STTG Market Recap May 6, 2015 – Stock Trading To Go
It is difficult to tell at times if the market wants bad news (more Federal Reserve) or good news. Ahead of Friday’s official employment report, the ADP Employment Report showed 169,000 jobs were created in April, below analyst expectations of a rise to 200,000. The S&P 500 fell 0.45% and the NASDAQ 0.40%. Ironically as the head of an organization that has a stated goal of pushing asset prices higher than they otheriwse would be, Fed Chair Janet Yellen said Wednesday in a conversation with IMF Managing Director Christine Lagarde that equity valuations are generally quite high. Gee, I wonder why….
Barry Ritholtz posted this chart on how the market has worked under QE vs non QE (quantitative easing) since 2009. You can see when there is no QE the market is down or flat. (-30% return) When QE is on we rally. (+176%) Which makes the Yellen comments ever more absurd; it is like the arsonist saying “wow, I’ve noticed a lot of fires around here lately.”
The indexes remain in not great areas. Here are the longer term charts – we noted the outside bearish reversal day in the NASDAQ the day it happened and asked if it still mattered in a market where central bankers push to inflate asset values – in this case it did work as a bearish indicator.
It is worth noting the move in bonds – the 10 year yield is now at highs last seen in the spike in early March. If yields continue to rise then this is a message that the bond market is actually buying the idea that the Fed will raise rates again in our lifetime.
Wendy’s (WEN) closed up =after reporting earnings of an adjusted 6 cents per share for its latest quarter, one cent above estimates, though revenue was below forecasts. The fast food chain also announced plans to sell its bakery operations during this quarter, and will refinance its existing debt.
After the close, we had reports from Tesla Motors (TSLA), Whole Foods (WFM), and Keurig Green Mountain (GMCR) – all names the trading community often focuses on – Tesla was positive, the other 2 not so much.
Tesla shares are up about 2% to the mid $230s. The company has had a big run in the past 5 weeks.
Tesla posted a first-quarter loss of 36 cents per share on $1.10 billion in revenue. Sales rose more than 50 percent from the year-earlier period. Analysts expected Tesla to post a quarterly loss of 50 cents per share on $1.04 billion in revenue, according to a consensus estimate from Thomson Reuters. The company delivered 10,045 vehicles in the quarter, slightly higher than an estimate of 10,030 the company announced last month. Tesla expects to deliver about 55,000 cars this year, with deliveries for the Model X slated to start in the third quarter. Tesla said it took a $22 million hit from revaluation of foreign currency holdings due to a stronger U.S. dollar.
Whole Foods (WFM) is down 11% in after hours to the $42s on earnings as same store sales were not great. Talk about a “round trip” on this chart.
Grocery chain Whole Foods Market stock sank after a key sales metric missed estimates on Wednesday.The grocer reported adjusted earnings of 43 cents a share, up from 38 cents per share in the year-ago quarter. Revenue rose to $3.65 billion in revenue from $3.32 billion in the prior-year period. Comparable store sales rose 3.6 percent. Same-store sales were expected to jump 5.3 percent. Wall Street expected Whole Foods to deliver 43 cents in earnings per share on $3.71 billion in revenue.
As for Keurig, the maker of K-Cup single-serve coffee pods reported adjusted earnings of $1.03 a share on $1.13 billion in revenue, missing expectations of $1.05 a share on $1.15 billion in revenue. Shares tumbled about 12% to the $95s. This has been a chart in a serious downtrend for months.
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STTG Market Recap May 6, 2015 – Stock Trading To Go
