Facebook may flop after earnings

7:30 AM after, earnings, Facebook No Comments

| By Jeff Reeves, MarketWatch

The stock can't keep up this run for much longer — and investors who are sitting on big profits may be wise to sell now rather than risk steep declines.

Facebook (FB) has doubled in just a few short months, sparked by better-than-expected second-quarter earnings in July, and is up over 170 percent in the last year.

And while it's unfashionable to badmouth this social-media stock as it approaches its next earnings report, count me among the Facebook bears.

I think that even if Facebook manages to post decent numbers this week when it reports earnings, the stock can't keep this run up for much longer — and investors who are sitting on big profits may be wise to sell now rather than risk steep declines.

Here's why I refuse to "like" Facebook stock.

The biggest reason to be bearish on Facebook is that domestic and European users have flatlined. I personally expect the company to post a decline in its U.S./Canada segment this quarter, or next quarter at the very latest.

That is not going to be a pleasant headline when FB sees its first-ever drop in U.S. users after its massive growth… just look at the fireworks in Netflix (NFLX) after its subscriber drop at home as a case study.

This is disturbing for obvious reasons in regard to the saturation of these markets and how it will affect growth, but it's even more disturbing when you consider that growth in emerging markets comes with only a fraction of the revenue.

Consider these figures from Facebook's last earnings report:

U.S./Canada

Users: 198 million, or 17.1 percent of FB totalRevenue per User: $4.32
Europe

Users: 272 million, or 23.5 percent of FB totalRevenue per User: $1.87
Asia

Users: 339 million, or 29.4 percent of FB totalRevenue per User: $0.75
Rest of World

Users: 346 million, or 30.0 percent of FB totalRevenue per User: $0.63
U.S./Canada is by far the most lucrative region by geography, with Europe an obvious second.

But consider that from the first quarter to the second quarter of 2013, Facebook grew its monthly active users less than 1 percent quarter-over-quarter, and year-over-year growth was a measly 6 percent.

In its second-quarter numbers, Facebook reported that $848 million in revenue — almost half of its $1.8 billion in total revenue on the quarter — came from users in the U.S. and Canada. So even a small rollback here is going to be felt, and the lack of future upside is significant.

The situation is the same in Europe as well. Europe's monthly active users increased just 1 percent from the first quarter to the second, and a modest 10 percent over the second quarter of 2012.

The Facebook longs better be sure that this user base is going to stick, or else they are in serious trouble.

The bulls may contend that the problem, then, isn't growing the Western audience, but simply monetizing it better. And, oh, by the way, if you make more money off those "rest of the world" subscribers, then it won't take quite so many of them to offset lost U.S. revenue if the users do roll back.

Read More

Apple earnings of top forecast, revenue hapert

2:27 AM Apple, earnings, forecast, hapert, revenue No Comments

Staff report, CNBC.com

Apple reported the result of the edges at the Wall Street fell estimates on Wednesday but its revenues slightly behind the forecasts in the quarter crucial holiday.

In extended hours trading, the company's shares fell after the announcement of the result. (Get the latest offers for Apple after the closing bell.)

Exclude objects from $13.81 per share, down from $13.87 result fiscal year obtained a share in the same period of last year in the first quarter of the company.

Sales rose 18 percent to $54,51 billion from $46,33 billion a year ago.

Analysts had a consensus estimates from Thomson Reuters the company expected revenue, earnings excluding items of $13.47 per share to $54,73 billion.

Apple sold in the period, up from 37 million to 47.8 million iPhones a year; 22.9 Million iPads, increase of 15.4 million per year 4.1 Million Macs, down from 5.2 million a year; 12.7 Million iPods, down from 15.4 million a year ago. The company said that its gross margin was 38.6 percent.

In the wake of the result beats Google and IBM on Tuesday looking to assess investors to Apple's quarterly report, such as the company's market share during the holiday season passed crucial. Apple's stock is the latest iteration of its popular smartphone since the company iPhone 5, debuted to more than a quarter of fallen.

Read More

Earnings may not matter to new breed of investor

10:00 AM breed, earnings, investor, matter No Comments

By BERNARD CONDON, Associated Press
Another type of investor buys when everyone thinks that earnings will rise. He buys because he thinks they'll rise even more than expected. Call him the eternal optimist.

Now, the 3?-year-old bull market may have produced a third type of investor, an undiscovered breed with a curious strategy for success: He expects earnings to fall but buys anyway because he hopes it won't matter.

Call him the blind-faith investor. Or maybe just blind.

"How do you explain where the stock market is?" Barclays Capital stock strategist Barry Knapp said last week as the Standard & Poor's 500 inched higher yet again. "Stock prices are not warranted by the fundamentals."

The financial reporting season begins Tuesday, when Alcoa announces third-quarter results. Brace yourself: For three months, stock prices have risen while, in seeming contradiction, Wall Street analysts have slashed estimates for earnings.

Earnings for July through September are expected to drop 1.3 percent compared with a year earlier for S&P 500 companies, according to S&P Capital IQ, a research firm.

That would break an 11-quarter streak of rising earnings that began just after the Great Recession ended three and a half years ago. Earlier this year, analysts had expected earnings for the quarter to rise 7 percent.

To be fair to the bulls, it's generally future quarters that investors should be most concerned about, not the one that just passed. That's a time-honored rule of investing.

But analysts have been cutting estimates for those quarters, too. They've lowered forecasts for earnings growth for each of the next two quarters by a third since the summer, and as much as half since the beginning of the year.

The bad news started in July, when UPS, the world's largest package delivery company, said the global economy was slowing and lowered its 2012 profit forecast as a result.

Then FedEx said that shipping volume had fallen to recession levels, and that investors should expect lower earnings. Norfolk Southern, the giant railroad company, cut its forecast, too.

The flurry of so-called negative pre-announcements ranged across industries — from steel maker Nucor Corp. and Applied Materials Inc., which sells semiconductor-chip-making machines, to Starbucks and Tiffany & Co.

On Tuesday, Fifth & Pacific, the company behind Juicy Couture products, said sales were weakening and it was likely to report lower earnings than expected, too. Investors pushed its stock down 11 percent in just a day.

Tally it up and 78 percent of companies issuing pre-announcements have suggested they will disappoint, according to FactSet, a financial data provider. That is the worst reading since FactSet began keeping records six years ago.

The problem is companies are running out of ways to increase earnings. You can see that in the results for the previous quarter, from April through June. Earnings for companies in the S&P 500 barely rose from a year earlier, just 0.8 percent.

U.S. economic growth has slowed to an annual rate of 1.3 percent, practically stall speed. Meanwhile, the old formula that companies have used to compensate — pulling more profit out of each sale by trying to run leaner — suddenly isn't working.

You can only cut expenses and squeeze workers so much, and many companies seem to have reached the limit. Profit margins are falling for the first time in the recovery, after hitting a record of nearly 9 percent, according to Goldman Sachs.

The other way U.S. companies have posted higher profits is by selling more abroad. But many of the 17 countries that use the euro have fallen into recession. And developing countries are facing headwinds now, too. China, India and Brazil are slowing. On Wednesday, the Asian Development Bank slashed its growth forecast for emerging economies this year and next.

So what's kept stocks rising? One theory is loose monetary policy.

The Federal Reserve announced last month a third round of bond-buying to try to stimulate the economy. That followed a bold plan by the European Central Bank to buy government bonds of struggling countries in its region.

"Central banks have single-handedly kept asset prices elevated," said Peter Boockvar, equity strategist at trading firm Miller Tabak Advisors. "It's certainly not the economy. It's certainly not the trajectory of earnings."

To be sure, analysts have been too pessimistic before, and investors who ignored them made money. Analysts expected earnings to fall in the first quarter of 2012, but they didn't. Those who bought the S&P 500 at the start of the year are up 16 percent.

And even if analysts are right and earnings fall, you can still make money buying stocks, though history suggests it's risky.

In the 46 quarters since the start of 2001, earnings for the S&P 500 have fallen 15 times. Seven of those times, stock prices rose the following three months, sometimes spectacularly.

In the first quarter of 2009, S&P 500 earnings plunged 35 percent. Yet investors who were brave enough to buy stocks enjoyed an S&P 500 gain of 15 percent over the next three months. If they held on after that, they doubled their money.

Similarly, investors won big who bought after the third quarter of 2001, when earnings fell 23 percent. Stocks rose 10 percent the following three months. But unlike in 2009, the next few quarters produced losses as earnings kept plunging. Stocks dropped for the next three quarters, in one of them by 18 percent.

Investors shrugging off disappointing earnings now are hoping the current period resembles 2009. But it's not a sure bet, and they may end up getting something closer to 2001 instead.

Read More

As fans wait for iPhone 5, Apple misses earnings target

7:00 PM Apple, earnings, iPhone, misses, target No Comments

(18:03 Aktualisiert ostlichen) Menschen konnen nicht ihre Hande auf iPads schnell genug, aber es scheint, dass sie bereit sind, zu halten und warten auf die nachste Version des iPhone, obwohl Apple keine Details daruber offiziell anerkannt hat noch keine.

Apple verkauft 8,50 Millionen weniger iPhones im dritten Quartal und fiel unter den Erwartungen der Analysten wenn es das Ergebnis fur das dritte Geschaftsquartal seine, berichtet kommt mit $35 Milliarden Umsatz und Gewinn je Aktie von $9,32 fur das Quartal endete am 30. Juni. Das war hoher als Apples eigene Leitung von ca. 34 Milliarden $ Umsatz und Gewinn je Aktie von etwa $8,68, wahrend die Stra?e $37,20 Milliarden Gewinn und Gewinn je Aktie von $10.35, erwartet nach Daten von FactSet.com.

Das Lager geschlossen fur den Tag an $600.92, um etwas weniger als $3 pro Aktie.

Die Rohertragsmarge sank von 47,4 Prozent im zweiten Quartal auf 42,8 Prozent, aber war hoher als die 41,7 Prozent verdiente Apple im dritten Quartal 2011.

Fur das laufende Quartal projiziert Apple einen Umsatz von $34 Milliarden und Ergebnis je Aktie von $7.65. Cashflow lag auch aus dem Vorquartal $14 Milliarden, um $10,20 Milliarden.

Im dritten Quartal kamen 62 Prozent der Apples Umsatz aus internationalen Markten. Europaische wirtschaftliche Schwierigkeiten belasteten das Unternehmen, und dieses Problem darstellen konnte eine Herausforderung geht weiter, wie die anhaltende Starke des US-Dollar, konnte, wenn es stark bleibt.

Das iPhone bleibt das Unternehmen gro?ter Hit trotz der Verlangsamung. Apple propagiert seine 28 Prozent Wachstum gegenuber dem dritten Quartal 2011, obwohl die 26 Millionen verkaufte im dritten Quartal war ein Tropfen aus der 35,10 Millionen verkaufte im Vorquartal. Raymond James Analyst Tavis McCourt sagte in einer Mitteilung, dass der Ruckgang nicht unerwartet war. Neue iPhone Aktivierungen sowohl auf AT&T als auch auf Verizon fielen unter Raymond James Schatzungen fur das Quartal.

"Insgesamt scheint es iPhone Aktivierungen am AT&T und Verizon kombiniert lag der Umsatz nur 8 Prozent im Jahr" McCourt schrieb, eine Abkehr von 29 Prozent Jahr uber Jahr Anstieg Aktivierungen im vorangegangenen Quartal.

Analysten zugeschrieben weit verbreitete Geruchte uber ein iPhone 5 sein Debut noch in diesem Jahr weitgehend mit weicher iPhone Verkaufe. "Wir glauben, dass Verbraucher iPhone Einkaufe vor der kommenden Aktualisierung verzogern werden," schrieb William Power, Analyst bei Robert W. Baird & Co., in einer Research Note. Macht hingewiesen Kaufer moglicherweise besonders motiviert fur die nachste Version zu halten weil es erwartet wird, zu einem gro?eren Bildschirm und die Fahigkeit, auf LTE-Hochgeschwindigkeitsnetze Beforderungsunternehmen ausgefuhrt haben.

CEO Tim Cook die "unglaubliche Vorfreude fur zukunftige Produkte" erwahnt, aber keine Besonderheiten bieten.

Je nachdem, wann das (technisch nach wie vor hypothetische) Telefon startet konnte die Zahl der in diesem Quartal verkauft iPhones niedriger, vor allem, wenn die neue Version naher an den Feiertagen und wahrend Apples nachste Geschaftsquartal debutiert. "Wahrend"wir immer noch glauben, dass das iPhone 5 liefern in der zweiten Halfte September, ganzer Volumes scheinen unwahrscheinlich bis Oktober starten, schrieb Ben Reitzes, Analyst bei Barclays Capital.

Wahrend iPhones ein langsamer Viertel hatte, waren Dampf iPads Abholung. Apple verkauft 17 Millionen iPads im dritten Quartal, bis aus der fast 12 Millionen, die es im zweiten Quartal um 84 Prozent auf ein Jahr auf Jahresbasis verkauft. Apple hatte einen spaten Start das neue iPad in China zu verkaufen; Es ging auf Verkauf in diesem Monat nach eine Auseinandersetzung mit dem Namen des Gerats besiedelt war.

Apple sagte das iPad wurde mehr Geschaftsbenutzer anzuziehen, und das das billigere iPad 2 war beliebt, vor allem im Bildungsmarkt K-12.

Rob Wilson, Analyst bei Tiburon Research Group, zeigt in einer Notiz, dass wachst aber margenschwacheren iPad Verkaufe Gewinnspanne Apples fur dieses Geschaftsjahr vor allem Druck konnte Karte, wenn sie in Verbindung mit sinkenden Umsatzen des iPhone, einem hoheren Margen-Produkt auftreten.

Die 4 Millionen Macs verkauft war flach mit den Zahlen des zweiten Quartals. Apples neue MacBook Pro und MacBook Air Notebook Modelle, dass kam letzten Monat auf insgesamt gute Kritiken, aber sie ging auf Verkauf nur drei Wochen vor Ende des Quartals. Mittelamerikanischer Power wies auch darauf hin, dass es mehr als ein Jahr, seit Apple seine desktop-Angebote aktualisiert und sagt voraus, dass eine Aktualisierung ist "gleich um die Ecke."

IPods verzeichnete zu fallen. Apple verkauft 6,80 Millionen im dritten Quartal, ein Ruckgang von 10 Prozent ab dem dritten Quartal letzten Jahres und weniger als die 7,70 Millionen im zweiten Quartal verkauft. Barclays' Reitzes vorgeschlagen, dass die Aussicht auf ein kleineres iPad Tablet einen positiven Spill-over-Effekt auf den Musik-Player haben konnte. "Das Produkt auch sein konnte nutzlich, erweitern die Funktionen des iPod Touch in einen gro?eren Formfaktor wie es scheint, dass das Produkt etwas an Fahrt verloren hat", schrieb er.

Blick auf die Zukunft erwarten die meisten Analysten auch iPad Umsatzsteigerung auf Geruchte uber einen sieben-Zoll "iPad Mini", die sowohl in den USA und im Ausland gegen billigere, sieben-Zoll-Android-Gerate von Apple-Konkurrenten wie Samsung und Google konkurrieren konnte.

Es gibt auch einige Spekulationen uber die Aussicht auf Apple startet ein iTV, entweder am Ende dieses Jahres oder Anfang 2013. "Wir erwarten AAPL einen noch starkeren Sto? in Cloud-basierte Dienste uber iCloud, machen die AAPL dann moglicherweise als Einstiegspunkt in das Wohnzimmer nutzen konnte," Peter Misek, Analyst bei Jefferies, schrieb in einer Research Note. Apple Fuhrungskrafte sagte iCloud 150 Millionen Nutzer.

CNBC Gary Kaminsky und Peter Boockvar, Miller Tabak wiegen in auf Apples Gewinn Miss.

Read More

McDonald's shares fall after earnings upset

5:00 PM after, earnings, McDonalds, Shares, upset No Comments

Bryan Elliott, Raymond James, and Matthew DiFrisco, Lazard Capital Markets, break down McDonald's lower-than-expected quarterly numbers, hurt by a slowing global economy and stronger dollar.

McDonald’s shares fell 2.5 percent to $89 Monday after the fast-food company’s chief executive said lower-than-expected quarterly earnings “reflected the slowing global economy [and] persistent economic headwinds.”

The world’s biggest fast-food chain company said weak consumer demand and the hindrance from the stronger U.S. dollar hurt business. A stronger dollar reduces the value of sales overseas for U.S. companies.

“You are starting to see signs that consumers are spending less at restaurants,” said Morningstar analyst R.J. Hottovy. “You are also seeing increased competition.”

McDonald’s net income fell to $1.35 billion during the second quarter, down 4 percent from $1.41 billion reported in the same quarter the year before. The restaurant chain said it expects same-store sales to go up in July, but less than they did in the second quarter.

“While the environment has become more challenging, we continue to see significant opportunities to further differentiate and grow the McDonald’s brand,” McDonald’s Chief Executive Officer Don Thompson said.

“We have the resources and discipline to invest for the long-term benefit of our System and our shareholders,” he added.

The broader stock market tumbled Monday, with the Dow sinking sharply, amid fears about the stability of key European economies as the region’s debt crisis intensifies.

Read More

Wall Street waits for Apple, Facebook earnings

6:30 PM Apple, earnings, Facebook, Street, waits No Comments

By Caroline Valetkevitch, Reuters
NEW YORK -- The trend of better-than-expected earnings will be put to the test in the coming week when investors hope Apple can exceed already high expectations for the tech giant and Facebook reports its first quarterly earnings.

Apple accounts for a significant proportion of the overall earnings of Standard & Poor's 500 components. S&P 500 earnings are expected to show a rise of 5.7 percent in the second quarter from a year ago. Excluding the maker of the iPad, the rise is 4.8 percent, according to Thomson Reuters data.

Apple's results, due Tuesday, could help stocks build on this week's gains and counter investor worries over the euro zone crisis. More signs of financial stress in Spain on Friday caused stocks to give back some of the week's increase. The S&P 500 ended 0.4 percent higher for the week.

"Apple can drive the whole (tech) group," said Daniel Morgan, who helps manage about $3.5 billion at Synovus Trust Company in Atlanta.

"There's a huge psychological component as it relates directly to Apple. If they just blast numbers like they did last quarter, then obviously the perception will be everybody else did pretty good and Apple did fabulous."

Apple's expected strong performance is mainly why technology earnings growth has held up better than other S&P 500 sectors. The expected growth rate for the sector has gone from 6.9 percent in April to 8.7 percent as of Friday, the data showed.

Apple's earnings for the quarter are seen at $10.38 a share, based on Thomson Reuters I/B/E/S, which includes estimates from 43 analysts. That compares with a profit of $7.79 a share for the year-ago quarter.

Morgan said Apple's growth has largely depended on the success of its new products. "For the stock, to continue its trajectory at the pace it has, it's critical that they release these new products," he said. Apple's shares are up 49.2 percent for the year so far.

Apple does not give any clues on its future products, but the California company is widely expected to release its next-generation iPhone later this year. Wall Street has also set its heart on Apple launching a new "mini iPad" and the long-awaited television set in the near future.

Investors are likely to be just as keen to hear from Facebook when it reports on Thursday. Facebook's first results following its market debut could give investors another chance to indicate how they feel about the stock since its disappointing initial public offering.

Shares of Facebook, one of the most closely watched IPOs ever, lost ground after technical problems with its market debut on Nasdaq and as investors questioned its ability to rapidly increase advertising revenue.

Analysts said an earnings miss by Facebook could be disastrous for the stock, which closed Friday at $28.76, below its $38 offering price.

Investors are looking for executives to address a litany of concerns about the business, such as the efficacy of its online ads and the company's nascent efforts in mobile advertising.

Tech results also will be closely watched for signs of weak demand overseas, particularly from Europe. Other technology companies expected to report next week include Texas Instruments and Amazon.com . Of the S&P sectors, technology has the highest sales exposure to Europe at about 25 percent, according to a Bank of America/Merrill Lynch research note.

Among the other 138 S&P 500 companies reporting earnings are Ford Motor Co , United Parcel Service and Whirlpool Corp .

While the majority of companies have beaten earnings expectations, revenue performance has been the worst for S&P 500 companies since the first quarter of 2009.

With results in from 116 companies, just 43 percent of companies are beating revenue expectations.

Sixty-seven percent of companies are beating earnings estimates, compared with a long-term average of 62 percent, Thomson Reuters data showed.

"With global growth slowing down, it's not surprising we're going to see some mixed numbers on the revenue side," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, whose firm manages about $13 billion in assets.

While earnings are expected to dominate stock investors' attention in the coming week, the euro zone crisis is still capable of taking the spotlight.

"It's the default thing for people to focus on," said Eric Kuby, chief investment officer at North Star Investment Management Corp. in Chicago.

Spain will tap the markets Tuesday when it sells three- and six-month bills. It will also sell three- and five-year bonds on August 2. Spain's 10-year bond yields hit a euro-era high of 7.3 percent on Friday.

The week's U.S. economic data includes the Markit U.S. Manufacturing Purchasing Managers Index for July, due on Tuesday. June's reading marked the lowest showing since December 2010.

CNBC's Amanda Drury looks back at companies that reported earnings this week and ahead to the big names slated to report next week.

Copyright 2011 Thomson Reuters.

Read More

Investors focused on corporate earnings

3:30 PM corporate, earnings, focused, investors No Comments

A host of corporate earnings reports are in focus Tuesday.

Goldman Sachs said its first-quarter earnings fell from a year earlier, but were better than many analysts had anticipated thanks to aggressive cost-cutting and better-than-expected investment banking and trading revenues.

Goldman earned $2.1 billion, or $3.92 per share, during the quarter. In the year-ago period, which was generally stronger for investment banks' trading and banking activity, Goldman earned $4.38 per share, excluding a one-time cost for buying back preferred stock.

The Wall Street investment bank also said it would raise its quarterly dividend to 46 cents per share from 35 cents.

Coca-Cola, the world's largest soft drink maker, also reported quarterly earnings, saying its first-quarter earnings were $2.05 billion, or 89 cents per share, up from $1.90 billion, or 82 cents per share, a year earlier. The world's largest soft drink maker said revenue rose 6 percent to $11.14 billion.

Yahoo is also due to unveil earnings, but the report may be overshadowed by comments from its new CEO Scott Thompson, who is expected to lay out his vision for the struggling web pioneer.

Intel is expected to post a seasonal dip in second-quarter earnings, seen at $0.50 per share compared to $0.56 per share one year earlier.

Johnson & Johnson reported better-than-expected quarterly earnings but global company revenue fell slightly on anemic sales of medical devices and consumer medicines -- businesses that have been hit by costly recalls in the past two years.

Groundbreaking on homes fell unexpectedly in March, but permits for future construction rose to their highest level in 3 1/2 years, Commerce Department data showed.

Housing starts slipped 5.8 percent to a seasonally adjusted annual rate of 654,000 units, the government said. February's starts were revised down to a 694,000-unit pace from a previously reported 698,000 unit rate.

Economists polled by Reuters had forecast housing starts little changed at a 705,000-unit rate.

IBM Corp reports earnings after the bell on Tuesday and investors are hoping strong software demand will make for a repeat of last year's first-quarter performance, when the company raised its full year forecast.

European stock markets edged higher, as prices cheapened by a steep month-long sell-off attracted investors, although concerns about Spain's finances kept the overall mood cautious and volumes low.

Regulators on Monday approved the country's first liquefied natural gas export plant in nearly 50 years. The Federal Energy Regulatory Commission approval paves the way for construction to begin at Cheniere Energy's LNG plant at Sabine Pass, Louisiana.

Chesapeake Energy Corp's oilfield services unit filed to raise up to $862.5 million in an initial public offering of its Class A common stock as the natural gas company looks to fund its heavy spending.

Read More

Slumping Wall Street keeps an eye on earnings

9:52 PM earnings, keeps, Slumping, Street No Comments

CNBC's Jackie DeAngelis reports on the late day plunge in stocks and whether China's economic growth is better than investors think. Also, what to expect from next week's slew of earnings, with Zachary Karabell, River Twice Research; Stephen Weiss, Sho...

After suffering their worst two weeks of the year, stocks will look to quarterly earnings to determine whether the recent pullback has been exhausted or more losses are justified.

Alcoa Inc opened the earnings season with a bang, reporting a first-quarter profit on Tuesday instead of the expected loss. That positive surprise foretold a trend. Of the 32 companies in the S&P 500 that have reported earnings so far, Thomson Reuters data showed that 75 percent - or two dozen - have beaten Wall Street's expectations.

This week will start one of the busiest weeks of the quarterly earnings reporting period. About 86 companies in the Standard & Poor's 500 are expected to post results, according to Thomson Reuters Director's Report.

At Friday's close, both the Dow Jones industrial average and the S&P 500 suffered their worst two-week percentage drops since late November. The Dow and the S&P each fell 2.7 percent for the two weeks from the close on March 30.

"It seems like everybody's been waiting for this so-called correction to potentially get back into the stock market," said Kei Sasaki, managing director of listed equities at PineBridge Investments in New York, which has $67 billion in assets under management.

Wall Street typically defines a correction as a drop of 10 percent from a recent peak. The S&P 500 is down 3.4 percent from April 2 when it closed at its highest level since mid-May 2008.

"The correlations on a moving average have also stayed relatively subdued, which tells us that investors are still looking at the market in a fundamental way that they haven't for the past year," Sasaki added. "So if earnings come in positive for the first quarter, we think they will get rewarded for it."

Among the marquee names on this week's earnings calendar are 10 Dow components: Intel Corp , Johnson & Johnson , Coca-Cola Co , DuPont , Microsoft , The Travelers Companies Inc , Verizon Communications Inc , American Express Co , General Electric Co , and McDonald's Corp .

Financials will also be eyed this week on the heels of Friday's results from JPMorgan Chase & Co and Wells Fargo & Co. Both big banks' earnings exceeded forecasts. In the coming week, earnings are expected from the likes of Citigroup Inc , Goldman Sachs and Morgan Stanley.

Riding the euro zone roller coaster
But even with earnings attracting investors' attention, equities remain vulnerable to flare-ups in the euro zone as the bloc continues to grapple with its debt crisis.

"Earnings are beating expectations. Outlooks still look pretty optimistic," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.

"Overall pretty good news, but it takes one lousy headline out of Europe to trump the whole thing."

Equities snapped a two-day advance on Friday, pulled lower as the rising cost of insuring Spanish debt against default increased concerns about Europe's financial health.

Last week, the benchmark S&P 500 had gained for two consecutive days after a drop of more than 4 percent in the previous five sessions. That opened the possibility that equities had seen the pullback many analysts were expecting after the S&P 500 climbed 12 percent in the first quarter.

The S&P 500 remained near its 50-day moving average, a key technical level that could help indicate the next direction for stocks.

"Technically, we were due for a correction, we started that correction, and the market will always come up with reasons and find excuses that fundamentally will trigger what should happen technically - and it's happened almost perfectly," said Paul Mendelsohn, chief investment strategist of Windham Financial Services in Charlotte, Vermont.

"How far backwards we are going to fall remains to be seen - we've got support at that 1,358 area, and we are playing around the 50-day moving average area."

The S&P 500 closed on Friday at 1,370.26. For the day, it was off 1.3 percent. For the week, it was off 2 percent.

Despite the recent declines, the S&P 500 is still up 9 percent for the year.

Checking the economy's vital signs
The data will also get plenty of scrutiny this week for signals on the U.S. economy's health after a weaker-than-expected jobs report cast doubt on the recovery's strength.

Economic indicators due this week include the Empire State and Philadelphia Federal Reserve's manufacturing surveys, retail sales for March, housing starts and existing home sales.

"It will be interesting to see if this is the beginning of a soft patch, if this unemployment number is a harbinger of more," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

The March nonfarm payrolls report, which was released on Good Friday when the cash U.S. stock market was closed, showed just 120,000 jobs added last month. That figure fell far short of the forecast for 203,000 new jobs and raised questions about whether the recovery in the U.S. labor market was stalling.

Sasaki of PineBridge Investments pointed out that "employment's been under everybody's watch" since Good Friday. "We still continue to see improvement. We believe it was a hiccup but in aggregate, we think the economic recovery is still continuing to improve."

But even if earnings are solid and data shows improvement, markets could be susceptible to further losses if more signs of fiscal distress in the euro zone emerge.

"You have to put Europe, Spain and Italy, on any 'watch list' at this point. That may even be more important than earnings," Massocca said.

"It's not really a liquidity issue. It's a solvency issue, and there are a lot of political whirlwinds around that, and there are a lot of concerns that the political will to actually do something is not going to be. We shall see."

Copyright 2011 Thomson Reuters.

Read More

Access to pill boosts women's earnings

3:01 AM Access, boosts, earnings, womens No Comments

AppId is over the quota
AppId is over the quota
By Linda Carroll, msnbc.com contributor

A new study may add tinder to the debate over whether the federal government ought to require health insurance plans to pay for  contraception. New research shows that access to birth control pills over the past 50 years has translated into higher pay and better careers for women.

After scrutinizing data from a multidecade survey, University of Michigan researchers determined that women who had access to birth control pills when they were in their late teens and early 20s tended to be better educated and better paid 20 years later compared to women who couldn’t get oral contraceptives. Women who had early access to the pill were making 8 percent more than those who didn’t.

“Arguably the pill had some pretty big benefits for these women,” said the study’s lead author Martha J. Bailey, an assistant professor of economics at the university. “I certainly would like an 8 percent pay raise.”

The new study, published as a working paper by the National Bureau of Economic Research, used data from two long-term surveys: one that looked at health and another that looked at labor force outcomes. Both tracked women for decades.

The labor force study was started in 1968 and included 4,300 women who were between 14 and 24 at the time of their first interview. The women were reinterviewed every year until 2003.

Bailey and her colleagues were able to disentangle the impact of the pill from other factors, such as the women’s movement and equal opportunity laws, because many states in the 1960s and '70s only allowed women to get the pill on their own after their 21st birthday. Other states allowed women to get the pill when they turned 18.

So the researchers were able to compare the career trajectories and salaries of women who could get the pill at 18 versus those who had to wait until they were 21.

Data from the health study backed up the assumption that women between the ages of 18 and 21 were far more likely to get a prescription for the pill if they came from a state where they could legally get it on their own.

Early access to the pill changed many women’s life plans.

“Instead of deciding between dating and pursuing a career they could do both,” Bailey said.

The women who benefited the most from early access to the pill were those who came from the most disadvantaged backgrounds.

“One thing I think is important to point out is that we didn’t see a change in the number of children these women had, but we did see changes in when they decided to have them,” Bailey said. “That slight delay in the birth of their first child translated into some pretty big gains in terms of lifetime earnings.”    

Discuss this story on Facebook.

View the original article here

Read More

Google shares slump after rare earnings miss

8:08 AM after, earnings, Google, Shares, slump No Comments

Shares of Google Inc fell 8 percent after the Internet giant posted a rare quarterly earnings miss and said money paid by marketers for its search ads decreased for the first time in two years.

The search giant underperformed on both revenue and earnings, despite record U.S. online commerce during the holiday season, prompting several brokerages to cut their price targets on the stock.

Google shares were down $50.77 at $588.80 in late morning trade on Friday on the Nasdaq. They had touched a low of $584.81. It was the stock's biggest percentage fall in 9 months.

About 5.2 million shares changes hands by 1120 ET, more than their daily average volume.

The broader Nasdaq composite index was down 0.25 percent.

Google executives blamed the decline in search ad rates on forex fluctuations and ad format changes but analysts wondered whether mobile advertising -- which has lower rates -- played a more important role than the company admitted.

The fall in cost per click (CPC) had led to a barrage of questions from analysts during the post-earnings conference call on Thursday.

The market needs to shift expectations to paid click growth and lower its estimates for CPC, Goldman Sachs analysts said in a note.

Google's heavy investments in mobile and social network initiatives -- to stave off competition from rivals Apple Inc and Facebook -- and its planned $12.5 billion acquisition of smartphone maker Motorola Mobility Holdings have also raised investors' concerns.

Larry Page, who took over as CEO in April, said in July that the company was moving to put "more wood behind fewer arrows."

Analysts said the company has seen growth in display advertising, its Android mobile platform and Google+.

Google+ -- its recently-launched social network -- has 90 million users now, up from 40 million three months ago.

Wall Street analysts called the selloff an overreaction; Barclays said it presents a buying opportunity.

"Don't judge a book by its cover," Goldman Sachs titled its research note on Google.

The company's core results were solid as paid click growth accelerated by more than a third, margins improved, and display and mobile businesses performed well, analysts said.

The acceleration in paid clicks suggests that underlying demand for Google ads is quite healthy across devices, JP Morgan said, adding Google is best-positioned for the shift to new media.

Goldman Sachs analysts said, "We expect the growth in mobile to be 146 percent in 2012 and represent 15 percent of gross sales as we exit fourth-quarter of 2012."

The company still has strong earnings power that will reappear during 2012, Canaccord Genuity said, reiterating its "buy" rating.

Barclays, Baird, Jefferies and JP Morgan also maintained their top ratings on the stock.

Copyright 2012 Thomson Reuters.

Read More

Stocks set to rally as earnings pick up

2:55 AM earnings, rally, stocks No Comments

By msnbc.com news services

Stocks are set to rally Tuesday as investors look to corporate profits as earnings season picks up and Chinese data fuel the belief the government may move to stimulate growth.

China's economy grew slightly more than expected but at the weakest pace in 2-1/2 years, suggesting the government may act to increase growth in the near future.

Corporate earnings are due from Citigroup Inc , Forest Laboratories Inc , Linear Technology Corp , M&T Bank Corp , and Wells Fargo & Co . Profit outlooks will be monitored for insight on how the euro zone debt crisis affected multinational companies.

Investors appear set to shrug off a cut in the credit rating of the euro zone's rescue fund by Standard & Poor's by one notch, apparently relieved the downgrade was not more severe. The move comes after Friday's widely expected downgrade of a number of euro zone countries.

S&P 500 futures rose 11.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 118 points, and Nasdaq 100 futures added 26 points.

Carnival Corp slumped 16.6 percent to $28.60 in premarket trade after its Italian unit, Costa Crociere, attempted to locate missing passengers after its cruise liner capsized.

France's EDF SA agreed to drop its opposition to power group Exelon Corp's purchase of Constellation Energy Group Inc after reaching a deal to protect the operating independence of a nuclear joint venture with Constellation.

AIA Group Ltd, Asia's No. 3 insurer that is about one-third owned by American International Group Inc, may bid for the $6 billion Asian insurance operations of ING Groep, sources said.

European stock indexes broke through key technical levels to hit five-month highs in early Tuesday trade, with miners among the biggest gainers after economic growth data from top metals user China topped forecasts.

Reuters contributed to this report.

View the original article here

Read More

For stocks, another week of earnings vs. Europe

8:35 AM another, earnings, Europe, stocks No Comments

NEW YORK — Stock investors will return to a tug of war between signs of domestic strength and overseas concerns this week as a batch of critical earnings reports look to add credence to the idea the economy is improving, while credit rating downgrades in Europe will keep that region's difficulties in view.

Bank stocks will probably once again be a primary focus, as not only will European issues call the group's profit outlook into question, but many key names report results.

Equities have recently undergone a decoupling with respect to Europe's sovereign debt crisis as signs of progress in the euro zone, along with improving U.S. data, have pushed Wall Street higher on improved growth prospects. Financials have been a beneficiary of that rising tide, with Bank of America up about 20 percent since the start of the year.

So far this month, the S&P 500 is up 2.5 percent, while the Dow is up 1.7 percent and the Nasdaq is up 4.1 percent.

"We're going to see more volatility in the weeks ahead with tension between earnings and Europe," said Christopher Sheldon, the Boston-based director of investment strategy at BNY Mellon Wealth Management, which oversees $171 billion globally.

"We want to see Europe resolved, but there will continue to be ups and downs, and while earnings will continue to be relatively good, we do expect slowing compared with 2011."

However, the uncertainty about Europe returned in a big way on Friday after Standard & Poor's downgraded the ratings of nine of the 17 euro-zone countries, including France, Italy and Spain after the market closed. Talk of the downgrades spurred a selloff that erased most of the gains for the week, when the S&P rose for four straight sessions.

The downgrades could exacerbate the euro zone's difficulties and bring concerns about how they might affect U.S. banks' profits back to the forefront.

Still, market participants looking for signs of strength don't have to look far. Data has been bullish lately, including Friday's consumer sentiment reading at an eight-month high that sharply exceeded what was anticipated.

"The prospect of a downgrade has been around for a while, so despite today's reaction, everyone was aware of the potential, and I don't think it will be as impactful, especially as corporate business trends remain strong," said Hank Herrmann, chief executive of Waddell & Reed Financial Inc in Overland Park, Kansas.

Earnings reports from numerous bellwethers could reinforce the growth story. Bank of America Corp, General Electric Co, Intel Corp, Goldman Sachs Group Inc and Microsoft Corp are among the names set to report.

Early reads have supported the idea that better times lie ahead. JPMorgan Chase & Co said the domestic economy was strengthening even as its profit fell 23 percent, while Alcoa Inc rallied earlier in the week after giving a bullish outlook for the aluminum sector.

"Banks will be an important part of the story, especially with Europe in the picture, and investors will also be looking at names like GE, which have global exposure, to see what insights can be gleaned from that," said Herrman, who helps oversee $90 billion in assets.

The U.S. stock market will be closed on Monday in observance of the U.S. holiday honoring the birthday of the Rev. Martin Luther King Jr., the slain civil rights leader.

When trading resumes on Tuesday, Wall Street will watch a number of economic indicators to gauge the strength of the recovery. Data scheduled for release in the abbreviated week includes the New York Fed's Empire State Index on January manufacturing, the December readings on the U.S. Producer Price Index and the Consumer Price Index, as well as December housing starts and December existing home sales.

For the past week, the Dow rose 0.5 percent while the S&P 500 gained 0.9 percent and the Nasdaq added 1.4 percent.

Copyright 2012 Thomson Reuters.

View the original article here

Read More