The Dow's correction last week was sudden -but the rally back has been too. And it looks set to continue this morning.
S&P 500 futures have advanced 0.1% at 7:47 a.m. today, while Dow Jones Industrial Average futures have ticked up 30 points, or 0.1%. Nasdaq Composite futures have risen 0.2%. The 10-year yield has fallen 0.008 percentage point to 2.88%.
The major indexes have gained for five straight days -they're trying for a sixth-after reaching the closing lows on Feb. 8, and the Dow has gained 5.6% over that period. That "ranks among its best-ever recoveries after falling more than 10% below its high for the first time in months," says Sundial Capital Research's Jason Goepfert. Other recoveries have been bigger--the Dow's 7.2% rise over four days in 1997 tops that list--but none have been longer.
The good news is that when stocks stage big rallies following sudden corrections, they tend to continue rising over the short term. In the three months following such a bounce back, the Dow has risen 80% of the time with an average gain 5.5%. Longer term, however, the results have been less satisfactory: One year later, the benchmark has been lower half the time with an average loss of 37%. "It's clear that these quick rebounds from a correction ultimately ended up leading to several bear markets, including the last two," Goepfert writes. "But in the process of forming those peaks, the initial correction often saw a multi-month rebound before finally rolling over and succumbing to the pressures of a bear market."
Campbell Soup (CPB) has fallen 3.4% to $46.10 after CEO Denise Morrison called the company's results disappointing even after it reported a profit of $1 a share, beating forecasts for 82 cents a share, on sales of $2.18 billion, narrowly edging out expectations for $2.16 billion.
Coca-Cola (KO) has risen 2.5% to $45.50 after reporting an adjusted profit of 39 cents a share, beating forecasts for 38 cents, on sales of $7.5 billion, beating forecasts for $7.4 billion. "A good quarter and strong FY18 outlook," writes Wells Fargo analyst Bonnie Herzog. "KO continues to do a good job driving relevancy with consumers and leveraging innovation and mix to drive solid pricing growth."
Shake Shack (SHAK) has dropped 5.4% to $39 after reporting an adjusted profit of 10 cents a share, beating forecasts for 6 cents, on sales of $96.1 million, ahead of forecasts for $92.8 million. Unfortunately, Shake Shack said its 2018 revenue would come in between $444 million and $448 million, below the Street consensus for $459 million. "We believe risk remains to another lowered 2018 EBITDA revision on SSS growth, non-comp volume and margin headwinds," writes Wedbush analyst Nick Setyan. "Nevertheless, we expect investors' long-term focus to remain the key driver of valuation over near- and medium-term risks given SHAK's industry-leading unit growth."
That's what some in the advertising industry are grousing. In blocking "annoying" and "intrusive" full-page ads--you know, the flashing, animated, auto-playing video ads on its browser to ostensibly serve users--Alphabet overly influenced the process in which ads are permissible, critics say.
"Ad-blocking is an outcry from consumers as they become more aware of new technologies, such as (ours) that collect data and use it to deliver digital advertising," says Michael Priem, Chief Executive Officer of Modern Impact, an advertising firm specializing in omni-channel marketing, machine learning for programmatic advertising and traditional advertising.
The built-in ad-blocker, announced in June, will stop showing all ads on any sites that repeatedly display offending ads, as defined by the Coalition for Better Ads, an organization whose members include Google, Facebook (FB), Microsoft (MSFT), Procter & Gamble (PG), Unilever (UN), News Corp (NWSA) and Jeff Bezos' Washington Post.
Change is necessary, even if it is arguably flawed, because advertisers and consumers are fed up with what is showing up on their social-media platforms.
More than 40,000 American and European consumers online made it clear in a survey that they find full-page ads that hide content and flashing animated ads as the most intrusive, according to a blog by Google engineering manager Chris Bentzel.
Meanwhile, Unilever, which spends billions of dollars annually on digital ads, has threatened to withdraw ads from Facebook if it doesn't excise objectionable material from its site - as Facebook Chief Executive Officer Mark Zuckerberg has vowed to do.
"There is scores of data and research that shows that consumers only engage with relevant and meaningful ads, and publishers are continuously pressed to create good ad inventory," Priem says. "The present ad blockers cannot disrupt this balance or ultimately consumers will have to open their wallets, or disable their ad blockers."
And don't overlook antsy regulators, who are keenly watching that social media companies had on the democratic process.
Alphabet's move, in no uncertain terms, hints at more self-regulation to come. -- Jon Swartz
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