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Government Shutdown! Now What? How to Play Market; What to Expect Next

Dan Berman
Hot Stock Minute
Government Shutdown! Now What? How to Play Market; What to Expect Next

Futures are up on the government shutdown. As odd as it may seem, premarket action is pointing green. Here at the Nasdaq, the composite index has been up about a-quarter percent. Of course yesterday was not so pleasant with the Dow suffering a triple digit drop ahead of the shutdown. As for that shutdown here's the latest: about 800,000 government workers will be furloughed today. More will be asked to work without pay. Many government activities like IRS audits and surveillance for flu outbreaks will be suspended. But essential functions like law enforcement and air-traffic control will continue. For more on the shutdown and thoughts on how the market might react watch the video above featuring show host Lauren Lyster and Yahoo Finance Columnist Rick Newman.

Warren Buffett is set to make a major Goldman Sachs (GS) grab today. Buffett's Berkshire Hathaway (BRK-A) is expected to exchange warrants that will make him the company's sixth largest shareholder. He acquired the warrants five years ago this week, in the midst of the financial crisis. They now come to more than $2-billion. By the way, Goldman shares are up 20% so far this year.

Amazon (AMZN) is priming itself for the holidays. The online giant is planning to hire 70,000 seasonal workers for its warehouses. That's a 40% increase over last year. The jobs typically pay about $11 an hour, and Amazon says some workers will be offered full-time jobs after the holidays are over. Amazon stock is up 21% year-to-date, and hit new high September 20th.

The Container Store is getting its house in order for an IPO. The retail chain has just filed paperwork allowing it to go public. The Dallas-based company has 61 stores nationwide. It lost nearly $700,000 last quarter on revenue of about $343-million. The filing says the company plans to use proceeds from the offering to pay dividends to preferred shareholders and to repay debt.


Walgreen (WAG) is out this morning with its quarterly earnings. The drug store giant reported adjusted earnings of 73-cents a share, beating estimates by a penny. Revenues, however, missed ever so slightly at $17.94-billion versus $17.95-billion. Profits were actually close to double from a year ago. Walgreens says that's because of strength in selling higher-profit generic drugs. Walgreen stock is up more than 41% year-to-date and hit a new 52-week high last Monday.

Diamond Foods (DMND) has been down nearly 8% in early trading. This is after reporting earnings yesterday afternoon. The company beat on the bottom line with adjusted earnings of 9-cents a share when estimates were for a loss of 3-cents. However revenues were down significantly, falling below the $200-million mark. Diamond had an accounting scandal several years back and has been trying to rebound since. Shares initially rose after the report but then moved lower on a weak outlook. Even with the losses the stock is up about 66% year-to-date.

Global Payments (GPN) reports after today's closing bell. The payment processing company has slightly underperformed this year's market, up about 11%. But it hit a new 52-week high yesterday ahead of the report. The company is expected to post earnings of 95-cents a share up from 87-cents a year ago. Estimates are for about a 6% rise in revenue to $623.8-million.

J.C. Penney (JCP) hit a 30-year low yesterday. The stock dipped all the way down to $8.59 in intraday trading. Keep in mind that's more than a-dollar lower than the $9.65 share price at which the company wants to sell 84-million shares. The share sale is intended to improve the company's cash flow ahead of the critical holiday season. It was announced last Thursday, hours after CEO Mike Ullman insisted the chain was in solid shape. The stock fell 31% in September, bringing its losses in 2013 to 58%.