Investors will be wishing on Disney earnings
The disappointing jobs report and voter repudiation of austerity in France and Greece will make Monday tough. But a strong earnings report from Walt Disney may help markets regain their footing. Reports from Macy's and Nordstrom may help, too.
An investor can be excused for looking at the stock market's difficult week just ended and thinking, "I hope it's not 2011 and 2010 again."
The Dow Jones industrials ($INDU) hit a four-year high Tuesday and spent the rest of the week falling, culminating in a 168-point loss on Friday. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) suffered their worst weekly losses of the year.
What makes the past weeks more worrisome is that it looks so much like the past two years. The major indexes hit peaks at the end of April and didn't get back to those levels until December in the case of 2010 and February 2012 in the case of 2011. Sunday's election results in France and Greece look to cause a lot of turmoil for the second time in two years. Futures trading suggested the Dow was looking at a drop of 115 points at Monday's open.
Walt Disney (DIS) may offer the best opportunity for the market to feel relief when it releases its fiscal-second-quarter results after Tuesday's close. Macy's (M) and Nordstrom (JWN), which report at the closes on Wednesday and Thursday, may help, too. Continuing declines in oil prices may give the market some support as well.
Socialist Francois Hollande's victory over conservative Nicolas Sarkozy in Sunday's election run-off along with the Greek vote almost certainly means more market turmoil in Europe. Hollande, as The Wall Street Journal noted, won a mandate to challenge German Chancellor Angela Merkel, who has imposed spending cuts as the main remedy to repair the public finances of heavily indebted European countries.
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The Greek vote produced such a fragmented result that it's not clear anyone can form a government at all, much less a government that can enforce or renegotiate the terms of the bailout negotiated in February. The incumbent conservatives and socialists lost seats in Greece's partliament to far-left and far-right candidates.
Europe continues to be a mess, with austerity the rule and no one willing to consider actions to boost growth.
The euro area is walking, eyes wide open, into depression," The Economist wrote this week. "Led by its periphery, which is already there."
The jobs report hurts stocks
U.S. stocks stumbled this past week -- well, really on Friday -- when the government reported that nonfarm payrolls were up 115,000 in April. Economists were looking for payrolls to gain 160,000 or so. Private-sector payroll gains were supposed to be around 200,000. The government said the number was 130,000.
"A disappointment, if not a crushing one," wrote Philippa Dunne and Doug Henwood of the Liscio Report, which tracks the economy through state and local tax data.
Like all economic reports, the jobs report was actually ambiguous. March was thought to have produced just 120,000 new jobs. The Labor Department says it was really 154,000, and a revision due in June may bump the number up a bit more.
Most everyone knew a lot of hiring came in the winter because it was so mild. Some of those gains may well have been gains that might have come in April and May.
Maybe the situation wasn't so bad. What continues to be true about the jobs picture is this: Jobs are growing only gradually. There's little pressure on wages; the average hourly wage rose a penny nationally to $23.38.
Residential construction, probably the hardest hit sector of the economy during the Great Recession, hasn't begun to recover. Some 460,000 jobs were shed between April 2006 and the bottom in November 2010. Only 5,600 of those jobs have been recovered since.
Housing has typically led the economy out of past recessions. The problem currently is there are still too many houses that need to be dealt with.
|Markets for the week|
|5/4/2012||4/27/2012||% chg.||YTD chg.|
|U.S. Dollar Index||79.59||78.76||1.05%||-1.16%|
Disney is expected to thrive, despite a movie dud
So, the recovery is slow. But not falling apart. The odds are that Disney will help confirm this week. It's expected to earn 55 cents a share in the second quarter, up from 49 cents a share. And those results will include a $200 million charge for the movie "John Carter," which will go down as one of Hollywood's great bombs. Revenue is expected to rise 5.4% to $9.56 billion.
It will show strength in its theme parks, cruise ships and the Disney theme park in Tokyo, which was closed for some time by the March 2011 earthquake and tsunami. The cable business, especially ESPN, should report a 10% revenue gain. Its ABC broadcasting business may report just a 2% revenue gain, but profits will be up 8%.
In other words, Disney may note some consumer caution -- but not a lot.
So, it's small wonder that Disney shares are up 14.5% for the year. The stock has been a solid performer, up 42.1% in 2009, thanks to the market recovery, 16% in 2010 and 14.5% in 2011.
Macy's and Nordstrom will add to the cheer, with earnings rising 30% and 14%, respectively. Revenue will be up 4.1% and 12.6, respectively. Their customers are at least fairly affluent and aren't afraid to spend. Their guidance should reflect that view.
Here's who else reports next week:
Monday: Coeur d'Alene Mines (CDE), Electronic Arts (EA), GlaxoSmithKline (GSK) and Tyson Foods (TSN).
Tuesday: Retailer Fossil (FOSL), OfficeMax (OMX), oil-driller TransUnion (RIG) and Vitesse Semiconductor (VTSS).
Wednesday: Fertilizer-maker Agrium (AGU), Priceline.com (PCLN), DollarThrifty (DTC) and News Corp. (NWSA). A British parliamentary committee declared News Corp.'s Chairman Rupert Murdoch unfit to lead a major media company this past week because of the ongoing phone-hacking scandal. The stock fell 2% on the week, most of it on Friday.
Thursday. McDermott International (MDR), Panasonic (PC) and Nissan (NISANY).
Friday: French banking giant Credit Agricole (CRAGY) and Brazilian oil company Petrobras (PBRQF).
Separately, watch Apple (AAPL). The stock fell 6.3% this past week and was a major contributor to losses suffered Friday by the S&P 500, the Nasdaq and Nasdaq-100 ($NDX) indexes.
And if you're a fan of Facebook, there will be lots of chatter about its upcoming initial public offering, which will probably come on May 17.
Europe's elections + producer prices = Worry
By Sunday evening, it was clear that the French and Greek elections had produced results that would roil European markets on Monday. European markets, in face, were more stressed than U.S. markets this past week. Germany's Xetra Dax Index ($DE:DAX) was off 3.5%. France's CAC-40 Index ($FR:PX1) fell 3.2%.
But the election results were also pushing the dollar higher and knocking prices for crude oil, gold, silver and copper lower.
At home, there are four important reports to pay attention to:
The U.S. Trade Deficit report for March, due Thursday. This should show a big gain because the Chinese New Year celebration cut February's deficit substantially.
The weekly jobless claims report from the government, due Thursday. Watch to see if it falls and how big the revisions from the past week were.
The April Producer Price Index Report, due Friday. The index is expected to fall because gasoline prices moved lower in April.
The Reuters/University of Michigan Consumer Sentiment Index report, due Friday. Lower gasoline prices should help sentiment. But the uncertain jobs picture may weigh on the index.
"Like all economic reports, the jobs report was actually ambiguous. March was thought to have produced just 120,000 new jobs. The Labor Department says it was really 154,000, and a revision due in June may bump the number up a bit more."
Yeah...if you don't like those disappointing results just have the Labor Dept fluff it up and make up some lies to give the appearance that all is well. The truth is that the job market sucks and those jobs being created for the most part of low paying entry level or service work.
1. I am totally against this site deleting your posts, but it is a extreme far left wing site, they try to suppress opposing views all the time. I stand totally against that. Your message sould be restored. How can there be any intelligent discussion without opposing views?
2. I does amuse me that I donated 10 times what the President, Biden and Gore gave to charity. And for the record, I don't give a lot to religion based charities.
3. As to the employees they cover the whole gambit of pay ranges... From engineers to skilled machinists. If you can find skilled machinists making less that $25/hour, please send them to me.
An applicant can give any BS they want... They didn't have a firm offer at that point... I am a bit old school, in that its... "Work or get fired"...
Dodd/Frank would not have gotten the SEC 'regulators' to stop watching porn and do their jobs. Matoff's fraud started under Bush I, and spaned 21 years. And he was yet another life long Democrat...
Dodd/Frank was already law for 18 months, did that Job Corzine? Is he even under arrest? Not even clear email evidence that he authorized the theft of 1.2 billion in customer funds has made the justice department move against the democratic crony of Obama's.
As I have said before nothing in Dodd/Frank would have stopped the current Real Estate Meltdown. More regulators won't and investigators won't. I think we should invest in prosecutors.
We could have prevented the whole housing mess by getting rid of Freddie and Fannie. The government was the real caus eof the mess, with their interference in the private sector. And the FDIC could have prevented the while mess also with 2 regulations... 1. Require 20% margin on all Real Estate loans, and 2. The Bank cannot sell the loan for a 3 year period...
The censors really dislike what could be called anti-left wing views. I admit I am old school when it comes to the criminal element. If I were running things there would be no parole. There would be more death sentences, and I would reduce prison costs dramatically. But the prisoners would not like how I did it. Prisons would resemble POW camps, and the use of deadly force would occur more often. There would be no gyms, basketball courts, TV's, or visitors. The only outside items allowed would be donated items and red cross parcels.
I have dealt with this type of left wing censorship before. It will get worse as Obama's press allies try to eliminate all opposition speach to his views. I have noted for example that if you say fifty-seven states as a numeric not enclosed in quotes, it is likely to be deleted. Slamming Obama posts usually get deleted.
On a personal level you would probably find me to be an extreme liberal, except where fiscal policy is concerned. I have said on here repeatedly, Defense needs to be slashed. Defense spending is out of control. I also don't care what government money is spent on, as long as it is not spent on 18,000 / person GSa junkets, $600 toilet seats or hammers, and a host of other wasteful spending. But, and I repeat this, GOVERNMENT SPENDING cannot exceed 18% of GDP. The historic numbe ris 17% and we are at 26% now with all of Obama's new spending.
Obama has added 1 trillion in new spending to the budget. He will have added 6 trillion in new debt before he leaves office. This fiscal insanity MUST STOP.
It was bad enough W gave us 400 Billion dollar deficits. Obama has converted that into 1.2+ trillion dollar deficits. We cannot Tax, Spend, Borrow or Debase our way to prosperity.
The Euro-zone countries have begun trading...and have opened sharply lower. I don't think Peter Pan and Tinker Bell can save this one.
The investment strategy of Scrooge McDuck (with his warehouse full of gold) might be best here.
I encourage everyone to read about the Wiemar Republic. There it was the bankers that fled the country to avoid having debts paid off in worthless marks. The main reason Germany printed the paper money was to pay off it's war debts and reperations. The French didn't like being paid in worthless currency so they occupied the Ruhr.
The German people that came out of this the best were those that held Specie, Land or shares of business. The middle class and poor were crushed.
We are rapidly heading into a Greek like situtation. We can no longer afford our 'entitlements'. Our debt now exceeds our GDP. Even the richest of states will collapse when it reaches 250% of GDP.
We must fire the main obstacle to fiscal sanity, that being Obama and his SPENDING...
LOE... No one is taking about cutting taxes for the rich. People are just against RAISING them to pay for Obama's massive new spending.
TAXES rates have REMAINED THE SAME FOR A DECADE. Only socialist democrats like Obama and YOU keep LYING by saying taxes on the rich are being cut.
Obama had his chance to roll back W's ACROSS THE BOARD tax cuts, he said the economy needed them. Was he lying as usual...
We have a spending problem, from the SEC watching porn, lavish vacations for the GSA, Pelosi' private jets, guns for Mexican Drug Lords, etc...
So keep spewing froth your DEMOCRAT LIES... The people are used to it...
"can anyone top this commentary on the unemployment going on Macy's and Nordstrom shopping sprees?"
Active, you never heard of Credit Cards? You never heard of Credit Card debt relief?
Michigan has a socialist plan.
ftc dot gov ......more
so even if michigan doesn't bail you out - your Ace in the hole is bankruptcy!
You just file for bankruptcy and everything is good again. just ask General Motors!
umm...ActiveRIA...that was a Obama speaking not me... He said those things in 2006!
As to Simpson Bowles... 4 Trillion with almost NO cuts until year 7... How about we reverse the plan...We provide all the SPENDING cuts up front and all the taxes increases 7 years later?
You plan would remian the same... Still want to sign on to it?
Better yet, how about we roll back Obama's extra trillion a year in SPENDING?
The Greek and French elections did not go well for the continued integrity of the Euro-zone, The crumbling of which might turn out to be a black swan event.
No, I showed Obama voted against raising the debt ceiling, while he was not the one SPENDING.
Once Obama became president he immediately raised SPENDING another trillion a year, and now demands TAXES to support his habit. When he was a Senator he was in complete opposition to more debt. He said is was a sign of FAILED LEADERSHIP.
His words, not mine.
I ask you again, on Simpson/Bowles... Are you still in favor of it with we put the SPENDING cuts in the first 7 years and the tax increases in the last 3, or do you only favor continuing Obama's massive new spending?
We cannot Tax, Borrow, Debase and Spend our way to prosperity no matter what Mr. Obama and his Donkey minions say. Has 6 trillion in additional spending helped at all? Did sucking 6 trillion out of the private economy to be redirected to failed 'shovel ready' projects makes things better? When will we pay for all this spending? Or are you like the typical democrat, and say never, we will print our way out of debt?
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
WELL STATED MR. PRESIDENT... And he voted against the increase...
Now he comes along along INCREASE SPENDING 1 TRILLION a year and then says we need to raise taxes to support the SPENDING.... Delusional...
WE ALL FREAKIN DOOMED; WELL, AT LEAST THE FRENCH ARE.....BAH HAHAHAHAHAHA
the pundits are talking about how the SOCIALISTS are sweeping the european continent because people ARE AGAINST THE AUSTERITY MEASURES.......to bad they not realize how much worse it'll be after four more years of spend spend and spend big with unlimited ink/ paper..........aaaaaah the STUPIDITY (HUMANITY)
p.s. good luck monday, may you sell or buy faster than the other guy
I have no time to argue, debate and repeat myself to any of you. It will change nothing and It's a big waste of time!"
Sorry to read this LOE. I was kinda looking forward to some intellectual discourse. Some exchange of ideas. But if this is your attitude, then i guess there is not to much else to say.... too bad
LOE: While it seems you are stuck in a hate romney loop.
I would appreciate a response to my "Jesus was the first Socialist" inquiry.
It's reading like many posts are deleted here for some unknown reason.
Please respond anyway.
What? Is Charley sitting back there with his finger on the delete key? LOL!
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[BRIEFING.COM] The S&P 500 shed 0.1%, registering its fourth consecutive decline. Today's session proved to be a bit of a roller coaster ride for stocks as the S&P 500 opened in the red, rallied into positive territory, fell to fresh lows, and regained the bulk of its losses into the close.
For the second day in a row, the early weakness coincided with heavy selling in Europe. In addition, bonds and risk assets were pressured by a better-than-expected ADP Employment report, which ... More
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