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Dow Drags on Tech-Stock Sluggishness, but Ekes Out a Weekly Gain
By: Schaeffer's Investment Research
"Tech earnings got all the headlines, as Google (
) and Microsoft (
) earnings disappointed, but you still have to give the bulls some
credit," mused Schaeffer's Senior Technical Strategist Ryan
Detrick, CMT. "With all the reasons in the world to have a big down
day, the market did pretty well, all things considered. The S&P
500 Index (SPX) and the Russell 2000 (RUT) both finished in the
green, so more new all-time highs were made." Against this
Dow Jones Industrial Average (DJI)
ended the day on a slightly sour note, but still closed comfortably
above its intraday low.
Continue reading for more on today's market, including :
- Schaeffer's Senior Options Strategist Tony Venosa, CMT, takes a closer look at Charles Schwab's ( SCHW ) prospects in his Chart of the Day column.
- See why these three small-cap standouts may have bullish potential.
- Outperforming Target ( TGT ) could be poised for further gains, according to the latest installment of Option Idea of the Week .
- Detroit files for bankruptcy, Microsoft (
) plummets, and traders show their confidence in Apple (
The Dow Jones Industrial Average (DJI - 15,543.74) spent a hefty portion of the session in the red, following a round of dismal earnings reports from the tech sector. The index sank to an intraday low of 15,491.96, but managed to narrow its losses to finish the day just 4.8 points, or 0.03%, lower. For the week, the blue-chip barometer tacked on 0.5%. General Electric (GE) led the Dow's 16 advancers with a gain of 4.6% after a well-received earnings report, while Microsoft's ( MSFT ) earnings-induced drop of 11.4% (its worst single-day decline in more than three years) paced the 14 decliners.
The S&P 500 Index (SPX - 1,692.09) fared better, adding 2.7 points, or 0.2%, to finish at a new record high. On a weekly basis, the SPX moved up 0.7%. Meanwhile, the tech-rich Nasdaq Composite (COMP - 3,587.61) was the worst performer of the three, shedding 23.7 points, or 0.7%. For the week, the COMP lost 0.3%.
The CBOE Market Volatility Index (VIX - 12.54) also remained south of breakeven for most of the day, closing 1.2 points, or 8.9%, lower. On the week, the "fear gauge" lopped off 9.4%.
A Trader's Take :
"The headlines read that Detroit filed for bankruptcy, General Electric (GE) revenue was light, and Microsoft ( MSFT ) and Google ( GOOG ) were both disappointments," noted Detrick. "Still, none of that mattered. Earnings season really picks up in full swing next week, so be open ready. If we've seen anything so far, it is that the bar was set very low this earnings season. In other words, companies had better beat the lowered expectations, or they will be punished."
3 Things to Know About Today's Market :
- Microsoft ( MSFT ) took it on the chin today, after revealing quarterly earnings that fell considerably short of consensus estimates. The software giant reported a profit of 66 cents per share, while revenue arrived at $19.9 billion. Analysts, on average, were expecting earnings of 75 cents per share on sales of $20.72 billion. This fiscal fourth-quarter miss was attributed to a $900 million write-down charge on the company's Surface RT tablet, as well as weak PC sales. (The Washington Post)
- Detroit, Michigan -- also known as the automobile mecca of the U.S. -- filed for bankruptcy yesterday. By taking this course of action, the city will be exempt from paying some of its debts, and is protected from most lawsuits, albeit temporarily. "I know many will see this as a low point in the city's history," said Governor Rick Snyder. "Without this decision, the city's condition would only worsen." (Bloomberg)
- RetailMeNot Inc -- previously known as WhaleShark Media -- made its debut on the Nasdaq today, with the stock opening at $26.50. The online coupon company's initial public offering of 9.1 million shares was priced at $21 per share. However, the Wall Street freshman surged close to 36% during the course of the session. By 1:40 p.m. ET, north of eight million shares were exchanged. (Reuters)
5 Stocks We Were Watching Today :
- Despite sitting with a year-to-date loss, BlackBerry (BBRY) scored some upbeat analyst attention at BMO.
- Apple ( AAPL ) bulls weren't deterred by tech-sector weakness, and scooped up soon-to-be front-month calls.
- A disappointing earnings report triggered a flurry of bearish brokerage notes for Google ( GOOG ) .
- eBay's (EBAY) lackluster quarterly earnings results didn't keep October bulls at bay.
- Short-term call buyers took a shine to United States Steel (X) , with a particular focus on weekly options.
For a look at today's options movers and commodities activity, head to page 2.
Crude oil futures remained nearly flat today, but still managed to finish a fourth consecutive week higher, courtesy of a stronger energy outlook and declining crude inventories. At the close, August-dated oil was up 1 cent, at $108.05 per barrel. On a weekly basis, crude gained 2%.
Meanwhile, gold futures notched their highest daily close in a month, thanks to a weak dollar, as well as anxieties spurred by Detroit's bankruptcy filing. By the time the dust settled, the August contract added $8.70, or 0.7%, to end at $1,292.90 an ounce. For the week, the malleable metal tacked on 1.2%.