We have a nominee! Janet Yellen is President Obama's pick to replace Ben Bernanke as Fed Chair. The White House says the announcement will come at three this afternoon. If confirmed, Yellen would likely continue Bernanke's loose monetary policy. Her key challenge up front will be to attempt a scale back of the central bank's asset purchases, or QE, while keeping the economy growing. As the Fed's vice chair, she was in fact a driving force behind the $85-billion a month in bond buying that began last year. Yahoo Finance Senior Columnist Mike Santoli has more on the Yellen nomination and market reaction in the video above.
Men's Wearhouse (MW) has an offer to try on for size. Bloomberg reports that smaller competitor Jos. A Bank (JOSB) is willing to pay $2.3-billion for the troubled suit-seller. Men's Wearhouse has been in turmoil since the ouster of its Founder and Executive Chairman George Zimmer in June. As for Jos. A Bank, its offer represents a 36% premium on the price of Men's Wearhouse stock. Taking a look at how both companies have performed this year, Joseph A Bank has been down 3%, while Men's Wearhouse has been up 12%, though that climb has been largely on speculation that Zimmer would attempt to take the company private again.
There's evidence this morning that Sears may have been flying under the radar while J.C. Penney (JCP) has been grabbing headlines. The Wall Street Journal reports that Sears (SHLD) has quietly sold nearly a dozen of its most profitable stores. A number of the sales took place over the summer. Sears, like Penney, has been struggling, and is likely using the cash to shore up its financial position. By the way, Sears stock is up 51% year-to-date, while J.C. Penney stock has tumbled 63%.
Apple (AAPL) is preparing to launch a new iPad. All Things D reports that Apple will unveil its next tablet at an event on October 22nd. The website says the new device will have a very similar design to the current one, but will have a processor already being used in the iPhone 5S. Expect a new iPad mini as well. Apple shares remain down 12% year-to-date, and they're down twice that much over the past year.
STOCKS TO WATCH
Costco (COST) is trading lower after reporting earnings this morning. The discount chain missed estimates on both the top and bottom lines. Costco says it made $1.40 a share when expectations were for $1.46. Revenues were also more than $1-billion short of consensus at $31.77-billion. On the positive side, same-store sales rose 3%, and earnings were up a penny a share from a year ago. Costco shares have risen 11% so far this year.
Yum Brands (YUM) has been down more than 6.5%, also on its earnings. Like Costco, Yum missed estimates, with adjusted earnings of 85-cents a share when expectations were for 93-cents. As for sales, they disappointed, falling on the south side of $3.5-billion. Ongoing weakness in China gets the blame. Yum now says a recovery from a chicken scandal at its KFC restaurants will take longer than previously predicted. Prior to this morning's losses, Yum shares were up 7% year-to-date, meaning at this point shareholders would have seen similar returns if they put their cash in a CD.
Alcoa (AA) is bucking the trend and is up more than 3.5% on its earnings. Alcoa did in fact beat with adjusted earnings of 11-cents a share, when analysts were calling for just 5-cents. Revenue was also above consensus at $5.77-billion. Not only was Alcoa recently booted from the Dow. It has been a market laggard this year, down 12% as of yesterday's closing bell.
Finally, we want to focus on a number of stocks in the tech sector which were hit yesterday. Facebook (FB) fell 6.7%, back down below the $50 mark; business networking site LinkedIn (LNKD) fell almost as much, dropping 6.1%; and restaurant review site Yelp (YELP) looked unappetizing, plunging 7.6%. Two other big losers were Netflix (NFLX) which fell almost 5% and Priceline (PCLN) which dropped back below $1,000 a share when it shed 4%.
- Professional Services
- Ben Bernanke
- Janet Yellen