Markets pause for breath after 2 day rally
Submitted by WC Power Tech Fund
Spurred by low valuations, the prospect of the Auto bailout culmination and President-elect Barack Obama’s massive infrastructure plan, stocks finished last week on a high and continued that trend Monday, tacking on about 700 points for the Dow during the 2 day span.
A new wave of profit warnings and profitability downgrades have turned Tuesday into gut-check trader’s day with the Dow hovering lower by about 250 points into the close. FedEx (FDX) plunged today after its forecasts took a hit due to current and forward looking economic troubles. FedEX shares were off about 14% after citing “significantly weaker” economics and talking about profit expectations that were lower than Wall Street was anticipating.
National Semiconductor (NSM) predicted a quarterly revenue drop of 30% and Texas Instruments (TXN) followed up by reducing internal quarterly estimates for Revenue and Profit. NSM and TXN were able to shake off the negativity and closed higher by 13% and 4% respectively.
This certainly goes to show that even though recovery is on the radar and the minds of traders, the valuation game will still be played on a day to day basis and stocks, which appear cheap, continue to downgrade their own profitability.
Disclosure: Author holds no position in above mentioned companies
More on this topic (What’s this?)
Best time to invest (Canadian Business Blog, 11/30/08)
More Downside for the Dow Could Be Ahead (Blogging the Commodity Bull Market, 12/2/08)
Does Obama’s Tax Plan Change Our View of Dividends? (Donaldson Capital: Rising Divid…, 11/5/08)
Know a great tech stock? Which blue chip would you buy? We want to know about it. Register on Tech Stocks Blog now and get published within minutes. Before posting, it is recommended that you review our posting guidelines.