5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.

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Though analysts praise the new 'art studio' design, shares still fall after the CEO warns of continued sales weakness.

By Kim Peterson Sep 20, 2012 2:08PM

J.C. Penney (JCP) just can't catch a break.

 

The retailer invited hundreds of analysts and investors to Texas on Wednesday to check out a prototype store that fully reflects the vision of CEO Ron Johnson. The tour was meant to wow investors, and to some extent it did, as J.C. Penney shares spiked in the afternoon.

But in a presentation to analysts, Johnson hinted that the second half of the year will see continued sales weakness. Menswear hasn't been selling well, and with no back-to-school coupons, sales in September were unexpectedly rough, Barron's reports. Investors fled the stock, and shares closed down more than 11% to $25.83 Thursday.

 
Tags: DISJCP

There are better uses for the athletic apparel maker's money.

By Jonathan Berr Sep 20, 2012 1:06PM
Credit: HANDOUT/Newscom/RTR/ReutersWhen Nike (NKE) announced Wednesday that it plans to buy back $8 billion in company Class B shares over the next four years, CEO Mike Parker described the move as "a prudent use of our cash."  

CEOs usually make similar comments about buybacks, but in Nike's case, investors shouldn't take the company's word.

Yahoo pundit Jeff Macke correctly noted in a tweet that "a huge buyback w/ shares $10 off all-time highs is foolish." Indeed, Nike shares are trading at a price-to-earnings multiple of 20.65, near their five-year high of 22.86, according to Reuters. Wall Street analysts have an average 52-week price target of $106.07, about 9% higher than where the stock currently trades. That forecast, however, may be wishful thinking, given Nike's recent struggles. Its shares have barely budged this year. 
Tags: CROXSKX

With demand for the devices expected to outpace inventories, consumers could be left empty-handed.

By InvestorPlace Sep 20, 2012 12:57PM
Image, Gifts, copyright Image Source Black, JupiterimagesBy Alyssa Oursler

iplogoIf you think the looming tablet wars are only for tablet makers, think again.

Yes, Microsoft's (MSFT) Surface, Apple's (AAPL) iPad, Amazon's (AMZN) Kindle Fire and the recently added Tabeao from Toys R Us -- which is owned by Vornado Realty Trust (VNO) -- are all competing for attention as the holiday shopping season rolls around.

But when consumers finally make it to the many retailers selling these hot gadgets, they may find themselves duking it out, as inventories of the increasingly popular tablets may not keep up with the seasonal demand. 

Agency director Thomas Hoenig calls for the separation of commercial banking and brokerage businesses.

By TheStreet Staff Sep 20, 2012 12:24PM

TheStreet.com logoBank sign copyright John Foxx, Stockbyte, Getty ImagesBy Philip van Doorn

 

Federal Deposit Insurance Corp. director Thomas Hoenig wants U.S. banks out of the brokerage business.

 

Speaking before the Exchequer Club in Washington, D.C., on Wednesday, Hoenig reiterated his May 2011 proposal that banks -- in return for the "public safety net" of deposit insurance and access to the Federal Reserve discount window -- should "again be restricted from engaging in higher-risk/return activities such as trading, creating derivatives or other broker dealer activities."

 

Unlike the Glass Steagall Act of 1932, which was originally meant to completely separate traditional banks that gathered deposits and made loans from investment banks, Hoenig's proposal would allow banks to "continue to do trust and wealth management, and underwrite new issues of stocks and bonds, as those activities bring new capital to commercial firms."

 

Apple's Internet radio ambitions put the Internet radio company in play.

By Jonathan Berr Sep 20, 2012 11:59AM
 Teens with MP3 player, copyright RubberBall, SuperStock
Shares of Pandora Media (P) rose Thursday after Bloomberg reported that the Internet radio company may be a takeover target if speculation about Apple's (AAPL) plan to start a rival service proves accurate.

Pandora, which went public last year, would interest many companies because it has helped breathe new life into the radio business. 

The company's growth has been remarkable. According to data cited by Bloomberg, Pandora represents 74% of online radio listening. Web radio accounts for 6.3% of all U.S. radio use, up from 3% a year ago. Sales of Internet radios are expected to hit 10.9 million units in 2018, versus 149,000 in 2010, as the devices become more ubiquitous in cars.

During the last quarter, the Oakland, Calif., company said revenue surged 51% to $101.3 million as total listener hours climbed by 80% to 3.3 billion. Its net loss was $5.4 million, or 3 cents a share. Wall Street analysts expect Pandora to earn 1 cent in the current quarter. Though consistent profitability will be elusive for a while, Pandora seems to be headed in the right direction.
 

After a lackluster decade, this dominant technology stock is set for a strong turnaround.

By TheStockAdvisors Sep 20, 2012 11:29AM
Network cable, copyright Epoxydude, Getty Images, Getty ImagesBy George Putnam, The Turnaround Letter

Cisco Systems (CSCO) peaked at $77 in early 2000 before declining sharply as the tech bubble burst, and the stock has bounced around in the $10s and $20s for much of the past decade. It finally appears to be on the verge of breaking out of its more than decade-long doldrums.

The networking company is focused on building its market-leading positions in some of the most important technology segments in order to build profits and cash flow. Moreover, the company is committed to returning a significant portion its cash to shareholders.

Cisco is the dominant supplier in many of its markets. Its products provide the backbone for several of the fastest-growing technology sectors, including cloud computing, video, smartphones, and social networking.   

UBS downgrades Citigroup, Goldman Sachs and Morgan Stanley to 'neutral.'

By MSN Money Partner Sep 20, 2012 11:28AM
fly logoInformation provided by Theflyonthewall.com

Thursday's noteworthy upgrades include:  
  • Adobe (ADBE) upgraded to Outperform from Sector Perform at RBC Capital
  • American Water (AWK) upgraded to Conviction Buy from Neutral at Goldman
  • DreamWorks (DWA) upgraded to Neutral from Sell at Janney Capital
  • Limited (LTD) upgraded to Outperform from Neutral at Credit Suisse
  • Kinross Gold (KGC) upgraded to Buy from Speculative Buy at TD Securities
 

More weak reports could be the symptom of a bigger problem.

By InvestorPlace Sep 20, 2012 10:38AM

Ddiamond necklace, Image Source, CorbisBy Lawrence Meyers


IPLOGOLast month, I wrote about weakness in Tiffany & Co. (TIF), and my thesis was that luxury led us out of the financial crisis, so any slowdown there may foretell further recession. A certain deceleration is expected in this sector because of difficult year-over-year comparisons, but Tiffany’s organic revenue growth was only 2%. Ralph Lauren (RL) and Coach (COH) also came in weak.


And now Burberry Group (BURBY) has joined the list. Last week, the company warned that it would see only a 6% increase in revenue and that such a jump would be entirely due to new stores, while same-store sales would be flat. This contrasts with more than 60% revenue growth in the first quarter of 2011.

 

Both overestimate the car company's year-end cash position.

By TheStreet Staff Sep 20, 2012 10:34AM

TheStreet.com logoFinancial Chart, Kick Images, Photodisc, Getty ImagesBy John Petersen

 

Bank of America's (BAC) Merrill Lynch last month reinstated its coverage of Tesla Motors (TSLA) with a "neutral" rating and a target price of $33. Earlier this week, Morgan Stanley (MS) raised its rating from "underweight" to "overweight" and increased its target price from $45 to $50.

 

Both reports included a fundamental financial modeling error that overestimates Tesla's year-end cash position by roughly 200%.

 

The error was simple. Both firms accounted for expected sales and expected new reservation payments during the second half of the year. Neither firm properly accounted for the fact that reservation payments and cash will decline by $40,000 for each Model S Signature Edition and $5,000 for each additional Model S Tesla deliveries this year.

 

Two million customers have ordered Apple's new handset despite the protestations of underwhelmed tech critics.

By TheWeek.com Sep 20, 2012 10:27AM

AppleThe verdict is in: Customers really want the iPhone 5 (AAPL). Going against the recommendations of disappointed tech bloggers, more than 2 million consumers went online Friday to put in their orders. That's twice as many as the iPhone 4S had in its first 24 hours and more than triple the number of early orders for the iPhone 4.


Some analysts predict the iPhone 5 will sell 10 million to 12 million units in September alone, and 50 million by the time the holiday season peaks in December.


Why is the new iPhone -- which has a faster processor and a larger 4-inch screen and uses faster next-generation 4G LTE networks -- shattering sales records even though it wasn't the revolutionary device everyone was holding his breath for? 

 

Reports show contraction in China's manufacturing activity and in the eurozone's private sector. US jobless claims fall by 3,000, but the level remains high. The Philly Fed's manufacturing index improves slightly, while leading indicators slip.

By Melly Alazraki Sep 20, 2012 9:23AM
stock marketUpdated at 12:20 p.m. ET

U.S. markets trimmed earlier losses but remained lower after U.S. reports showed jobless claims fell less than forecast, while the Philadelphia Federal Reserve Bank's gauge of regional manufacturing activity remained sluggish. Investors were also concerned about the global economy after weak data from China and eurozone.

The Dow Jones Industrial Average ($INDU) was down 11 points at 13,567. The S&P 500 ($INX) was down 4 points at 1,458. The Nasdaq Composite ($COMPX) was down 12 points at 3,171.

In the U.S., applications for jobless benefits fell by 3,000 to a seasonally adjusted 382,000 in the week ended Sept. 15, the Labor Department said Thursday. Economists expected claims to drop to 375,000, according to Briefing.com. Levels near a two-month high suggested some weakening in the labor market.

The four-week  average, which economists see as a better gauge, rose by 2,000 to 377,750, the highest level since late June. It was the fifth week of increases. 

Rails could have been a nice card to play in the easing game if not for Norfolk's hard dose of truth.

By Jim Cramer Sep 20, 2012 8:53AM

theStreet.com logoCoal tains, Joseph Sohm-Visions of America, Photodisc, Getty ImagesThe biggest problem with investing with the central banks is this: You very much want to own the stocks of the companies their easing is meant to help, except on days when those companies speak.

 

Wednesday was a terrific day for this kind of remonstration and analysis. You had to feel a little emboldened during the session. After all, here's 3M (MMM) saying its regular goals had just become stretch goals -- a big-cap name basically saying, "Look, we aren't going to make the numbers." Yet the stock didn't even get hit. You saw the users of energy getting a boost after the third straight day of oil price declines. You saw airlines all flying higher off it, and when those dogs move, they move like greyhounds at the track.

 

The company's money managers bought more than 2% of the shares sold in the offering.

By Kim Peterson Sep 19, 2012 6:28PM
Image: Arrow Down (Photodisc/SuperStock)Morgan Stanley (MS) was the lead underwriter for Facebook's (FB) initial public offering, and liked the stock so much that it bought in bigtime. Now, Morgan Stanley investors are paying the price.

The company's own money-management team bought more than 2% of the shares sold in the offering, Bloomberg reports. Its Investment Management unit bought 10 million shares at $38 each, plowing about $380 million into the IPO. In fact, Morgan Stanley has become the sixth-largest shareholder in the company.

A dozen funds in that unit each spent 6.8% of their net assets buying Facebook shares at $38 each, which was the IPO price. But shares of Facebook have tumbled since then, closing Wednesday at $23.29, and some of Morgan Stanley's funds began unloading the stock in June. 
Tags: FBMS

The action helped stock markets across Asia.

By Jim J. Jubak Sep 19, 2012 5:13PM
The Bank of Japan, the country's central bank, has joined the global parade of central banks moving to stimulate domestic economies. In the case of the Bank of Japan, the move wasn’t unexpected, although the timing is more aggressive than economists had projected. Most thought the move wouldn’t come until October.

The Bank of Japan didn’t cut interest rates -- with short-term rates at 0% that would have been quite a trick. Instead, it expanded Japan’s version of quantitative easing by increasing its asset-buying program by 10 trillion yen ($128 billion.) The new funds will go to purchase government bonds and Treasury bills.
 

Investors really aren't sweating any legal trouble Apple faces, however.

By Minyanville.com Sep 19, 2012 4:35PM
Image: Laws (Medio Images/SuperStock)Judge Lucy Koh rejected Samsung's (SSNLF) motion Tuesday to have Apple's (AAPL) ban of the Galaxy 10.1 tablet removed. However, Apple now faces a legal challenge from Motorola Mobility, which could put Apple in the same position as Samsung.

The U.S. International Trade Commission, or the USITC, voted and announced Wednesday that it will investigate Motorola Mobility’s claim that Apple infringed on seven of its patents. Motorola cited Section 337 of the US Tariff Act of 1930, and this section of the law could potentially ban Apple’s products from entering into the United States. The investigation will cover iPods, iPads, and Mac computers. The USITC will set a date to finish the investigation within 45 days.

Click here for the release from the USITC. 

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[BRIEFING.COM] The S&P 500 has inched up from its worst level of the session, but that could be overlooked considering the index remains lower by 28 points.

Today's retreat has sent the benchmark average below its 50-day moving average (1953) for the first time in a while. Specifically, the index tested, but never closed below the 50-day average on six occasions during a three-week stretch between late April and early May. Prior to that span, the S&P 500 dove below the 50-day ... More


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