The Dow Hit by Car Data, Plus Krispy Kreme and Apple Make Moves
The Dow Jones Industrial Average dropped 94 points Tuesday on a couple of bad econ reports.
1. Motor sales pop, Ford crashes, and Tesla gets redemption
November auto sales accelerated 9% from a year ago as Americans keep upgrading their cassette-playing 11-year-old cars (on average) with USB-lovin' new ones. The number of cars sold last month was boosted by crazy Black Friday deals, and the nation's car-buying level is almost back up to pre-'08 crisis levels. That's the strongest sales rate in six years.
The scary part for Ford and General Motors was that car prices were $200 lower on average from last year. Ford fell 3% Tuesday, citing brutal competition from Japanese automakers as a reason to slow North American production of its tiny Focus sedan and even some Fusions. Ol' Blue in Detroit has too much inventory and needs to reduce the rate at which its workers are putting them on the road (or, obviously, call in Tommy Callahan for a new sales pitch).
Tesla shareholders were electrified for other reasons. The Germans ended an investigation into one of Tesla's burning cars that has plagued the stock recently. Germany decided the combustion wasn't Tesla's fault and it won't be charged with any wrongdoing. People don't like burning cars (explosions are uncomfortable), so the news helped Tesla stock pop 16% Tuesday.
2. Apple makes a big holiday purchase
Apple is buying Topsy Labs, a company that processes Twitter data, for $200 million. The purchase price is pennies to the enormous Apple, and stock analysts were quick to reward the company for making the tech-savvy move. Shares rose 2.7% Tuesday as one investment bank, UBS, upgraded its stock recommendation on Apple to "buy."
A motley crew of Twitter scientists is what Topsy brings to the table. Topsy is one of the few companies that has access to the most raw data on Twitter's users and their posting habits. (Creepy.) The analysts process bajillions of data bytes in order to interpret the reactions of Twitter users to news stories, products, and other trending topics.
How will Apple use Topsy? Take your best guess. Because nobody knows. But if another nipple-gate is bestowed upon viewers at the Super Bowl halftime show show this year, Apple's got a sizable department crunching the world's immediate Twitter reaction in real time.
3. Krispy Kreme's earnings look good, but taste bad
It's not easy being kremey. Shares of glazed-doughnut legend Krispy Kreme plummeted more than 20% on Tuesday, following Monday afternoon's earnings report that did not satisfy investors' expectations or cravings.
What did KKD serve up? Actually, some pretty good-tasting financials -- revenues rose nearly 7%, profits grew 34% last quarter, and plenty of new franchises were added. The problem was that Krispy Kreme's forecasts for next year were below Wall Street's expectations -- and with the stock up more than 100% so far in 2013, investors want a lot of sweet sugar in their pockets and have some pretty high standards.
The takeaway is that Krispy Kreme's products taste awesome (the MarketSnacks team seriously prefers them to any of those Boston Creme things from Dunkin'), but the stock has been historically all over the place, especially around earnings season -- KKD stock jumped 21% after its earnings report last spring and 23% on its final earnings report of 2012.
The Federal Reserve's "Beige Book" tells us what the central bank thinks of the U.S. economy.
The ADP Employment Report previews the Labor Department's Non-Farm Jobs Report on Friday.
New Home Sales.
As originally published on MarketSnacks.com.
The article The Dow Hit by Car Data, Plus Krispy Kreme and Apple Make Moves originally appeared on Fool.com.
Fool contributors Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Apple, Ford, General Motors, and Tesla Motors and owns shares of Apple, Ford, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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