Inflation and Stocks Stay Flat: Wednesday’s IP Market Recap

by Marc Bastow | August 15, 2012 5:17 pm

Stock markets pretty much loped along again on Wednesday, with very little in the way of economic or fiscal news managing to move share prices beyond a narrow trading range. In the end, the major index moves were minimal. The Nasdaq gained 0.46% to finish at 3,030, well ahead of the pack. The S&P finished a tick higher, by 0.11% at 1,405. The Dow went into the red, finishing down fractionally at 13,164.

The day started out with news that the New York Fed’s Empire State manufacturing index unexpectedly fell to minus 5.85 in August from plus 7.4 the prior month, turning negative for the first time since October. According to CNNMoney[1], economists were expecting a reading of plus 5.

On the positive side of the economic ledger, according to the Bureau of Labor Statistics, inflation remains low[2], with consumer prices holding steady in July, marking the second consecutive month the measure has remained flat.

Earnings news came in on waves during the day, with some big names not faring so well.

After-hours trading news was dominated by Cisco (NASDAQ:CSCO[3]), which reported a quarterly profit and sales better than last year’s results and beat Wall Street’s forecasts. Net income rose 56% to $1.9 billion in its fiscal fourth quarter ended in July. CSCO shares were trading up over 4% after hours.

Deere (NYSE:DE[4]) was crushed as the company missed estimated profit targets[5] and provided Street analysts with a downbeat forward forecast. Deere’s South American and Asian sales[6] are expected to slow, and shares fell just over 6% on the day.

Office-supply chain Staples (NASDAQ:SPLS[7]) missed on revenue and earnings as well, with domestic sales coming in especially lower than expected[8]. Its shares tumbled 15% on the news. Both Office Depot (NYSE:ODP[9]) and Office Max (NYSE:OMX[10]) suffered along with Staples, with ODP down over 4% and OMX over 3%.

Following on the heels of July’s positive retail report, two other retailers had much better days, as Abercrombie & Fitch (NYSE:ANF[11]) rose over 9% after second-quarter earnings exceeded company forecasts[12], despite lower same-store sales. ANF shares are still down 27% on the year as it battles fierce competition[13] from Gap (NYSE:GPS[14]) and American Eagle (NYSE:AEO[15]).

Target (NYSE:TGT[16]) also ran in the black, as shares rose just under 2% after a solid-second quarter[17].

Sprint (NYSE:S[18]) continued its magical run, climbing over 7% and hitting a 52-week high of $5.49 before settling at $5.38. Sprint’s 130% year-to-date rally puts it on the radar screen for mutual fund buyers. The wireless company is riding a wave of customer retentions and a recent re-award of a contract with the Federal Emergency Management Agency for its push-to-talk service.

Finally, Facebook (NASDAQ:FB[19]) rallied over 3% on the eve of its lockup period expiration[20].

Thursday’s earning releases include InvestorPlace Dependable Dividend[21] Wal-Mart (NYSE:WMT[22]), Dollar Tree (NASDAQ:DLTR[23]), and Sears (NASDAQ:SHLD[24]).

Three Up

Three Down

Marc Bastow is an Assistant Editor at As of this writing he did not hold any any position in any of the aforementioned securities.

  1. According to CNNMoney:
  2. inflation remains low:
  3. CSCO:
  4. DE:
  5. missed estimated profit targets:
  6. South American and Asian sales:
  7. SPLS:
  8. domestic sales coming in especially lower than expected:
  9. ODP:
  10. OMX:
  11. ANF:
  12. after second-quarter earnings exceeded company forecasts:
  13. battles fierce competition:
  14. GPS:
  15. AEO:
  16. TGT:
  17. after a solid-second quarter:
  18. S:
  19. FB:
  20. eve of its lockup period expiration:
  21. Dependable Dividend:
  22. WMT:
  23. DLTR:
  24. SHLD:
  25. JDSU:
  26. DNDN:
  27. PERY:
  28. SWHC:
  29. BKS:
  30. JRCC:

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