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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The retail heavyweights hope to offset struggling domestic sales with overseas growth.

By TheStreet Staff May 13, 2011 1:35PM

By Jeanine Poggi, TheStreet

 

Two retail giants, struggling at home, hope to have better luck overseas.

 

Wal-Mart  (WMT) and Gap (GPS) both announced expansion plans to their international business in the last 24 hours; Wal-Mart with the acquisition of a minority stake in a Chinese e-commerce company, and Gap with the announcement that it is moving its brand into Serbia and the Ukraine.

 

The discount retailer purchased a stake in China's Yihaodian, which sells groceries, consumer electronics, clothing and other items. The Chinese company was launched in July 2008.

 

Watch your step on the way down.

By Motley Fool Pick of the Day May 13, 2011 1:05PM

By Rick Aristotle Munarriz

 

You don't need to look too far to bump into pessimism.

 

Remember the recovery in the housing industry? We're still waiting on that one. Real-estate portal Zillow.com is reporting that home sale prices fell 3% during the first quarter, off by more than 8% over the past year. According to Zillow, real-estate prices have dipped for 57 consecutive months.

 

That's a nasty streak, unless you happen to be in the market for a new home without one to sell. It gets worse.

 

There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names that are expected to go the wrong way on the bottom line next week.

 

A recent Bloomberg Poll shows that 68% of investors, analysts and traders have an unfavorable view of the potential presidential candidate. With video.

By Kim Peterson May 13, 2011 12:38PM
The following post is from Bloomberg News:

Donald Trump, the real estate developer-turned-reality-television star who promotes his business acumen as he ponders a U.S. presidential campaign, is a bust with global investors.

By 68% to 14%, the billionaire is viewed unfavorably by respondents in a Bloomberg Global Poll of investors, analysts and traders. In the U.S., where Trump is more widely known, his unfavorable rating climbs to 79%, while those viewing him favorably rises to 17%.

"The last thing this country needs is an uber-political, self-serving, egomaniacal media junkie whose all-sizzle-no-steak approach to life and politics only distracts us all from the real issues and problems of our country," said poll respondent Douglas Schoninger, 50, president of DJS Capital Management Inc. in New York.

Post continues after this video about the Bloomberg poll about Trump: 

Do you check your phone even before getting out of bed? You're not alone, one study shows.

By Kim Peterson May 13, 2011 12:07PM
How addicted are we to the Internet? One recent study shows that 35% of U.S. smartphone users check in with their phones even before getting out of bed in the morning.

The phone is the first thing these people touch when they wake up, and the most common activity is checking their Facebook accounts. About 18% of Facebook users log in while their heads are still on the pillow, according to the study by Ericsson ConsumerLab.

Even right after rising from bed, about a quarter of U.S. smartphone users go on to the Internet, and a quarter check their email.  

As you'll see from the analysis of these 4 blue-chip bank stocks, the fundamentals in the financial sector are extremely weak.

By MoneyShow.com May 13, 2011 11:39AM
By Tom Aspray, MoneyShow.com

Since the stock market bottomed last summer, I have been concerned about the lack of participation of the financial sector in the ensuing rally.

The numbers don’t lie—the Financial Select Spyder (XLF) closed 2010 at $15.95, and settled Thursday at $16.00. In comparison, the S&P 500 is up 7.2% over the same period.

In February, I took a technical look at both Bank of America (BAC) and Citigroup (C), which were both reaching critical junctures. At the time, I advised having your stops in place to avoid big losers in your portfolio. Since then, they are down 14.6% and 9.3%, respectively.

Besides keeping these stocks out of your portfolio, the other major concern is what will happen once the stock market begins a meaningful correction. If the financial stocks, like the banks, are still weak when the market tops out, they are likely to lead the market on the downside.
 

Google stumbles into netbook market with Chromebook. Big Oil battles the Senate. Comcast turns friends into enemies.

By TheStreet Staff May 13, 2011 10:48AM

Here is this week's roundup of the dumbest actions on Wall Street.

 

5. Google hits the books

 

Google (GOOG) should have Googled "netbook" before it took the big plunge into Chromebook.

 

Seemingly unaware of the short, tragic history of the cheap, underpowered mini-notebook category, Google now holds up its breakthrough invention in personal computing: the Chromebook -- a cheap, underpowered mini-notebook with a three-year contract.

 

The opening of Texas locations and a Dallas distribution center could mean moves as far north as Iowa and as far east as Florida.

By InvestorPlace May 13, 2011 9:57AM

Southern California's In-N-Out Burger has officially opened in Texas. And if opening day of the Frisco location is any indication, Ronald McDonald should be shaking in his big red shoes. 


Despite gas prices averaging more than $4 a gallon, folks waited as long as three hours in the In-N-Out drive-thru to get a taste of its burgers. Some even ran out of gas and had to have some delivered.


It's all part of what some folks think is a big expansion plan that could bring the burger joint with a cult following to the entire Southern U.S.

 

Solid earnings from Macy's and Kohl's tell us consumers are thriving. Bet on more of the same from Home Depot, Target and Lowe's next week.

By Jim Cramer May 13, 2011 8:54AM

jim cramerthe streetThroughout this period of retail reporting, I have not heard a single word from the negativists about how these numbers could be so bountiful.

 

We have weak housing, we have so-so employment, we have stretched balance sheets, and we have higher gasoline prices. Yet the numbers so far, from Kohl's (KSS) and from Macy's (M) -- two you would think would be hit the hardest, because you can easily trade down to dollar stores or Target (TGT) or, yes, Wal-Mart (WMT) -- were superb. There were no holes in them.

 

Macy's, in particular, was astonishing. You had this incredible nirvana of data: fantastic sales of the higher-end products, truly terrific across-the-board selling of almost all goods except women's apparel (which was just OK) and an amazing reduction of credit balances and bad debts on the credit card side.

 

Kohl's, similarly, just shot the lights out when it came to profitability. Solid, good numbers. Not the kind that you can put up when things are not so hot.

 

A change in bank policy sparks new worries about how China views its own economy.

By Jim J. Jubak May 12, 2011 5:06PM
Jim Jubak
Another month, another increase in the reserve requirement for China’s banks.

Today, May 12, the People’s Bank raised the reserve requirement by another 0.5 percentage points, to a record 21%.

This is the fifth time this year, and the eighth time since October, that China’s central bank has raised the percentage of assets its banks need to keep on hand. (Money held in reserves is money that can’t be lent out. In theory, raising the reserve requirement should slow the economy and help control inflation.)

Unless my math is off, that’s one increase a month since October 2010.

You might think the move would be old hat by now, but it’s not. In fact, today’s move has raised new worries in China’s financial markets.
 

Facebook hires a public-relations firm to wage a stealth campaign against Google's social-networking efforts.

By Kim Peterson May 12, 2011 4:56PM
Facebook is a bit embarrassed today after being uncovered as the culprit involved in a smear campaign against rival Google (GOOG).

The issue came to light after Facebook hired a well-respected public-relations firm, Burson-Marsteller, to suggest some ugly things about Google to reporters. Burson assigned two of its highest-profile employees to the job: former CNBC reporter Jim Goldman and former political reporter John Mercurio.

Two of them got to work, alerting reporters to Google's "sweeping violations of user privacy." The culprit? Google Social Circle, which builds a network of Gmail users' friends and contacts -- and their friends and contacts. Google culls public sites like Twitter and, yes, Facebook, for the information. You can read more about it here

This cash cow remains the market leader in routers, switches and other advanced technologies. It also has an amazing balance sheet.

By MSNMoney partner May 12, 2011 2:45PM

By Adam Stockmeister, Seeking Alpha


The last of the stocks in my portfolio is the once-mighty Cisco (CSCO). It was the highest-priced company in the world at one point, with a market cap of a staggering $500 billion.


Today it sits at a lowly $96.5 billion valuation and is valued as if it were 2009 all over again. Expected margins for 2Q are 61% and FY of 62%. These are much lower than most expected, and the stock price has been unfairly punished. The products that Cisco sells have not changed, and they are going to be around for a long time, with demand staying flat or increasing in the future. I don't generally like a dividend, but I like the $0.24 dividend (paid quarterly) for about a 1.4% yield.


I believe Cisco's future is only looking up from here. Future dilution will likely stop (unless the share price increases 30%) since the average exercising price of the 732 million pending option shares for employees is $21.39, with nearly half of those options exercisable at prices 15% higher than current prices. This is good for outstanding share count as Cisco has approved up to $10B for buybacks on the current program. The company has bought back over $62B in shares in the company's history.

 

The food giant says it was able to cover a jump in costs for fuel and raw ingredients. With video.

By Kim Peterson May 12, 2011 12:32PM
The price for raw ingredients is killing some food companies. While costs are going up, in this economy any sort of price increase will irritate consumers.

But Kraft Foods (KFT) has managed to navigate those rough waters pretty well. Analysts say it could be the only food company so far this year to successfully raise prices enough to cover costs without sacrificing demand. Kraft's largest brands include Nabisco, Maxwell House and Oscar Mayer.

Kraft "may take the prize as the only (food) company to have offset inflation via pricing" in the first quarter, a Barclays Capital analyst told Dow Jones. "To the extent that pricing can continue to run in line (or slightly ahead) of commodity costs, Kraft should have all the more flexibility to continue to reinvest against its brands and support volume growth." 

Wednesday's circus in the oil market will probably lead to further declines in both crude oil and stocks.

By MoneyShow.com May 12, 2011 12:26PM
By Tom Aspray, MoneyShow.com

Crude oil’s failure to rally through first resistance, and the ensuing sharp downside reversal, has seriously weakened the outlook for the energy sector.

The Energy Select Spyder (XLE) was clearly the star performer in the first quarter of 2011, but failed to make new highs with many of the market averages in early May.

In last night’s report, Fasten Your Seatbelts, I noted that the major stock-market averages were very near critical short-term support and that they were moving in lock-step with crude oil. Later, I examined several major oil companies, all among the largest components of XLE, and they also appear to be completing significant top formations.

The completion of these tops in the energy sector will impact the S&P 500 and Dow much more than the energy-light Nasdaq-100. If we get a drop in the major averages to more important support, it will be important for another sector to step in and take over leadership. It could be the tech sector.
 
Tags: oil

Though first-quarter earnings have been solid, there are new concerns that the momentum won't continue.

By Anthony Mirhaydari May 12, 2011 12:11PM

While job growth, housing and wages have all lagged during the economic recovery to date, corporate earnings have been the bright spot as executives leverage a vast pool of cheap labor, rising global demand and a focus on cost cutting to expand margins and deliver impressive profitability growth despite modest revenue growth.  
 
As a result, corporate profits have pushed to record highs, lighting a fire under the stock market. We've seen this reflected in first-quarter earnings. Of the 443 S&P 500 companies that reported though the week of May 6, 267 beat analyst earnings estimates, 299 beat on sales and 198 beat on both.

 

That's all well and good. But there is increasing evidence that the profit tailwind is set to subside. And with stock market valuations looking stretched and the economic outlook darkening, this is likely to put added pressure on equities in the months to come. Here's why.

 

National Presto provides some risk, as well as a tasty hidden payout.

By Motley Fool Pick of the Day May 12, 2011 11:41AM

By Anand Chokkavelu, CFA

 

Last week, I laid out the investment case for one massive hidden dividend. The company I was referring to was National Presto (NPK).

 

Now I'm putting my money where my mouth is, buying shares for my real-money Rising Star portfolio.

 

Why I'm buying
Long story short, National Presto pays out a small, regular dividend each year, equating to a 0.9% dividend yield at today's prices. But counting its special dividend (which increased slightly from the year before), that yield jumps to 7.4%.

 

The company has a lot of moving parts, and there are definitely risks (which I'll detail below) that could keep it from prolonging its dividend magic, but I like the stock at today's prices -- and I like it even more if the stock falls further.

 

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[BRIEFING.COM] The S&P 500 (-0.7%) has slid to a new session low with dip-buyers showing reluctance to step in amid broad weakness that has only spared two countercyclical sectors-consumer staples (+0.8%) and utilities (+0.3%).

Meanwhile, all six cyclical groups hover in the red with top-weighted technology (-0.8%), financials (-1.2%), and energy (-1.3%) exerting significant pressure. The industrial sector (-0.7%) trades not far behind the broader market, but that has masked the ... More


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