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Stocks in the News

The three major market indices are all positive today, indicating a strong rebound following yesterday’s downswing.  The S&P 500 is currently trading at 1,946.23, up about 0.65% with the big gainer being Vertex Pharmaceuticals (VRTX - Analyst Report), up about 4% today, and the big loser today being Macy’s (M) after reporting weak earnings.  The DJIA is up about 100 points and the NASDAQ is trading up about 40 points so far in this trading day.  The big news headline today are disappointing retail earnings, so where are Americans buying their clothes?

Retail Earnings

As earning’s season comes down to an end, retail companies are beginning to report their earnings with Macy’s(M) leading the charge, but with disappointing numbers.  Shares fell 5% in premarket trading after the quarterly earnings disappointed. Macy’s reported to earn a profit of 80 cents per share below Zacks Consensus Estimate of 86 cents per share (also read Macy’s Shares Are Taking a Hit After Disappointing Earnings).  

As we look at the broader consensus of the retail industry, we can look at the SPDR S&P Retail ETF (XRT) is currently trading at $84.57/share down about 0.58% for the day.  J.C. Penney Company, Inc. (JCP) down 1.27% and Nordstrom Inc. (JWN) down 1.26%, are also feeling the effects of the Macy’s earnings disappointment. 

Investors will be looking out for Wal-Mart Stores Inc. (WMT) which is currently down .34% in expectation that tomorrow’s numbers could be weak as retail continues to struggle.   Some analysts say that poor retail earnings are due to the “summer polar vortex”, because when in doubt, blame the weather.

Equity Market

  • Winners
The market is making a positive rally today after yesterday’s down market.  Facebook, Inc. (FB - Analyst Report) is trading in high volume and is up about 1.88% after reports being told that there will be new ways to track how advertisers will know their return on investment within Facebook.  

On the e-commerce side, Amazon Inc. (AMZN - Analyst Report) is up 3.01% after announcing today their product, Amazon Local Register, a card reader and mobile app that will allow local business to accept credit and debit cards much in the way that Square does with its Square Reader. 
  • Losers
Earnings seem to be the main driver of the companies that are getting hit hard in the markets today.  SeaWorld Entertainment (SEAS) and King Digital Entertainment (KING - Snapshot Report) are down, respectively, 34.64% and 23.08% after disappointing earnings. 

Will King Digital be able to produce another hit similar to the Candy Crush Saga and will SeaWorld be able to reassure investors as summer comes to a close?  Investors will be on the look out to see if these two companies will continue to struggle to make ends meet (see Candy Crush Maker KING Reports Earnings).

Bond Market/Geopolitical Concerns

The Treasury Department auctioned $24 billion in 10-year notes, the second auction of its $67 billion dollars in debt this week. The high yield of 2.439% for the 10-year is the lowest since June 2013. The bid/cover ratio which measures demand was 2.83, showing solid demand for the 10-year. Tomorrow, the Treasury will auction $16 billion of 30-year bonds.  

As traders prepare for the rest of the week’s bond supply, they will keep an eye out for geopolitical concerns overseas in Russia and Ukraine.  Meanwhile, Israelis and Palestinians have not reached a deal to end a month-long war in Gaza as the three-day ceasefire comes to a close.

Zacks Rank#1 Top Mover

In the entertainment industry, Lions Gate Entertainment Corp (LGF - Analyst Report) is a Zacks Ranked #1(Strong Buy) stock, and is currently up about 3.21% for the day with a price of $32.76/share.  The entertainment company reported much better than expected earnings for the second quarter of 30 cents per share beating Zacks Consensus Estimate of 19 cents per share.  Expect LGF to continue to post strong growth numbers because it has a positive average reported earnings surprise of 81.21% within the past year.

For more information about the market see this Ahead of Wall Street article: Q3 Earnings Estimates Not Falling As Much

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