Thursday, January 28, 2010

Markets sold off on disappointing forecasts

Stocks sank at the beginning & were never able to break into the black. Dow fell 115 to another YTD low, decliners ahead of advancers 5-2 & NAZ dropped 42 on gloomy tech announcements. Banks drifted lower in late day trading. It's been 6 months since the Financial Index was able to make any headway.


% Change

The Alerian MLP Index fell almost 1, taking it below 290 while the REIT index fell 1½. Junk bond funds were slightly lower today & down along with the stock markets YTD. The VIX was little changed in the 23s. The yield on the 10-year Treasury bond rose another 1+ basis point to 3.66%.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD

Oil & gold each inched up. It's surprising that the cold weather hasn't had more of an impact on oil.

CLH10.NYM..Crude Oil Mar 10..73.72 ..Up 0.05

GCG10.CMX..Gold Feb 10..1,088.00 ..Up 3.50

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Photo: Bloomberg

Apple (AAPL) is getting only lukewarm response on its new iPad. The thinking is it will will need more apps (beyond just gaming) & that may take time, 1+ years. For the same price, somebody can buy 2 netbooks which are useful on day 1. Apple was down 8½ to the 199s, this may be the start of significant selling in the stock.

Apple’s IPad May Take Year to Become Breakout Product

Apple --- 1 year

Qualcomm (QCOM) sounded a cautious note on the economy when it said a "subdued" recovery forced it to slightly dial back expectations for 2010 based on a lagging recovery in Europe & Japan plus greater demand for cheap phones. QCOM had expected sales of $10.5B - $11.3B for the fiscal year, which ends in Sep. It's new guidance is for $10.4B - $11B. But it's keeping the full-year earnings estimate at $1.56 - $1.76 per share. In addition QCOM gave a forecast for the current quarter that came in under the expectations with earnings of 49¢ - 53¢ excluding items & revenue between $2.4B - $2.6B. Analysts had been expecting earnings of 57¢ per share, excluding items, on revenue of $2.75B. The stock plunged almost 7 to prices not seen since Apr. Motorola also had a dreary report, down 92¢ (12%).

Qualcomm stock tumbles on cautious forecast

Qualcomm --- 1 year

Motorola --- 1 year

Jan has been a difficult time for stocks, a bad sign for the rest of the year. Ben Bernanke is expected to get a 2nd term starting next week, but the vote will be fairly close. Tech stocks, MLPs & junk bonds have one thing in common, after a red hot year they are sinking this year. OK, MLPs are up YTD but they look like they could break into the red soon. The bears out there are getting more attention!

Dow Jones Industrials --- YTD

Nasdaq --- YTD

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