News Column

Daily Wrap: Good day to own bread, batteries and drugs

July 30, 2014

By David Nicklaus, St. Louis Post-Dispatch



July 30--TODAY'S INDEXES -- Dow industrials 16,880.36 -- 31.75

S&P 500 1970.07 +0.12

Nasdaq 4462.90 + 20.20

EARNINGS ARE SO-SO, STOCK RISES: Panera Bread met analysts' earnings expectations but missed their sales prediction and lowered its forecast for the rest of this year. So what did the stock do? It rose 3.5 percent. Apparently the market is buying Panera's statement that it "continues to expect both comparable net bakery-cafe sales growth and transaction growth to strengthen in the second half of fiscal 2014."

BATTERY BUYING: Energizer Holdings also delivered a mixed bag of earnings news, falling short of third-quarter profit estimates but maintaining its forecast for the full year. It also saw its shares rise, by 2.5 percent. In the earnings announcement, Chief Executive Ward Klein said he expects "a strong finish to the fiscal year."

UPBEAT SCRIPT: The earnings news was better from Express Scripts, which beat analysts' estimates for both profit and sales. The pharmacy benefit manager's shares advanced 5 percent.

NO CLEAR DIRECTION: The market had plenty of news to digest, including a strong GDP report and a stay-the-course statement from the Federal Reserve, but couldn't generate much momentum in either direction. The S&P 500 was flat, while the Dow industrials dipped 0.2 percent. The yield on 10-year Treasury notes rose 0.09 percentage point to 2.55 percent, its biggest daily increase in four months, according to Bloomberg.

ATWITTER: The big stock-market story of the day was Twitter, which soared 20 percent after posting an upbeat earnings report late Tuesday. Along with better-than-expected financial results, Twitter said its user count has risen to 271 million, up 24 percent in the past year.

X FACTOR: You don't have to be a hotshot social media firm to get a big boost from a positive earnings surprise. Venerable U.S. Steel, ticker symbol X, jumped 19 percent after reporting a second-quarter profit (analysts had expected a loss) and saying that third-quarter results will be significantly better.

LOCAL INDEX: The Bloomberg St. Louis Index rose 0.5 percent, easily outpacing the broader market.

STL STOCKS GAINERS LOSERS

Express Scripts 4.9% Perficient -5.0%

Aegion 4.7% Arch Coal -3.6%

American Railcar 3.5% Belden -3.2%

LOCAL GAINER: Include Aegion in the list of companies that kept investors' confidence despite a slightly disappointing quarter. It rose nearly 5 percent after missing analysts' profit target by a penny.

LOCAL LOSER: Arch Coal posted a lower-than-expected second quarter loss, but it also lowered its sales guidance for the year. Its shares fell 3.6 percent.

ANALYST'S INSIGHTS: Scott Wren, senior equity strategist at Wells Fargo Advisors, says he's hearing the word "bubble" a lot, but he doesn't think it applies to the stock market. "Consider that the S&P 500 index is currently trading at 16.7 times our likely conservative earnings estimate for this year," he writes. "Looking back to 1986, the median price-to-earnings ratio just happens to calculate to the same 16.7 times .... Sure, stocks are no longer cheap, but based on our work it is hard to describe them as expensive."

THE DAY AHEAD: Two big St. Louis employers, Anheuser-Busch InBev and Charter Communications, report earnings in the morning, as does software firm Perficient. Analysts expect BUD to report a second quarter profit of $1.34 a share, down from $1.48 a year ago.

David Nicklaus is business columnist at the St. Louis Post-Dispatch. Subscribe to his Facebook page or follow him on Twitter @dnickbiz.

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(c)2014 the St. Louis Post-Dispatch

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Source: St. Louis Post-Dispatch (MO)


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