Yahoo Finance Can Visa,Tesla spark stalled market?
The best way to make a stalled car seem dramatic is to put it on some railroad tracks. Otherwise there’s not much to keep anyone’s interest. That’s why, whenever the stock market gets stuck for a while unable to get a spark, investors start thinking they hear the alarming whistle of an oncoming train.
While there is nothing like panic in the market right now, the months the stock market has spent stuck in a narrowing range has fed anxiety and confusion about what might go wrong. A no-growth quarter for the economy and earnings and wild moves in macro markets globally are hard to decipher when stocks themselves fail to render a verdict on whether everything’s still OK.
Of course, earnings season has been weathered pretty well – since the day Alcoa Inc. (AA) began the reporting parade, the S&P (^GSPC) has eked out a 1% gain. But I’ll suggest that the tape “feels” worse than it’s been, mostly because some popular investment positions that traders thought could see them through a slow-growth patch have reversed pretty hard recently.
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These include the euro rallying against the beloved dollar in recent weeks; oil’s rebound; piping-hot European stocks cooling off; the furious China rally pausing; and a steady run of darling growth stocks trading poorly on earnings news.
Those names include Facebook Inc. (FB), Twitter Inc. (TWTR), Buffalo Wild Wings Inc. (BWLD), GrubHub Inc. (GRUB), Yelp Inc. (YELP) and – yes – Apple Inc. (AAPL). Lots of turbulence, but yet the indexes are still aloft for now. Fasten seat belts, though, for plenty of droning about the hoary old Sell in May rule of thumb.
Never mind that it hasn’t helped consistently in recent years, and hasn’t provided an edge in years like this one when gains from October through April were modest. We’ll still be treated to all those headlines.
Finally, there’s the rumor that Salesforce.com (CRM) might be a takeover target, never mind its $47 billion market value and super-pricey stock. We don’t know how legitimate the scuttlebutt is. But its very existence, and the fact the market is giving it a little credence will feed plenty of worry that tech is becoming overconfident and overheated. With this backdrop, here are a few things to watch apart from the free-floating worry:
-How will the market interpret and digest the economic data on personal income and wage growth. We are highly sensitive to all data on consumers and salaries now that the Fed left the door open for many options in raising rates. We have no Fed meeting until June, when a minority of economists thinks we could get a rate hike. So the bond market’s take on these numbers will help set the tone for weeks.
-Visa Inc. (V) reports results after the close. The card processor hasn’t missed earnings forecasts in four years. It is one of the bedrock mega-cap growth names. It incorporates lots of secular and cyclical trends, from electronic payments to retail sales to currency swings. Like the broad market, the stock has idled in recent months, though is up 33% for the past year. How it trades off its numbers will be worth watching.
-And finally, Tesla Motors Inc. (TSLA). We get the promised news on a new product today, likely an in-home battery that could offer on-demand, cost-efficient power from the grid. Once again, it’s not the news itself but the way the market regards it that will matter. The stock has rocked a 22% gain the past month after a long slide, and it remains a good indicator of investors preference for greed or fear.
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