There is a terrific breakdown of the Dow’s components by sectors over at the free section of the WSJ:
Dow vs SPX & Nasdaq
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The Tech stocks in the Dow have not been participating very much:
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But thanks to the generally weak dollar, the Industrials have been:
I want to know WTF is up ,,,,
“”U.S. SEPT. ISM SERVICES FALLS SHARPLY TO 52.9% VS. 57.0% IN AUG., BELOW CONSENSUS””
but the market continues to go up ?? THIS IS BAD NEWS. Someone please tell me what is going on. I am just stunned.
There’s “consensus” and there are actual market expectations.
Goldilocks came to me in a dream last night. She whispered in my ear; “I need a strong employment # on Fri.”
I asked her if this was the reason that the $ continues to rally in the face of such weak data pts?
What happens after Fri? …
But just then I woke up. Wet.
classic short squeeze in stocks (hedgies short, public underinvested, many caught looking for 4Q setback) and bonds (selling mortgages and buying back hedged Treasuries, hedge funds wrapping up ops) just before election that FRB will manipulate to ensure right-wing reelection. anytime WMT same-store sales growing at 1% you better be worried about consumer and last 5 yrs’ outsized US profit margins. PE multiple average unless you think profit margins might revert to historical mean. if they dont revert it means we’re in the grip of one-party-state and corporate fascism. ta daaaa!
chris:
Why are you stunned by that data point? Equities have completely ignored the inverted yield curve, the weak durable goods report, the weak ISM manufacturing, weak leading economic indicators, the breathtaking sell off in commodities and coincident rush into treasurys, several reduced guidance reports, potential systemic risk from hedge funds blowing up, liquidity withdrawn from the global system from Japan, Russia and China increasing reserve requirements, most central banks still tightening or at least not easing rates, etc.
But hey, consumers got a tax cut at the gas pump and they’re spending it at TGT and KSS, so all is good in the world.
Seems like they are absolutely determined to play for the soft landing until the hard landing hits them in the face with a two by four.
The Journal has the value of the Dow companies if you invested $1000 at the last peak and what it is worth, or worth-less now.
It looks some pretty high priced talent, say Palmisanno or Nardelli have enriched themselves but pilfered the stockholders.
me,
looking at the stock price to evaluate a CEO’s performance is not meaningful in the short to medium term. If, as most of us here agree, stock prices are not always representative of intrinsic value, then it is clear that over certain periods of time a company’s stock price is not an accurate marker of management performance. In the long run, yes, but long run is a long time.
Let’s look at Nardelli specifically. When he was hired in December of 2000, HD was finishing a fiscal year (ended in Jan ‘01) in which it did $38.4B in revs, earned $1.00/share and had book value per share of $6.45. In FY ended Jan 2006, sales were $81.5B, it earned $2.72/share and book value per share was $12.66. If these numbers were presented without any knowledge of the stock price, one would have to concede that Nardelli has done at minimum an acceptable job. However, if one introduces stock prices to the picture, we find that in December 2000, HD traded between $38-$47 or at a 38-47x P/E multiple and a 6-8x P/B multiple. Today HD trades at 12.7x trailing earnings and 2.5x book value. Nardelli’s biggest mistake was going to work for a WAY overvalued retailer and suffering as the multiple has contracted to what now appears to be fairly to modestly undervalued levels. I would argue that the per share intrinsic value of Home Depot is much much higher today than it was at the start of Nardelli’s tenure.
Goldilocks may indeed be here for awhile. Per MarketWatch:
“Also on the data front, nonmanufacturing sectors of the U.S. economy expanded at a slower pace during September, the Institute for Supply Management reported. The ISM nonmanufacturing index fell to 52.9% from 57.0% in July. The drop was sharper than expected. Economists were looking the index to slip to 56.2%.
Any reading over 50%, however, does show …..continued expansion……
Within the report, there was good news on inflation. The price index….. plunged….. to 56.7% from 72.4% in the previous month. Last Monday, the ISM’s manufacturing report showed that factory activity in the U.S. slowed in September. See full story.
New orders for U.S.-made factory goods were unchanged in August after a 1% drop in July, the Commerce Department reported. Declines in orders for petroleum, civilian aircraft, electronics and machinery were offset by higher demand for defense airplanes, ships, pesticides and tobacco, the government said.