Futures pointed to a positive open on Wall Street this morning, following the Fed fueled two-day sell-off. Though the indices did indeed start the day’s session in the green, stocks started to pull back and dropped into negative territory at various points throughout the session. It seemed as though investors and traders were a bit nervous today, which resulted in a fluctuating market that ultimately closed in the green to end the week.
Shares of Oracle (ORCL) got hammered today after the company reported fourth quarter financials. Though the company was able to beat on the earnings front, revenues came up short of Wall Street analysts’ estimates. As a result of the revenue miss, investors are dragged the stock into the red.
Darden Restaurant (DRI) shares also fell today on disappointing earnings. Though the parent of Red Lobster, Oliver Garden, and LongHorn Steakhouse saw improved sales in the fourth quarter, its profit fell and missed estimates.
Even though Oracle and Darden released disappointing earnings, both companies did announced dividend increases – which is obviously a positive development. Also announcing dividend increases today were Medtronic (MDT) and W.P. Carey (WPC).
Wall Street analyst upgrades of The Southern Company (SO), Kimberly Clark (KMB), Brown-Forman (BF-B) helped those stocks trek higher today. Downgrades of Corning Inc (GLW) and Allergan (AGN) caused those shares to fall.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.It’s Not All About the U.S.A.
There are a number of concerning developments outside of the U.S. equities markets that we have been paying attention to as of late. Specifically, we have been keeping an eye on the meltdown in emerging markets over the past couple of weeks. With all of the worries surrounding the future of central bank policies, from the Federal Reserve to the Bank of Japan to the European Central Bank, it has caused a huge amount of volatility in emerging market countries’ currencies and stock markets, as investors move frantically to position their holdings going forward. Though we focus our attention to the major U.S. markets most of the time, these pullbacks in the emerging markets could eventually trickle down and impact various companies and their stocks that do major business abroad.
However, probably the most alarming development that has us concerned is the state of the Chinese economy. Though technically considered an emerging market, China is obviously a huge player in the global economy. Any obstacles that it may need to navigate could end up affecting not only specific companies that do business in China, but overall Asian and U.S markets as well.
Over the past couple of weeks, the country has released disappointing after disappointing economic data. People are now wondering if China, once seen as a perpetual growth economy, might see a slow down in production. Any slowdown in Chinese production could prove to be a devastating development as the global economy continues to slowly recovery.
But the problems don’t stop there; this week we have seen a credit crunch in the Chinese financial system as well. This credit crunch has actually caused many to wonder whether the global multi-asset sell-off over the past two days was actually in response to the Federal Reserve’s statements, or the troubling intra-bank interest rate spikes in China. If the Chinese central bank does not get things in order, it could spell even more trouble for the global economy.
All in all, these global developments should not be the main focus for dividend investors when assessing the markets, but they are still story lines that need to be considered in some way prior to making any investing decisions.Looking Toward Next Week
Looking ahead to the next week for stocks, quarterly earnings releases continue to trickle in from a number of companies, including Carnival Corp (CCL), Walgreens (WAG), General Mills (GIS), Monsanto (MON), and Paychex (PAYX).
Thanks for reading and have a great weekend!