We mentioned yesterday the divergence between small caps and NASDAQ vs large caps and S&P 500 and there was no better example than today’s action! The S&P 500 was up 0.56% while the NASDAQ was down 0.32%. Both were actually down more earlier in the day before a late day rally. The Russell 2000 did eek out a very small gain but that again was in the closing moments after it was down almost the entire session. In the perverse world we live in, having the Federal Reserve chief saying the economy is not very strong so she/he needs to be there to constantly support is remains a great thing – hence why stocks rallied today out of their early hole:
Yellen said the U.S. economy was still in need of lots of support, given the “considerable slack” in the labor market in remarks to the congressional Joint Economic Committee.
Here are the longer term indexes – same story we’ve been repeating; we need to see a new higher high in the NASDAQ to really buy in to any real bottom.
The one non safety sector that has been working has been energy – we’ve mentioned a few names in that space the past few weeks, so you can see from the sector ETF it had a new breakout today. So if you want to avoid the sectors such as utilities and consumer staples it appears this is the one money is flowing into.
There are numerous names in the energy space – just taking a random one like Newfield Exploration (NFX) – you can see how strong the chart is.
Tesla Motors (TSLA) was rocked in after hours to the tune of nearly 8% on a disappointing second quarter outlook.
Tesla posted a higher-than-expected first-quarter operating profit and said its operating automotive gross margins in the current quarter would increase slightly. S&P Capital IQ analyst Efraim Levy called the outlook a disappointment, saying investors had hoped for something better. The company reported a first-quarter net loss of almost $50 million, compared with its first quarterly profit a year ago.
Tesla said it would spend up to $850 million this year to boost production capacity of its Model S luxury electric sedan, develop the Model X crossover vehicle and start construction of a new lithium-ion battery plant, dubbed the “gigafactory.” It said that would leave the company with a negative free cash flow for 2014.
AOL (AOL) was crushed on missed earnings.
AOL Inc said its quarterly profit declined, with its stock price falling 22 percent as it missed earnings expectations due to the cost of restructuring its digital and media entertainment businesses. Net income dropped 64 percent to $9.3 million because of costs related to workforce reduction and a $10 million impairment charge for software at the division that operates its legacy subscription dial-up services.
First-quarter earnings per share of 34 cents fell far short of the average analyst estimate of 45 cents and overshadowed growth in revenue and advertising sales. In the year ago period adjusted EPS came in at 41 cents.
If you have a very strong stomach and risk tolerance, Herbalife (HLF) is one name that may finally be coming out of a base. Of course if this reverses tomorrow or the next few days that idea will be false and with this name that is the battle ground of various hedge fund managers, a news event could drive it in one direction or another.