Traders came back to Wall Street after a three-day weekend. Did they miss anything?First, the scoreboard:
Dow: 12,482.01, +60.0, +0.5%
S&P 500: 1,293.7, +4.6, +0.4%
NASDAQ: 2,728.1, +17.4, +0.6%
And now, the top stories:
- Let’s briefly turn back the clock to Friday. After much waiting, S&P waited until after the markets closed to announce its downgrade of 9 eurozone countries, including France and Austria. And then yesterday, they stripped the European Financial Stability Facility (EFSF) of its AAA rating downgrading it one notch to AA+. While the U.S. was off for MLK Day, the rest of the global markets basically brushed off the ratings actions. Goldman’s Jim O’Neill described Friday’s downgrade as “one of the most widely anticipated moves of all time.” Last week, even S&P said a downgrade would be no big deal.
- Sure, S&P may have been behind the curve. But it doesn’t take away from the fact that Europe remains a financial mess. Nevertheless, markets remain remarkably sanguine. And this has top Wall Street strategists freaking out. One bizarre trend in this ‘risk-on’ rally is the lack of any selling of Treasuries. Here Are 11 Uber-Bearish Predictions That No One Hopes Come True >
- One piece of good news that may have bolstered markets was China’s GDP reading, which showed 8.9% growth in Q4. While this is markedly slower than recent growth rates, it was better than economists had expected.
- Shares of Carnival Cruise Lines fell following this weekend’s tragic sinking of the Costa Concordia. Some have argued that this could have a limited impact on the growing cruise industry. However, Citi’s Greg Badishkanian warned this could escalate into a PR nightmare for the industry as the tragedy occured just three months before the 100th anniversary of the sinking of the Titanic.
- Earnings season continued with two big U.S. banks announcing good and bad earnings. Citigroup reported EPS of $0.38 on revenue of $17.17 billion, which missed analysts’ expectation of $0.51 and $18.46 billion, respectively. Investment banking revenue plunged 45% year-over-year.
- Wells Fargo announced EPS of $0.73, which beat the consensus estimate of $0.72. Revenue fell 4.1% to $20.6 billion, but was better than analysts’ expectations. Investment banking doesn’t represent quite the sizeable share of Wells’ business as it does for its competitors. Another one of Wells Fargo’s main drivers of outperformance relative to its competitors is lack of exposure to Europe, said analyst Mike Mayo.
- Shares of BlackBerry maker Research In Motion moved on a yet another buyout rumour. BGR reported that Samsung was a leading suitor to buy out parts or all of the company.
- On the economic data front, Empire State Manufacturing Survey jumped to 13.48, beating economists’ estimate of 11.00. According to the survey respondents, business would hire more if sales were growing. In other words, demand trumps other factors such as tax reform.
- Despite the broad market rally in both stocks and commodities, natural gas sold off sharply, falling by more than 7% to multi-year lows.
- Don’t Miss: TO RENT OR BUY: A Quick Price Guide To America’s 20 Hottest Real Estate Markets >