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The Dow Jones today tumbled 291 points amid poor earnings reports and conflicting economic data ahead of the Federal Open Market Committee (FOMC) announcement on Wednesday. The two-day FOMC meeting kicked off this afternoon to discuss monetary policy and growing concerns that Greece could unravel any stability in the Eurozone after a historic vote placed an anti-austerity party in power. The S&P 500 Volatility Index (VIX), the market's fear gauge, climbed more than 10% on the day.
Dow: 17,387.21, -291.49, -1.65%
S&P 500: 2,029.55, -27.54, -1.34%
Nasdaq: 4,681.50, -90.27, -1.89%
What Moved the Markets Today: The markets took a hit after a slew of weak earnings reports, including Dow components Caterpillar Inc. (NYSE: CAT) and Microsoft Corp. (Nasdaq: MSFT). Microsoft stock had its worse day since July 2013, slipping 9.25% after the company said the source of its earnings power – software sales to large businesses – is showing signs of weakness. Caterpillar, one of the largest heavy machine manufacturers in the world, saw shares slump more than 7% after the company slashed its 2015 outlook and said falling crude oil prices are expected to hurt its industry in the years ahead. Caterpillar stock is sitting at a 52-week low.
Now, check out the other top stories from the stock market today:
- An Apple a Day: Shares of Apple stock were down 3.5% ahead of its earnings report today but came roaring back after the bell. Apple Inc. (Nasdaq: AAPL) reported fiscal first-quarter earnings of $3.06 per share on revenue of $74.6 billion, handily beating estimates of $2.60 on revenue of $67.7 billion. Apple sold a record 74.5 million iPhones during the quarter, up 46% from a year ago. That easily beat analysts' estimates for 66.5 million units. AAPL stock was up more than 5% in after-hours trading.
- Picky Analysts: Not even falling fuel prices and higher baggage fee profits can please all owners of airline stocks. Shares of American Airlines Group (Nasdaq: AAL) fell nearly 5% on the day despite the firm reporting better than expected quarterly earnings. Analysts hung onto one key figure in the report, "revenue per available seat mile," which slipped 1% in the period. The metric is a critical performance gauge in the sector.
- Job Cuts: Problems continue at Sony Corp. (NYSE ADR: SNE). The technology giant said today it plans to slash 1,000 jobs from its smartphone business in an effort to boost its earnings. The cuts are expected to continue over several rounds into 2016 as the firm expects to miss its smartphone sales in its current fiscal year by 9 million units, according to a Nikkei report.
- Rising Gas Prices: Travel and leisure organization AAA announced that gas prices ticked upward last week for the first time in four months. The average price last week was $2.038 per gallon, a half-cent rise from the previous period. Nearly six out of 10 stations across the United States were selling a gallon of gas for less than $2 in January, according to AAA's weekly report. Here's a look at what was going on in the world the last time gas prices were below $2 a gallon…
- Mining Miss: It was another tough day for mining stocks, capped by a 6% slump for shares of Freeport-McMoRan Inc. (NYSE: FCX). The mining giant announced plans to slash its 2015 capital expenditure levels and seek new capital funding for its struggling oil and gas division. Falling commodity prices in oil, gas, and copper fueled a huge earnings miss for the company. The firm reported a $2.85 billion loss for its fiscal 2014.
- Earnings Losers: Shares of Pfizer Inc. (NYSE: PFE) slipped 0.6% today on news the company slashed its 2015 guidance during its lackluster earnings report. DuPont Co. (NYSE: DD) slipped 1.25% after the company offered a weak 2015 outlook and took a hit on earnings thanks to a stronger dollar. Bristol-Myers Squibb Co. (NYSE: BMY) topped earnings, but saw its stock decline 0.75% after the company cut its full-year 2015 earnings forecast. Shares of Procter & Gamble Co. (NYSE: PG) fell nearly 3.5% after the firm missed its second-quarter profit expectations and slashed its yearly growth forecast.
Now for Money Morning's Tip of the Day: Shorting takes guts and more than a little discipline, but don't be put off…
Today's tip comes from a recent article from Money Morning Chief Investment Strategist Keith Fitz-Gerald:
Most investors focus exclusively on buying stocks in an attempt to capture huge returns. That's too bad, because it means they restrict themselves to half the opportunities available to them.
After all, markets move up AND down, which means there is plenty of profit potential to be had in both directions.
George Soros made $1 billion in a single trade that famously almost broke the Bank of England in 1992. John Paulson made billions from the housing crisis by betting against the grain. Doug Kass of Seabreeze Partners is famous for bucking conventional wisdom on seemingly mighty companies and laughing all the way to the bank.
That's why shorting is one of the first tactics I shared with you in my Total Wealth publication.
Now shorting stocks isn't for everybody – it takes guts, conviction, and a whole lot of discipline to do it profitably. But done right, it can really boost your profits.
To learn more about the profit opportunities in short-selling, plus five stocks to get you started, check out my recent column: How to Profit from the Five Scariest Stocks on Wall Street Right Now.