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1:15pm (EST)
The market is taking another beating today as the Dow is down 210 points to 10,393. The index saw a little green at the open but it has been all downhill since. The S&P 500 is down 20 points to 1,117 while the Nasdaq is off by 27 to 2,263. The big cloud currently raining on the bulls parade is President Obama’s strong comments on the banks.
We have told you how Wall Street’s buddy wants to put a heavy tax on the bonuses that these firms are paying out and you can tell traders are clearly upset. Goldman Sachs (GS, $160.07, down $7.72) is down 5% after beating earnings estimates by $3.00. Folks, that is three dollars a share!
The stock started off in positive territory and reached a high of $171 even before the whipping started. Goldman made nearly $5 billion for the quarter and earned $8.20 a share on revenue of $9.6 billion. Wall Street was expecting $5.20 a share.
The company has set aside $16 billion of its revenues for bonuses. We try to remain neutral on these types of situations because we don’t get emotional and we have to trade what the market gives us. We have stayed away from trading the Financial stocks recently because of the volatility but we continue to watch them. Bank of America (BAC, $15.39, down $1.10) is looking like an awesome LEAP trade at these levels but could go lower. By year-end this will be a $25 stock.
We would have liked to see the Dow hold 10,400 but that went out the window when Obama started speaking. The S&P 500 needs to hold 1,100 to convince us we will get one last rally before the month is over. We have talked about reaching a top for the market and usually volatility will pick up if a big move is in store. We are seeing that right now.
Things will really get interesting when Google (GOOG, $575.97, down $4.44) reports after the bell today. We have been covering this company a lot recently and you can bet shares will be moving in after-hours trading tonight. We would love to do an earnings trade on this one but our portfolio is full right now.
Before we go today we thought we would update the Berkshire Hathaway Class B (BRK/B, $72.01, up $2.49) 5-for-1 stock split. Shares opened at $71.13 and has reached a high of $73.43. If we can get one last rally then we think this one could quickly go to $80. Everybody, the Buffett is open to get one of America’s best run companies ever at double-digit prices.
Big Blue Misses (IBM), Shares Tumble
Tuesday, July 20th, 2010
9:00am (EST)
The bulls managed to take the market higher on Monday, but they will likely give back all of those gains today and then some. Futures are pointing towards a nasty open after International Business Machines (IBM $129.79, up $1.76) missed on their revenue number.
Yesterday, the Dow Jones added 57 points, or 0.6%, to finish at 10,154. The index traded to a high of 10,187 but ran into resistance which is currently at the 10,200 level. If futures hold and selling pressure picks up then we could see a drop below 10,000 today.
The S&P 500 gained 6 points, or 0.6%, and closed at 1,071 but ran into trouble at the 1,075 level as the index touched a high of 1,074. The next level of support will come in at 1,050 but that will fall if the bears have their way.
The Nasdaq added nearly 20 points, or 0.9%, to settle at 2,198 but once again had trouble with the 2,200 level. The index traded to a high of 2,201 but will could take a huge bath if Tech tanks.
Of course, the big story this morning is IBM’s earnings which were pretty good despite the revenue miss. The company reported a profit of $3.4 billion, or $2.65 a share, versus $3.1 billion, or $2.34 a share, in the year ago period. Analysts were expecting $2.58 a share.
Revenue came in at $23.7 billion, up from $23.3 billion but was below the $24.2 billion Wall Street had factored in. The company said currency changes cut revenue by $500 million in the quarter.
Shares of IBM are down $6.29, to $123.50 in pre-market action. IBM alone will account for over a 40 point loss on the Dow.
Elsewhere, Texas Instruments (TXN, $25.55, up $0.78) also missed on their revenue number despite profits tripling. The company earned $769 million, or $0.62 a share, versus $260 million, or $0.20 a share, a year earlier.
Revenue came in at $3.5 billion while expectations were for $3.52 billion. Although TI provided some decent numbers going forward, shares are getting clipped this morning. In early action, the stock is down $1.45, to $24.10.
As we head towards the opening bell, Dow futures are off by 74 to 9,986 while the S&P 500 futures are down 9 to 1,054. The Nasdaq 100 futures are showing a loss of 17 points and are at 1,789.
This just in, Goldman Sachs (GS, $145.68, down $0.49) missed on their revenue number. Earnings beat Wall Street’s estimates but they fell a little short in some areas of their business. Shares are down $4 in pre-market action.
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