Boom. Someone on Wall Street just popped open some vintage Four Loko cans and gave the stock market a swig. The Dow Jones Industrial Average (DJINDICES:^DJI) surged 193 points Tuesday for its biggest gain in two months, thanks to some adrenaline-pumping words from the new head of the Fed.
Here's the thing. As the economy did improve over 2013, Yellen's predecessor, the famous bearded Ben Bernanke, slowed down QE stimulus by cutting the amount of bonds bought to $65 billion monthly last month -- but with January's poor econ data, investors were wondering Tuesday what the new Fed chair's plan would be for the stock-pumpin' stimulus juice that Wall Street craves.
And Yellen's stimulus decision is that the Fed will continue to scale back stimulus but has no set schedule for it -- that means quantitative easing isn't going away tomorrow. And investors like that.
2. Sprint earnings spur acquisition rumors
Investors love acquisitions, so the stock climbed more than 2% after the CEO's remarks on hopes that it would either make an acquisition (most likely of smaller T-Mobile) or that it would be acquired. Either of those events would be lucrative for Sprint stockholders, as larger scale would help it compete with the two mobile monsters that dominate our smartphone plans.
Is a merger going to happen? Not if the U.S. Justice Department has anything to say about it. DOJ officials have made it clear that they don't want to see any more consolidation in the lucrative U.S. wireless phone provider industry. For the DOJ, the more competitors, the better -- but a healthy four competitors is uber-important for consumers. Nonetheless, Sprint's clear desire to create a "tri-opoly" in the U.S. market got investors psyched.
The takeaway is that Sprint's actual earnings were OK. The company lost less money in the fourth quarter than analysts expected and also lost fewer of its most profitable phone plan subscribers. Clearly, things aren't looking too dandy at Sprint, but the hope of a possible merger is driving the stock's potential value.
Attention, faux hipsters: Your artificially weathered T-shirts are at risk. Urban Outfitters (NASDAQ:URBN) reported that sales dipped 6% at the company's flagship Urban Outfitters stores, which unfortunately make up 45% of the company's total revenues. That's not a good look.
- Fed President James Bullard speaks
- Fourth-quarter earnings reports: Dr Pepper Snapple, Manchester United
MarketSnacks Fact of the Day: The company behind the business school entrance exam, the GMAT, has greater profit margins than Apple.
As originally published on MarketSnacks.com