October 12, 2018 Weekly Wrap up LIVE from the floor of the NYSE

Monday, October 8, 2018 – Friday October 12, 2018

On Monday there wasn’t much economic news and the U.S. bond market was closed due to the Columbus Day holiday.  Markets were mixed as investors remained concerned over rising interest rates, a strong dollar, and rising wages.  China lowered reserve requirements for its banks, causing the yuan to drop as the country tries to increase growth in the face of trade uncertainty. 

On Tuesday, the NFIB Small Business Optimism Index for September fell .9 points to 107.9, retreating slightly from August’s record high.  The IMF reduced its global growth projections, partly due to trade tensions between the U.S. and China.  Markets gyrated between loss and gain to close mostly mixed. 

On Wednesday the producer price index for September rose .2% compared to the previous month’s .1% decline. Year-over-year the PPI gained 2.6%.  Fears of rising interest rates dragging down corporate earnings sparked an intense selloff, particularly in the tech sector.  The Dow Industrials fell 3.2% or 832 points, while the Nasdaq Composite lost 4% and the S&P 500 lost 3.3%. 

On Thursday the consumer price index for September increased .1% on top of the prior month’s .2% gain, and jobless claims for the week ending October 6th increased 7,000 to 214,000.  The EIA petroleum status report for the week ending October 5th saw crude oil inventory increase 6 million barrels.  The selloff continued with the Dow Industrials closing down 545 points, the Nasdaq Composite losing 1.3%, and the S&P 500 losing 2.1%.  Ten year Treasuries fell 2 basis points to 3.15%, West Texas Intermediate crude fell 3.2% to $70.87 a barrel and gold rose 2.4% to $1,223 an ounce. 

On Friday import prices for September rose .5% compared to the prior month’s .4% decline and export prices remained unchanged compared to the prior month’s .2% drop.   Markets opened strongly higher as tech stocks recovered sharply.  Now let’s take a look at some stocks.

Sears Holdings Corporation (NASDAQ: SHLD) announced on Tuesday that Alan J. Carr, Managing Member and CEO of Drivetrain, LLC, has joined the Board of Directors.  Carr is an investor and advisor leading complex financial restructurings.  Shares of Sears reached an all-time low of $0.34 on Thursday.

Fastenal Company (NASDAQ: FAST) on Wednesday announced its financial results for its third quarter.  Net sales increased $147 million, or 13.0%, year-over-year and operating income improved by 14.8% year-over-year.  Fastenal shares reached a low of $50.73 on Thursday.

Snap Inc. (NYSE: SNAP) announced on Wednesday, plans to produce its own new original content called Snap Originals.  Investors continue to fear Snap’s slowing user growth and revenue.  Snap reached an all-time low of $6.46 a share on Thursday.

Square, Inc. (NYSE: SQ) announced on Wednesday that Sarah Friar will step down as Chief Financial Officer in order to accept an offer to become Chief Executive Officer of Nextdoor.   Square reached a low of $65.00 per share post announcement.

Delta Air Lines (NYSE: DAL) reported on Thursday morning its third quarter financial results with adjusted operating revenue of $11.8 billion up $912 million, or 8%, year-over-year.  Total adjusted operating expenses increased $1 billion versus a year-ago, with more than half of the increase driven by higher fuel prices.  Shares of Delta Airlines rose, reaching a high of $52.60 on Thursday post announcement. 

6 Comments
  1. Joe Kunkle 1 month ago
    Reply

    Today’s $SQ action has nothing to do with $SQ and everything to do with rising rates & a flight to “safety”. In short, weak hands panicked. Shorts will pile on but they should be careful lest they get burned. Q318 earnings drop within 30 days.

  2. Doug Rumer 1 month ago
    Reply

    covered $SQ today, one of my best shorts in this correction capturing +21% in few days, insider trades look like just as jack sold 107k shares recently for a few mill, n where are the earnings to price in the premium? valuations are starting to matter again

    • Jamie L. 4 weeks ago
      Reply

      $SQ everything have to be a problem with this stock? Spy at highs and nasd right near highs but this cant get a bid over 75 to save its life

  3. Jonathan Wells 1 month ago
    Reply

    Dow futures down 100 pts. Looks like a red day tmrw. only trade open right now are puts on $snap

  4. Joesama 4 weeks ago
    Reply

    $DAL BTO Jan calls. Purely seasonality play imo

  5. Haris Arshad 4 weeks ago
    Reply

    I got caught up in game theory (between Eddie and the Board) w/ my $SHLD bond trade… fortunately I was hedged, unfortunately I was not hedged enough. Key lesson here for me is that if you are going to try to Arb a bond on a cash bleeder, you better be hedged 100%.

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