This morning we are seeing a general lack of conviction in the overseas markets' moves. Markets are mixed in Asia and European stocks are flattish, but green. We like to say that "up is up," and that is the case today. U.S. futures are up as well, even though we have conflicting corporate outlooks out this morning. We have CEOs of manufacturing companies seeing growth worldwide being sluggish, while the merger and acquisition activity continues to heat up in the U.S. The news out of Europe was not great this weekend, but it seems that this morning markets are ignoring it and instead looking ahead to future good news based off of falling rates in Spain as one highlight at this time.
There will be no economic news out today pertaining to U.S. markets, and as usual we will have a back loaded data week.
Looking at Asian markets we see markets are mixed:
- All Ordinaries - down 0.04%
- Shanghai Composite - down 0.38%
- Nikkei 225 - up 0.09%
- NZSE 50 - up 0.59%
- Seoul Composite - down 0.01%
In Europe markets are mostly higher:
- CAC 40 - up 0.36%
- DAX - up 0.25%
- FTSE 100 - down 0.04%
- OSE - up 0.12%
It has been a while since we last wrote about Apple (AAPL), but in that time shares have bounced back much as we predicted. The stock hit another 52-week high on Friday and is now less that 1% away from the level we thought it would arrive at on the back of new product announcements and blow out earnings in the latter half of the year. Shares rose another $11.77 (1.85%) to close at $648.11/share as investors are buying up shares for a myriad of reasons, but most notably due to the impending release of the iPhone 5, rumors about Apple teaming with the cable companies for a set top box and a general risk-on mentality creeping into the market. We will wait until the stock takes out our past estimate before re-evaluating, but at this point it seems pretty obvious that the momentum will take us through that level rather easily.
Whereas the news surrounding Apple is good, the same cannot be said about Marvell Technology's (MRVL) news flow. The company fell in response to their earnings report, which saw revenues fall by 9%, while analysts were expecting a fall of only 5%. Earnings missed too, and it appears that you can blame this on the PC market and the growth of the Chinese economy - or rather the lack thereof. Volume was 54.1 million shares as the stock fell $1.74 (14.17%) to close at $10.54/share. The stock is trading near multi-year lows here, justified by the recent deterioration in the chipmaker's business.
One of our favorite retailing stocks, Gap Inc. (GPS) had a positive day on Friday as shares responded positively to the company's quarterly earnings. Shares rose $1.65 (4.80%) to close at $35.99/share. The company's stock closed at a new 52-week closing high after setting a new 52-week high in trading, the latest in a string of new 52-week highs over the past few months. This is one we have highlighted many times in our morning commentary and the latest quarterly report has done nothing but reinforce our bullishness here. The company saw net income rise dramatically and raised guidance for the year. We think that this back to school year will be one of the biggest the company has seen in years, and due to increased pricing power the margins should deliver some of the best bottom line results for the period as well.
Ann Inc. (ANN), the owner of brands such as Loft and Ann Taylor, saw shares close at $33.89/share after rising $5.75 (20.43%) on volume of 9.3 million shares. The company reported quarterly earnings which provided further reason to push shares up for investors, and now the shares are approaching a double over the past 12 months. Same store sales rose about 5% at the company's stores and like Gap the company saw net income increase almost 30%.
All was not great in retail land on Friday as shares in Aeropostale (ARO) fell $1.52 (11.13%) to close at $12.14/share after the company's most recent quarterly earnings. The company traded 10.3 million shares, or roughly 3.3 times the three-month average daily volume. Aeropostale realized poor results due to poor product variety and a lack of product differentiation between their goods and those at other retailers. This resulted in unsold goods being marked down significantly, which killed margins. All retailers go through periods such as these, where they effectively commoditize their product offerings - Gap is just emerging from about 10 years of this - and it usually takes at least a year to rectify the situation.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.