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Market Recap: Flip Flop Markets, Stocks Fall


Stocks could not sustain yesterday's rally. Tech fell, even after a strong opening. Markets close lower.


Stocks succumbed to late-day selling pressure. The Dow Industrials fell -92 points, or -0.70% to 13,214, the S&P 500 fell -11 points, or -0.78% to 1469, and the Nasdaq Composite fell -29 points, or -1.10% to 2,644.32.

The markets failed to keep the streak alive after yesterday's rally. Stocks appeared headed for strong gains early on, when news of Merrill Lynch (MER) snagging NYSE Euronext (NYX) CEO John Thain caused a short spurt in buying, and news of Bear Stearns (BSC) disclosing $1.2 bln in write-downs briefly assuaged investor concern. But the buying sentiment seemed to flame out as the day wore on. Although MER closed +1.81%, and BSC added +2.38%, the broader Philadelphia Bank Index fell -1.59%. Toddo had his eyes set on Morgan Stanley (MS) which fell -0.45%. Read his Random Thoughts for today for more insight into his trade. Also read Mr. Practical's The Real Reason For Yesterday's Rally for more interpretation of the markets.

Tech shares also reversed strong gains. Research in Motion (RIMM) shares flip-flopped, closing -1.5%. Apple (AAPL) shares also closed -2.10% even after a strong opening. The performance led Professor Cooper to question, "Did Apple really gain and lose $15 bln in value?" For more, read Between The Ticks.

In retail, Macy's (M) hit a new 52-week low even after beating estimates for the quarter. The company reported 3Q performance of $0.10 EPS versus $0.08 consensus on revenues of $5.91 bln versus $5.9 bln consensus. Professor Depew noted on the Buzz that the grim news that caused the sell-off wasn't the anticipated slowing retail sales environment, but comments in the conference call "related to the credit markets, corporate buybacks, and the ability to generate EPS growth without the buybacks." In the conference call, Macy's CFO stated "we are carefully evaluating our options with respect to the timing of completing our remaining $1 bln authorization. As a result, some or most of that $1 bln could end up being deferred to next year." Macy's shares fell -7.11% to $28.47.

In economic data, Retail sales came in as expected with an increase of +0.2%. Less autos, the figure came in +0.2% versus +0.3% consensus. Producer Prices also was at +0.1% versus +0.3% consensus and Core PPI came in unchanged versus expectations of a +0.2% increase. For more on economic data, read Professor Depew's Five Things You Need To Know.

In commodities, crude oil closed up +3.20 to 94.09. Gold added +15.7 to 814.70. Silver added +0.45 to 15.06, and copper added +18.65 to 333.65.

For more summaries, click on Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.

Earnings Review:

Here are some companies that reported after the bell:

  • Applied Materials (AMAT) reported $0.32 EPS versus $0.29 consensus on revenues $2.36 bln versus $2.38 bln consensus.

  • Network Appliance (NTAP) reported $0.32 EPS versus $0.26 consensus on revenues $792.2 mln versus $760.34 mln revenues.

  • PetsMart (PETM) reported $0.23 EPS versus $0.22 consensus on revenues $1.12 bln versus $1.11 bln consensus.

  • Longs Drug (LDG) reported $0.51 EPS versus $0.44 consensus on revenues $1.24 bln versus $1.246 bln consensus.

Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: VLCK, COST, JAVAD, DELL, gold

Some bearish trade or investment ideas: C, SPX, EEM, FXI, DECK, WYNN, MA, CF, ETFC, GS, MAN, FED, DRYS, DSX, AAPL, M

The week has flown by! We'll see you tomorrow for Thirsty Thursday! Good night!

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No positions in stocks mentioned.

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