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Need to Know
JULY 25, 2013
7 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Ever since its grotesque IPO, Facebook has been one of those stocks
investors love to loathe. Philip Morris and Monsanto , without the
returns. So yesterday's resounding report and subsequent stock surge has to
taste like post-toothbrushing orange juice to all the haters. Make way for
a rare moment of mea culpa on Wall Street .
"We were wrong," admits BTIG's Richard Greenfield .
"It's time to eat a whole plateful of crow," concedes Jeff Reeves . "Maybe we'll
come back after all," says no teenager anywhere. But that's another
issue entirely, and it's actually one Zuck says is untrue, based on what
he's seeing. Teen-flight or not, today is cause for celebration and profits
for Facebook bulls -- those who weren't caught up in that IPO mess, anyway.
Next divisive tandem to report: Amazon.com and Starbucks.
Key market gauges: Asian stocks closed lower, weighed
down by weakness on the Nikkei and Singapore's Straits Times Index .
Europe isn't doing any better in midday trading, nor are markets in
the U.S., where futures on the Dow and the S&P are setting
up for a red open. Read: Stock futures fall ahead of durable goods, GM
.
The economy: Orders for U.S.-made durable goods rose 4.2% in June on stronger demand for
civilian aircraft, marking the third straight sizable gain in orders.
Economists were looking for a rise of 2.3%. Boeing's bookings tally
has played no small role in these recent gains. Separately, the number of
people who applied for new unemployment benefits rose by 7,000 to 343,000,
showing little change in the U.S. labor market .
Earnings: General Motors , 3M and Dow Chemical
are just some of the highlights in the busy premarket earnings
deluge, while Amazon.com and Starbucks will set the tone after
the bell. Zynga is also worth keeping an eye on late. Read: Stocks to watch .
The buzz: As you know by now, Facebook shares are
screaming higher premarket, with investors relishing some strong mobile-revenue numbers . That
upgrade from BTIG won't get in the way of today's
rally, either. Dell is also trending on the heels of Michael Dell's
bumped-up offer price, while Steve Cohen's hot water with SAC Capital remains a top
story on Google's business pages.
On StockTwits, Sarepta Therapeutics is still getting chewed on after
yesterday's wild ride, joined by Potash , Dunkin' Donuts and LinkedIn
on the top-trending list.
The chart of the day: Stocks have held up this week, but
this colorful chart shows some bearish momentum bubbling below the surface
. As you can see by the highlighted vertical red line, the market-breadth
reading -- a ratio of the number of advancing stocks to declining stocks --
touched -1700 midday, much lower than all the closing readings dating back
to June 24. This means a lot more companies were moving lower than moving
higher yesterday, even though the damage, overall, was minimal. "There
was some faulty action under the surface (…) even as the indexes don't show
supreme weakness," said Mark Hanna of the Market Montage blog. "A
lot of the stronger groups of late, like biotechs and transportation,
faltered."
The
call of the day: My kids just got out of school
yesterday, and back-to-school banter is already starting. That's a good
thing for Wal-Mart , according to Citi analyst Deborah Weinswig, who stood
by her buy rating in a note late Wednesday . "WMT will
be at the head of the class in a competitive back-to-school season as our
retailers fight for share of a smaller wallet," she wrote.
Few would argue that Middle America is getting squeezed by the challenging
economic climate, and that serves Wal-Mart well. "The company remains
mindful of the low-end consumer who remains under pressure due to pockets
of high unemployment, the 2% payroll tax increase and rising gas prices,"
Weinswig wrote. She's looking for a total return on the stock of about 16%
in the next year.
Random reads: Beemageddon, it's worse than you think .
Chipotle's fake hack attack stirs up some backlash ... for not
being particularly clever, among other things. But, marketing-wise, it
seems to be working.
A current trend in the auto sector -- high-end goes low, and low-end goes high .
Want a satisfying job? Move to Silicon Valley . You know, home
to Chuck E. Cheese's, "the best pizza chain ever
". Apparently, Denver is worse than Vegas and Detroit.
After "the longest I've ever worked on a story with so little
information to report," the royal--baby press pack finally heads home
.
@Nick_Kostov
contributed to this blog.
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