China Awakens Dow Bears
It looks like the bulls' run is officially done today, as all three major indexes are lower this morning.
Why are stocks trading lower? Chinese exports, which are generally gobbled up by healthy Western economies, only grew by 1%. This is a disastrous number compared to expectations of 8.6%, and a sign that China will need to further stimulate its own economy, but with the rest of the world stuck in a low-to-no-growth environment.
Let's take a closer look at how the three major indexes are faring and at several stocks making headlines.
|Dow Jones Industrial Average (INDEX: ^DJI)||(52.90)||(0.40%)||13,112.29|
|Nasdaq (INDEX: ^IXIC)||(12.74)||(0.42%)||3,005.90|
|S&P 500 (INDEX: ^GSPC)||(5.21)||(0.37%)||1,397.59|
Source: Yahoo! Finance as of 11 a.m. EDT.
Roughly two-thirds of the Dow's components are seeing red, with the biggest loser currently Cisco, down 1.4% on no real news. However, most of the news today is coming off the Dow.
Famous soccer (football, for non-Americans) powerhouse Manchester United (NYS: MANU) saw its debut today on the NYSE at $14 per share, below its offering range of $16-$20. What is truly remarkable is that the company offered 16.6 million shares, but already over 20 million shares have traded hands today. Because of a large syndicate bid at $14, high-frequency traders have moved in and are exploiting the several pennies the stock is moving for a nearly no-lose trade. With a disappointing launch and robots in control, investors need to stay away from "Man U" for the time being.
Retailer J.C. Penney (NYS: JCP) reported earnings today and they were brutal, with plummeting same-store sales and a yanking of full-year guidance. However, after trading down as much as 7%, shares are up 5% since, during the conference call, CEO Ron Johnson discussed how he was not only reshaping Penney's business, but the whole department-store concept as well. With different hubs of activity, a "town center" at the core with seasonal merchandise, iPads for kids to play with, and even yoga classes for customers, the Apple Store veteran's vision will either be a huge disruptive success or a spectacular high-profile failure.
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