Latest Media Quote:
Mr. Sarhan was quoted by Dow Jones Newswire on Friday 1.15.10. The article was picked up by several major news outlets. Here are a few:
Wall Street Journal (WSJ.com): http://online.wsj.com/article/BT-CO-20100115-707328.html
Investor’s Business Daily (Investors.com): http://www.investors.com/NewsAndAnalysis/Article.aspx?id=106888049&source=Newsfeed&Ntt=
Market Watch: http://www.marketwatch.com/story/us-stocks-open-lower-as-financials-weigh-djia-off-25-2010-01-15
US Stocks Open Lower As Financials Weigh; DJIA Off 25
NEW YORK (MarketWatch) — U.S. stocks traded lower Friday despite Intel and J.P. Morgan Chase delivering fourth-quarter earnings above analysts’ estimates, as J.P. Morgan’s revenue missed expectations and its chief executive offered cautioning words.
Stock losses accelerated after a gauge of consumer confidence proved disappointing.The Dow Jones Industrial Average (INDU) fell 89 points, or 0.8%, to 10,621.40 in early trade.
The measure’s financial components led its decliners, with Bank of America (BAC) off 2.1% and J.P. Morgan (JPM) down 1.6%. J.P. Morgan’s fourth-quarter earnings quadrupled, but its revenue came in below analysts’ estimates and Chief Executive James Dimon warned the banking giant is cautious about the future, noting “consumer-credit costs remain high, and weak employment and home prices persist.” See J.P. Morgan story.
Intel (INTC) fell 1.3%. The giant chip maker’s fourth-quarter profit surged nearly 10-fold from the depressed year-earlier period, as revenue jumped 28% and Intel’s closely watched gross profit margin hit an all-time record for the company. However, analysts and investors are now wondering whether there’s more room for the stock to climb after its most profitable quarter in history. “Although we believe Intel is executing flawlessly, we are seeing several signs of a peak in the stock in terms of gross margins and earnings,” analysts at J.P. Morgan said.
Also weighing on the Dow, Kraft fell 1.3% after one of Cadbury’s (CBY) top shareholders once again rejected the U.S. food giant’s offer, saying it doesn’t reflect the U.K. confectioner’s long-term value.
Meanwhile, the dollar (DXY) was higher against the euro but lower against the yen. Treasurys edged higher, while crude-oil futures slipped and gold futures also moved lower.
With stocks down following the strong earnings posted by Intel and J.P. Morgan, money managers are fearing that the market’s expectations might have gotten too high for the fourth quarter, as the reports seen so far appeared to have already been priced in.
J.P. Morgan’s report also raised concerns for the financial sector, as net income in its commercial banking segment was down 53% from a year earlier, and down from the third quarter as well. In addition, the bank posted losses in its card services, consumer lending and retail financial services.
“At first blush, the numbers looked strong, but when investors digested all the data, it led them to question what will happen going forward,” Adam Sarhan, chief executive at Sarhan Capital. “They’re having a difficult time because there’s so much uncertainty.”
Among the economic data released Friday, reports showed manufacturing activity in the New York area improved more than expected, while U.S. consumer prices rose at a moderate pace – just 0.1% – in line with expectations. See inflation story.
The consumer price data “means inflation is not a concern, which is a good sign, as it means the Fed doesn’t have to start raising rates,” Sarhan said.
Other data showed U.S. industries elevated production in December, with a 0.6% rise in industrial production last month, in line with forecasts by economists. See industrial output story.