Dow Jones
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Jim Rogers: Market Surge from Eurozone Debt Crisis Deal Won't Last
Stock markets around the world soared Friday in reaction to the morning's Eurozone debt crisis deal, but noted investor Jim Rogers wasn't impressed.
"This is no more than just another temporary stopgap to make the market feel good for a few hours, days or even weeks," Rogers, Chairman of Rogers Holdings, told CNBC. "Then everybody's going to wake up and say, "This doesn't solve the problem.'"
Meeting in Brussels, European leaders announced a plan early Friday that would provide struggling banks with money directly from the bloc's bailout fund.
The leaders also said bailout funds could be used to stabilize European bond markets. But they did not tie such use to additional austerity measures, which have angered citizens in debt-troubled nations like Greece and Spain.
The summit is just the latest in a series of high-level attempts to resolve the 2-year-old Eurozone debt crisis, which has required bailouts of Greece, Portugal, Ireland, and most recently the Spanish banking system.
Markets around the world surged on the announcement, with some European indexes rising as much as 4%. In the United States, the Dow Jones Industrial Average shot up 200 points at the open. The Standard & Poor's 500 Index was up about 25 points, or just under 2%.
Don't get used to it, Rogers said.
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Stock Market Today: What Investors Can't Miss
Companies making headlines in the stock market today include Dell (Nasdaq: DELL), Johnson & Johnson (NYSE: JNJ), and JPMorgan Chase (NYSE: JPM).
After Tuesday's closing bell Dell (Nasdaq: DELL) gave shareholders good news: it will begin paying a dividend later this year.
The struggling tech company expects to pay quarterly cash dividends of 8 cents per share on all common stock starting during the third quarter of this year.
Using Tuesday's closing price of $11.97 as a benchmark would give Dell a dividend yield of 2.7%, higher than the average yield of the stocks in the S&P 500.
Dell's CFO Brian Gladden hopes this move can turnaround the beleaguered company whose stock is trading well below its 52-week high of $18.36.
"The payment of a quarterly cash dividend to Dell's shareholders adds another element to our disciplined capital allocation strategy," Gladden said.
Dell stock was up more than 4.5% in early trading Wednesday.
Johnson & Johnson (NYSE: JNJ) announced after market close Tuesday that it will be able to complete its acquisition of Swiss medical device maker Synthes on Thursday, much earlier than expected.
JNJ initiated the $19.7 billion deal, its largest ever, in April 2011. The purchase will make JNJ a prominent player in the orthopedic surgery business. Synthes also offers a strong presence in emerging markets like Russia, China and India.
In a turnaround of expectations JNJ stated that the deal will actually add 3 to 5 cents per share to its annual earnings. Earlier projections by the company stated the move would trim up to 22 cents off of its profits.
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Dow Jones Erases 2012 Gains – What's Next?
The "sell in May and go away" approach panned out this year as the month was not merry for markets.
U.S. equities experienced a steep drop during May, enduring the worst monthly declines in two years. The Dow Jones Industrial Average fell 6.2%.
A good part of May's decline was blamed on the ongoing European sovereign debt crisis that has swelled of late and shattered investors' confidence. But things on the home front are far from ideal.
The flight from stocks flowed into the first day of June. The Dow plunged 274 points Friday, erasing all of the year's gains. Fueling Friday's fall was May's dreadful U.S. jobs report, which showed employers added just a trifling 69,000 in payrolls, less than half the expected 150,000.
The Standard & Poor's 500 Index and Nasdaq both plummeted more than 2%. The Nasdaq has given back more than 10% since its late-March peak.
Traders consider a 10% drop to be a market correction. Meanwhile, the S&P 500 is just a mere point above correction territory.
Just 17 of the 500 companies in the S&P index ended higher on Friday.
"The big worry now is that this economic slowdown is widening and accelerating," Sam Stovall, chief equity strategist at market research firm S&P Capital IQ, told the Associated Press.
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Stocks Have You Worried? Here's What You Do
Last Tuesday, USA Today ran a long Page 1 story under the headline "Invest in Stocks? Forget About It."
The story's message was loud and clear: U.S. stocks have risen more than 100% from their March 2009 bear-market bottom - including 25% since October and 9% so far this year - but most retail investors still wouldn't touch them with a 10-foot pole.
And with the Standard & Poor's 500 Index now on a losing streak - it's down about 5% from its April 2 high, according to Bespoke Investment Group LLC - you can bet that this "keep-stocks-away-from-me" sentiment has only intensified.
I mentioned this to Keith Fitz-Gerald, our chief investment strategist, during a private briefing last week.
True to form, Keith quickly said out loud what I had already been thinking.
"BP, those investors are making the mistake of their lives," he said. "In fact, I'll wager that they're actually compounding an already-huge mistake. They missed out on the most-powerful stock market rebound since the Great Depression - and they did that after having sold out at the very bottom of the bear market that preceded it, meaning they locked in some of the most-horrific market losses most investors have ever seen."
If you're in that group, don't fret: You can recover.
In fact, Keith helped me lay out a game plan just for you - one that will let you take charge, put the odds in your favor and even capitalize on approaching opportunities that Wall Street will be slower than you to see.
Let's take a look ...
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Earnings Fuel Stock Market Gains – Dow Jones Soared More than 100 Points Midday
Yes, Friday was all about the earnings.
The stock market rallied Friday thanks to a roaring round of positive earnings reports - with a little help from positive news out of Europe.
Just after noon, the Dow Jones Industrial Average climbed 113 points, the Standard & Poor's 500 jumped 9 points and the Nasdaq gained 22.
With little on the economic calendar to close out the week, and no major reports due, market participants focused on encouraging first-quarter results from a spate of several large and market-influencing firms.
"There's been a wrestling match all week long between strong earnings and weak economic data. At the moment earnings are winning," Lawrence Centura, portfolio manager at Federated Investors told the Associated Press.
Strong Earnings Push Stock Market Gains
To date, quarterly earning has been pleasantly strong.
"The number of companies reporting positive surprises is much higher than it typically is at this stage in the game," Fred Dickson, chief market strategist of D.A. Davidson & Co. told CNN Money. "They're only beating by a little, but it's still a significant number of companies and that's the wow factor."
Of the 212 companies in the S&P 500 that have reported, better than 80% have exceeded expectations, according to Thomson Reuters. During a typical quarter, the percentage of companies that top forecasts is 60%.
Here are some recent highlights:
- Tech giant Microsoft (Nasdaq: MSFT) lead Friday's gains in the broad-based rally after beating expectations late Thursday, reporting sales growth of 6% thanks to its Window and Office products. MSFT gained 4.55% Friday to close at $32.42.
- Investors also ate up better-than-expected numbers from fast-food king McDonald's Corp. (NYSE: MCD), which ended the day up. The company proved it remained a worldwide favorite with same-store sales up 8.9% in the U.S., 5% in Europe and 5.5% in Asia-Pacific, Middle East and Africa. Revenue rose 8% (excluding currency fluctuations).
- Robust earnings from General Electric (NYSE: GE) pushed its stock up 1.15% to $19.36. GE narrowly beat expectations with quarterly profit of 34 cents a share, a penny higher than expected, and revenue of $35.18 billion compared to a forecast $34.7 billion.
- Meanwhile, traders traded E*Trade (Nasdaq: ETFC) up some 6% on better-than-expected first-quarter results. E*Trade's first-quarter profit rose 38% from a year earlier.
- Technology manufacturer Honeywell (NYSE: HON) beat on both earnings and revenue, sending the honey pot buzzing. First-quarter income climbed 17% from a year earlier, and the company raised its 2012 forecast.
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The Case for Spitting into the Wind (At Least for Now)
You've heard the expression "You don't spit into the wind," haven't you?
Well, it's true when it comes to trading and investing, too. You keep the wind at your back, and you don't give up easy profits by bucking the trend.
That's all well and good, so long as the wind is coming from a discernible direction. I prefer a warm southwest breeze myself. That's why I live where I live (in Miami).
But we have no control over the many ill winds that blow over our investing horizons.
The best we can do is stay aware of subtle shifts in directional changes, and watch out they don't strengthen into hurricane-force monsters.
I've been cautiously (too cautious, I admit) bullish since October, and I remain optimistic that stocks have enough momentum to try and push through important psychological barriers - such as 13,000 on the Dow, 1,375 and 1,400 on the S&P 500, and 3,000 on Nasdaq.
That doesn't mean we won't see a correction first. Or that last Tuesday wasn't a tiny correction in and of itself.
But 30 years of hardcore trading, and catching every major move in that long time span (no, I hardly ever pick the exact top or bottom, but I have come close) has taught me to go with my gut, to know when I "blink" that it means something.
And lately, I'm starting to "blink" more and more...
I'm getting the feeling that something's wrong, and, somewhere, the eye of a terrible storm could be forming. There's nothing out there that I've read (and I read a lot), or heard, or come across in any research, either quantitative or fundamental, that articulates what this nagging feeling is that's hanging over markets.
So, it looks like I'll have to be the one to put it out there.
But first let me be clear. I'm not spitting into the wind here. I'm still going with the path of least resistance.
What I am doing is presenting the backdrop of what people have lost sight of as they look front and center on the investing stage.
Am I saying the eye of a hurricane is forming? No. I'm saying it already has formed.
I'm saying keep buying cautiously and keep raising your stops as markets go higher, if they do. I'm saying keep watching these developments with me.
Things change, and this brewing storm could dissipate, but it could also turn really ugly, really quickly.
If the storm strengthens, and that's my bet, have a fail-safe plan to get out of speculative long positions, a plan to selectively add to core positions on the way down, and a plan to put on short-side positions that will make you a ton of money if I'm right.
Okay, ready?
Here's where the winds have shifted...
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You Asked, He Answered: Shah Gilani on China, Ben Bernanke, the Fed and Much More…
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The Dow Hit 13,000 – Will it Stick?
The Dow Jones Industrial Average climbed to above 13,000 briefly today (Tuesday) for the first time since May 2008. Now investors wonder if the gain will last - and possibly soar even higher.
The Dow touched above 13,000 around 11:30 a.m., pulled back then crossed the line again just after noon.
The market has climbed despite concerns surrounding Greece as well as the continued U.S. economic recovery. The gain represents about a 25% increase since the Dow touched its 2011 low of 10,404 in October. The Dow at 13,000 is only 8.9% from its all-time high of 14,174.53, reached on October 9, 2007.
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Five Ways to Make 2012 Your Best Year Ever
I hear it everywhere I go. I'll start investing again...
...when the debt problem is fixed.
...when the markets pull back a little.
...when the EU crisis is over.
...when the elections are over.
Chances are you've said some of these same things to yourself.
Yet, waiting is exactly the wrong thing to do. Time is something you never get back.
And when it comes to consistent investment returns, time is the one thing you always have to capitalize on - without fail.
Besides, waiting makes it harder to get back in the game. Ask anybody who missed the S&P 500's 99.53% run up off March 2009 lows that carried things until April 2011.
Or the 87.26% run up through July 2007 following the low set in 2003. Or the 569.25% move from November 1987 (shortly after Black Monday) through January 2000.
No. The way I see it, the thing to do is to begin investing the moment you decide you want to. That way you pique your imagination, your motivation and your returns.
Five Ways to Get Better Results in 2012
Here are five tips to help you get started:
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