-quarter economic growth.
Online retailer Amazon climbed 15.7 percent to $226.85 and
contributed half of Nasdaq’s gain for the day. An S&P retail
index rose 3.5 percent and hit an all-time high. Shares
of Expedia, the Web-based travel provider, surged 23.5 percent
to close at $40.31, after hitting a new high at $43 on record
volume.
Growth in S&P 500 earnings rose to 7.2 percent this week
from 3.2 percent at the start of the month, according to Thomson
Reuters data. About 73 percent of the companies that have
reported so far have beaten expectations.
“So far the numbers have been pretty good, and we’re happy
about that, but I think we have to wait to where we’re done with
the earnings season to really make judgments,” said David James,
senior vice president of James Investment Research in Alpha,
Ohio.
“Going forward, the big key for people especially looking at
tech is what happens with the dollar. I think the dollar will
probably be stronger than people expect on a relative basis.
Historically that usually means tech is the sector that gets hit
the hardest.”
The Dow Jones industrial average was up 23.69 points,
or 0.18 percent, at 13,228.31. The Standard & Poor’s 500 Index
was up 3.38 points, or 0.24 percent, at 1,403.36. The
Nasdaq Composite Index was up 18.59 points, or 0.61
percent, at 3,069.20.
The S&P 500 posted its best weekly percentage gain since
March and the Nasdaq its best gain since February.
Earlier this week, a blowout quarter from Apple Inc
gave the Nasdaq its best day of the year .
With one more trading day left in the month, the S&P 500 is
slightly lower so far in April but still up 11.6 percent for the
year. The S&P is well above its 50-day moving average.
The earnings news overshadowed the day’s economic news. The
Commerce Department reported the U.S. economy expanded at a 2.2
percent annual rate in the first quarter, below economists’
expectations for growth of 2.5 percent.
Among other companies reporting results, Ford Motor Co
surpassed expectations as its North American unit reported the
best profit in at least 12 years. But the stock fell 2.3 percent
to $11.60 after executives said Ford lost U.S. market share in
April, suggesting that second-quarter .
Also on the downside, Procter & Gamble Co shares fell
3.6 percent to $64.44 after the world’s biggest consumer
products maker cut its full-year profit view and posted lower
quarterly earnings.
Starbucks Corp fell 5.3 percent to $57.43 and was
one of the biggest percentage decliners on the Nasdaq 100
after the coffee chain operator reported results late on
Thursday. Investors focused on weakness in European sales, even
though its quarterly profit topped estimates.
Volume was 6.2 billion shares on the New York Stock
Exchange, the Nasdaq and the NYSE Amex, below the daily average
this year of 6.76 billion.
Advancers outpaced decliners by a ratio of about 2 to 1 on
the NYSE as well as on the Nasdaq.
(Editing by Leslie Adler)
