Microsoft's Rejection, EA's Pain, and Why the Dow Fell for the 5th Straight Day

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Maybe Wall Street's distracted by the ultimate holiday gift we just found (the "Perfect Bacon Bowl" does sound pretty perfect) -- because the Dow (DJINDICES: ^DJI  ) dropped 68 points Thursday for its fifth straight loss. Now, investors are focused on the big November jobs report due Friday morning.

1. Microsoft suffers CEO rejection
Getting rejected at a bar is tough. But getting rejected by someone to whom you want to offer a CEO position is tougher. The current CEO of Microsoft, Steve "Baller" Ballmer, is stepping down later next year, and one of the top replacement candidates is Ford CEO Alan Mulally (great smile). But on Thursday, Mulally pulled the "it's-not-you-it's-me," saying he won't leave Ol' Blue Ford in 2014. The slap dropped Microsoft (NASDAQ: MSFT  ) stock 2.41%.

Ol' pals Ballmer and Mulally enjoy long walks on the beach and restructuring multinational companies. Microsoft still has a strong core Windows and Office software business, but has been looking for a leader to help compete with Apple's much cooler products. Ballmer's buddy Mulally could have at least temporarily filled that role, but now Wall Street is nervous that Microsoft is having trouble finding "The One" (someone get MSFT on Tinder).

2. U.S. GDP popped 3.6% last quarter
How much stuff is America buying and selling? We're not talking about your brother's hockey pads that you're dealing on eBay. Gross Domestic Product (GDP) expresses an economy's total economic production and is the fundamental measuring stick telling Uncle Sam he's got the biggest economy in the world ($15.6 trillion annual GDP, baby). And on Thursday, the Commerce Department reported that GDP grew at an annualized 3.6% rate from June through September.
The initial estimate was 2.8%. But that figure was revised up to a hefty 3.6% on Thursday. Economists weren't expecting to see the strongest growth since the first quarter of 2012 -- but that's what they got. Christmas came early. The surprising pop in GDP was driven by stores purchasing tons of inventory to fill their shelves for stampede-prone holiday shoppers.
The takeaway is that, along with improving housing and jobs reports, this GDP data is a big sign that the U.S. recovery is starting to hum along. Although a good economy is a fine thing, it's also a sign that the Federal Reserve's bond-buying stimulus policies (which have been boosting U.S. growth) may cool off soon. Investors love them some stimulus, so they actually sold off stocks Thursday on worries about the dreaded "tapering" of the Fed's easy-money actions.

3. EA video games shoot the stock in the foot
It's not Game Over... but America's second-largest video game maker, Electronic Arts (NASDAQ: EA  ) , got the equivalent of slipping on a banana peel mid-Mario Kart race. The stock dropped 5.95% Thursday on word that "technical problems" with its popular war-themed "Battlefield 4" might prevent there from ever being a Battlefield 5.

The takeaway is that Electronic Arts is big enough to survive the problem, but not diverse enough to get by unscathed. The sports games that dominate dormroom Toshiba screens, along with "Battle Field," make up half the company's annual sales. For analysts, the big question is whether competitor Activision Blizzard (NASDAQ: ATVI  ) can deliver a knockout blow to "Battle Field" with its "Call of Duty" game, even as EA slashed prices for Thanksgiving.

  • The Big November Non-Farm Payrolls Report (new jobs and unemployment rate)
  • Reuters/UMich Consumer Sentiment Survey


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