The three major stock indices were doing fine on Tuesday until 1:45, when the slide began. Miami-based companies had worse luck. Carnival Cruise Lines (CCL) was the only member of the group to have spent more than fifteen minutes in positive territory on Tuesday. Once 1:45 came along, Carnival sank with the other Miami-based stocks and a bad day become miserable.
Tuesday started on good news from the eurozone after leaders meeting in Brussels agreed to provide a 130-billion euro bailout for Greece. Holders of Greek debt will take a 53-percent writedown. It is hoped that this program will help reduce Greece's debt-to-GDP ratio to 120 percent by 2020. Bad news arrived when a number of reports disclosed that analysts were cutting their projections for earnings growth here in the States. Beyond that, Peter Spiegel of the Financial Times published a leaked, 10-page “strictly confidential” memo prepared for eurozone finance ministers. The memo warned that the imposition of austerity measures on Greece could cause debt levels to rise by weakening the Greek economy and limiting reduction of the debt-to-GDP ratio to 160 (rather than the hoped-for 120) percent by 2020. This report by Landon Thomas, appearing in Tuesdays New York Times, added to the skepticism about the latest Greek bailout and reduced the level of irrational exuberance, experienced during the first four hours of trading:
Greece may have dodged a default with its last-minute bailout deal, but longer-term doubts over its ability to repay its staggering debts remain, raising questions about whether even more rescue money will eventually be needed.
After spending much of Tuesday above the 13,000 level, the Dow Jones Industrial Average got hit by the 1:45 slump, although it managed to crawl back up to recover 15 points, closing at 12,965 for a gain of 12 basis points (0.12 percent). The S&P 500 rebounded by 7 basis points (0.07 percent) to finish at 1,362. The NASDAQ Composite declined by 11 basis points (0.11 percent) to end the day at 2,948.
Miami-based corporations had a dismal day on Tuesday. Carnival Cruise Lines (CCL) suffered the least damage, falling by 74 basis points (0.74%) to close at 30.74. Ryder System (R) declined by 1.62% to finish at 52.83. Royal Caribbean (RCL) sank by 2.99% to close at 29.89. Lennar (LEN) lost 3.55% to end the day at 22.53.
The following companies will be playing “beat the number” on Wednesday, with the release of their quarterly earnings reports: AGL Resources (GAS), Analog Devices (ADI), Angie's List (ANGI), Chicos FAS (CHS), Dollar Tree (DLTR), Donaldson Company (DCI), DryShips (DRYS), Dyax (DYAX), Eaton Vance (EV), Garmin (GRMN), Hertz Global Holdings (HTZ), Hewlett Packard (HPQ), Jack In The Box (JACK), LaSalle Hotel Properties (LHO), Lightbridge (LTBR), Limited Brands (LTD), Mannkind (MNKD), MGM Resorts (MGM), Novatel Wireless (NVTL), RR Donnelley and Sons (RRD), Smith Micro Software (SMSI), Sturm Ruger and Co (RGR), Toll Brothers (TOL), United Online (UNTD), Williams Companies (WMB), Windstream (WIN) and Zale (ZLC). Good luck!
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