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The Nasdaq pre-market showed further signs of trouble, with Nasdaq futures plunging 46 points. This was the day after the Nasdaq Composite fell 118 points – its steepest one-day decline in almost a year.
A wide sell-off in the biotech and technology sectors outpaced gains fueled by news of a merger between Kraft Foods Group Inc. (Nasdaq: KRFT) and H.J. Heinz Co.
This morning, U.S. weekly jobless claims are expected to hit 291,000, as Wall Street is keeping an eye on the conditions of the employment markets after last week's Fed announcement on interest rates. Investors will also be watching the biotech sector and small cap stocks to see if there is any improvement from yesterday's sell-off.
Continued weakness in Europe also remains a central concern to investors, who will want to pay attention to a revise fourth-quarter update to French GDP. The nation hopes for an improvement from its very weak initial reports. In addition, keep an eye on a retail sales report from the United Kingdom, where the country has shown modest year-over-year improvement in its economy.
Here are some of today's pre-market movers in the stock market today, as well as your "Money Morning Tip of the Day…"
- Payday Problems: President Obama will be giving a speech today with payday lending in focus. The administration is concerned that consumers fall into deep debt rapidly from the short-term, high-rate loans. Prior to the speech, the Consumer Financial Protection Bureau is expected to unveil new regulations for the industry. News of the speech sent shares of Cash America International Inc. (NYSE: CSH), Ezcorp Inc. (Nasdaq: EZPW), and World Acceptance Corp. (Nasdaq: WRLD) down more than 3% yesterday. In addition, the CFPB's deputy director has hinted that the government is also looking to tackle subprime auto lending, which he called an "emerging risk." Of course, our Shah Gilani tackled the rise of subprime and payday lending when he highlighted the beginning of the next financial crisis in January, right here.
- "F" For Effort: Shares of Apollo Education Group Inc. (Nasdaq: APOL) cratered by more than 28% yesterday after the online for-profit university company announced that enrollment at University of Phoenix has declined over the last five years by 50%. The firm's revenues and enrollment both fell by nearly 14% last quarter compared to a year ago. It also significantly slashed its 2015 sales outlook. In 2010, the firm earned nearly $5 billion. This year, it will be lucky if it reaches $2.6 billion.
- Sanction Struggles: Oil field services giant Schlumberger Ltd. (NYSE: SLB) has agreed to pay a $232.7 million settlement for violating U.S. sanctions in Iran and Sudan. Under terms of the agreement, the firm will pay a $155.1 million criminal fine – the largest ever levied for violating U.S. sanctions. The firm will also forfeit $77.6 million in illegal profits. Shares of Schlumberger were down more than 0.3% this morning.
- Oil Prices Today: Weakness in the U.S. dollar, geopolitical tensions in Yemen, and news of speculative buying are outweighing oversupply concerns in the oil markets. This morning, oil futures surged on news that Saudi Arabia and its allies have launched airstrikes on rebel forces in Yemen. Brent crude, priced in London, jumped more than 4.2% to $58.89 per barrel. WTI crude, priced in New York, jumped another 4.3% this morning to surpass $51 per barrel.
- Earnings Beat: After the bell yesterday, cloud software provider Red Hat Inc. (NYSE: RHT) jumped more than 5% on news that the company beat quarterly earnings and announced a $500 million stock buyback program. The company reported adjusted per-share earnings of $0.43, besting Wall Street expectations of $0.41 per share. The company reversed losses on the day after
- Earnings Reports: Investors can expect earnings reports today from Accenture Plc. (NYSE: ACN), GameStop Corp. (NYSE: GME), ConAgra Foods Inc. (NYSE: CAG), Cosi Inc. (Nasdaq: COSI), and Lululemon Athletica Inc. (Nasdaq: LULU).
Full U.S. Economic Calendar March 26, 2015
- St Louis Federal Reserve Bank President James Bullard speaks at 4:35 a.m.
- Jobless Claims at 8:30 a.m.
- Atlanta Federal Reserve Bank President Dennis Lockhart speaks at 9 a.m.
- PMI Services Flash at 9:45 a.m.
- Bloomberg Consumer Comfort Index at 9:45 a.m.
- EIA Natural Gas Report at 10:30 a.m.
- Kansas City Fed Manufacturing Index at 11 a.m.
- 3-Month Bill Announcement at 11 a.m.
- 6-Month Bill Announcement at 11 a.m.
- 52-Week Bill Announcement at 11 a.m.
- 7-Year Note Auction at 1 p.m.
- Fed Balance Sheet at 4:30 p.m.
- Money Supply at 4:30 p.m.
Money Morning Tip of the Day: The Facebook stock rise is far from over.
Facebook Inc. (Nasdaq: FB) stock hit a new all-time high Tuesday, climbing to $86.07 mid-day before closing at $85.31.
In the past year, Facebook stock has gained 30%. That's more than three times the 9% gain of the Dow Jones in the same period.
But the Facebook stock price will head even higher.
The consensus forecast among 57 analysts covering FB stock is widely bullish, according to a recent Thomson Reuters poll.
The Wall Street Journal shows 40 analysts currently rate Facebook "Buy." That's up from 38 a month ago. Five maintain an "Overweight." Six have a "Hold." Just one rates FB a "Sell."
The 43 analysts providing Thomson Reuters with a 12-month price target have a median target of $91. The high estimate is $107; the low estimate is $65.
Money Morning Tech Specialist Michael A. Robinson was ahead of Wall Street when he predicted on Feb. 27 that Facebook stock will double to $161.36 in three years.
Robinson pointed to Facebook's indisputable role as the world leader in the $9 billion social networking market, which grew by 36% a year between 2009 and 2014.
He also cited how the firm has matured into a "mobile juggernaut," rapidly increasing its mobile active users (745 million in Q4 2014) and deftly turning the mobile trend into money. Mobile ad sales in the quarter represented roughly 69% of total ad revenue, a 30% annual gain.
Facebook's new initiatives and strategic acquisitions are yet another tailwind for its stock price.
"Facebook still offers investors plenty of upside," said Robinson. "Even better, it's a big-cap firm, so it should remain less volatile than the overall market. That makes Facebook a great long-term tech play that can really improve the value of your portfolio."
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.