|Dow||+21.45 to 18,080.14|
|S&P 500||+4.76 to 2,117.69|
|Nasdaq||+36.02 to 5,092.08|
|10-YR Yield||-0.03 to 1.92%|
|Gold||-$16.30 to $1,177.70|
|Crude Oil||-$0.56 to $57.18|
Investors have two reasons to celebrate today …
1) Tech stocks soared today after a quad-fecta of strong earnings results from industry titans! Amazon.com (AMZN, Weiss Ratings: C-), Google (GOOGL, Weiss Ratings: B+), Microsoft (MSFT, Weiss Ratings: B), and Starbucks (SBUX, Weiss Ratings: A+) all blew away expectations, sending their stocks through the roof!
Oh and yes, SBUX is not technically a “tech” stock. But it is a well-known Nasdaq-traded name that uses technology to boost its business, so I’m lumping it in here. More on these guys in a minute. But first …
2) Today marks the one-year anniversary of my afternoon Money and Markets editions! It’s hard to believe, but with this column on April 24, 2014, we launched our latest ambitious effort to keep you updated on all the important developments of each trading day.
|The Nasdaq Composite just eclipsed its bubble-era highs!|
Since that date, I’ve covered everything from Donald Stern to the McDonald’s (MCD, Weiss Ratings: B-) meltdown … from tax inversions and the euro currency implosion to the energy market’s resurgence and the possibility of the biggest “Big Reversal” in market history.
I haven’t nailed every trend. I’ve had some misses along the way. But I’ve had a lot of successes and correct calls, too. And whether you agreed with my conclusions or not, I trust you felt better informed about the many trends that influenced bonds, stocks, currencies, and commodities along the way!
Rest assured I’ll keep plugging away in 2015 as well, and as always, I continue to welcome your feedback at the Money and Markets website here.
Now, let’s talk tech earnings! Amazon.com reported a stronger-than-expected 15 percent surge in sales to $22.7 billion. Analysts expected $22.4 billion. “Earnings” were once again absent, with the online retailer turning in a loss of $57 million, or 12 cents per share.
But investors dog-piled into its shares anyway after the company finally revealed details of its Amazon Web Services business. The division provides cloud computing services, and it generated revenue of $1.57 billion in the quarter.
That was up 49 percent from $1.05 billion a year earlier, and some analysts expect Amazon could eventually spin it off at a huge multiple. Ergo, the stock surge of 14 percent on the day!
Then there’s Google. The Internet search behemoth reported a 3.9 percent rise in profit to $3.6 billion, or $5.20 per share. If you exclude certain items, you get $6.57 per share — slightly below analyst estimates.
But the stock took off anyway because some of the weakness stemmed from the rising dollar rather than core business problems, and because Google trimmed costs. Shares finished the day up 2.9 percent.
|“Investors were pleased with signs of progress in Microsoft’s gradual shift away from the declining PC industry.”|
How about Microsoft? The mega-software/Xbox company delivered 61 cents per share in fiscal third-quarter earnings, topping estimates for 51 cents per share. Revenue jumped 6 percent to $21.7 billion, also topping expectations.
Investors were pleased with signs of progress in Microsoft’s gradual shift away from the declining PC industry toward cloud-based and mobile/table-based business. They rewarded the company by driving its shares 10 percent higher on the day.
Finally, Starbucks turned in a 16 percent surge in profit to $494.4 million, or 33 cents per share. Revenue jumped 18 percent to $4.56 billion, better than analysts anticipated.
Plus, the company’s move to sell more food later in the day — and its test program to sell alcohol alongside coffee and tea — are boosting sales nicely. That’s exactly what investors wanted to see, and they pushed SBUX shares 4.8 percent higher as a result.
Just yesterday, I noted that the major, broad averages couldn’t seem to break out no matter how hard they tried. But tech stocks are clearly doing so now, and the Nasdaq Composite just eclipsed its bubble-era highs!
Will that be enough to drag the Dow Industrials and S&P 500 along to new highs as well? Will we get true, powerful breakouts on heavy volume? Or is this move doomed to fail? How are you playing this market in light of the latest news? You know what to do: Jump over to the Money and Markets website and weigh in!
|Our Readers Speak|
Time to bat cleanup on a few issues we’ve discussed this week …
Reader Jim came out as a proponent of energy exports, saying: “For years now, the oil and gas industry has been leading the U.S. economy out of the doldrums. Of course, we liked low prices when we were the big importer. Now, we are close to being the top dog again and we must realize higher prices are not necessarily a bad thing.
“It means lots of high-paying jobs and keeping our cash here at home instead of sending it to the Middle East, where they use it to harm us. If we were allowed to become a leading exporter, we would beat OPEC at its own game. Nobody does oil and gas better than the U.S.”
But Reader John countered by saying: “Here we go again. The major oil monopoly has to adjust to good ole supply and demand, and we start talking of ways to increase their inflated ‘bottom line.’ So what happens if we lift the export embargo and there’s an all out hiccup in the Middle East? My speculation would be that global gas prices would rise significantly!”
When it comes to the stock market outlook, Reader Bill said: “Get ready for the routine Friday drop in U.S. stocks. My feeling is both U.S. and foreign stock markets are where they are this year because of greed, and a big correction — or more likely, a 37 percent crash — will happen not in 2015, but sometime in March of 2016.”
On the other hand, Reader Phil said you can still find promising investments if you are willing to do the work. His take: “I’m in total agreement that this market is for stock pickers, and not all boats will float.
“For example, I am carrying a nice open gain on a chip stock that is levered to one of our best hardware producers; to an aerospace stock that is cashing in on both the civilian and military markets; to a proponent of the natural food craze; and to a company profiting from our increasingly cashless society. In addition, I must mention the enormous open profits I have in a couple of biotech stocks that are addressing unmet medical needs.”
Thanks for all your comments! I’m on board with the idea of selective investing, and I’m definitely in favor of exporting crude rather than just sticking with asinine, outdated policy from the 1970s. If there’s anything else you’d like to add, here’s that website link again.
|Other Developments of the Day|
Businesses aren’t opening their wallets, at least not for American capital goods. Non-defense orders, ex-aircraft … a key gauge of business investment … sank 0.5 percent in March.
That was worse than the 0.3 percent gain that economists expected. It was also the seventh consecutive decline, dragged down by a reduction in energy sector spending, a strong dollar that favors overseas competitors, and more.
It’s just one more reason I believe U.S. politicians and policymakers will continue to jawbone the dollar lower. And sure enough, just as I predicted a few months ago, the buck continued to break down against key foreign currencies today — from the Canadian dollar to the British pound.
Two hostages — one American, one Italian — became casualties of our drone war against terrorism, according to the White House. Both Warren Weinstein of Maryland and Giovanni Lo Porto, captive since 2011 and 2012 respectively, died in the January strike by the C.I.A.
Talks, talks and more talks! That’s been the story of the debt negotiations between Greece and its European creditors for what seems like an eternity. Apparently, the latest round in Riga, Latvia, involving finance ministers from Greece and other euro-zone countries got heated — diminishing expectations (for now) of a quick deal.
Ever see that disaster movie “2012“? Turns out, Director Roland Emmerich might have been on to something!
A new study of Yellowstone National Park suggests there’s a huge chamber of volcanic magma below it. If it were to ever erupt, it could send 1,000 times more material into the atmosphere. That would be a truly catastrophic event with global repercussions. Hopefully, John Cusack will still be around to save the day!
Is the drone war worth the collateral damage, including the tragic death of two Western hostages? Should American officials fight back harder in this global currency war with Europe and Japan? Thoughts on any other stories I’ve shared, or that you stumbled across elsewhere? Then use the website this weekend to ping your fellow investors and me about them!
Until next time,