The Dow Jones Industrial Average (DJINDICES:^DJI) went loco on Cinco de Mayo, falling over 100 points in the morning before finishing up with an 18-point gain.
1. Target drops after bagging its CEO for data breach
You don't get "fired" at the CEO level. Instead, you "step down." Gregg Steinhafel, the CEO of big-box retailer Target (NYSE:TGT), did his "step down" on Monday, bringing to an end his 35-year run at the company.
Yes, there was the data breach of the company's stores last November and December that put 40 million customers at risk of data theft. But there were also a number of leadership blunders during Steinhafel's six years as CEO. Target's online sales lag those of other big-box retailers, and the company has a reputation of following, not leading, innovation in 21st-century retail.
Blame Canada? The data breach of credit card info led to a 45% drop in quarterly earnings. But the company's ill-fated decision to expand into Canada (an investment of over $4 billion) has led to enormous losses. Poor sales are forcing Target to discount prices -- a desperate and profit-killing move. Canadian Target practically offers free hockey puck-shaped maple syrup candies to try to get people to the doors.
Is data security a CEO's job? That's tough to say. But the data breach was humiliating and put all of Steinhafel's moves under the microscope. The CFO will be the interim CEO while the search is on to find a new CEO. At a time of major change in the retail shopping industry, it's scary that the struggling retailer is headless -- the stock fell 3.5% Monday as investors worried that the company is getting off-target.
2. Pfizer earnings looked sick (as in bad sick)
If you want a headache, spend some time checking out the earnings report from pharmaceutical giant Pfizer (NYSE:PFE). The stock dropped 2.6% Monday after first-quarter revenues fell 9% to just over $11 billion, which was a hernia-inducing $730 million below analysts' expectations.
What's the diagnosis? Pfizer's key prescription brands are suffering a case of serious competition from generic drugs. For instance, Pfizer's cash cow Lipitor, a cholesterol-fighting medication that seems to take over every single TV ad spot during football season, saw sales dip during the first three months of 2014 as consumers increasingly purchase cheaper U.S. generic options.
The takeaway is that this is also a case of bad timing for Pfizer. The American drugmaker tried to purchase UK pharmaceutical firm AstraZeneca, offering a cool $99 billion last week, which AstraZeneca quickly rejected as "undervaluing the company." Now Pfizer is expected to up its offer and guarantee that fewer AstraZeneca workers would lose their jobs in the purchase -- meanwhile, AstraZeneca awkwardly won't comment on Pfizer's sick earnings.
3. Wall Street firms fall on JPMorgan report of lower trading revenues
Managing expectations was the goal of JPMorgan Chase's (NYSE:JPM) disclosure to the SEC that was made public on Friday after markets closed. Trading revenues are expected to be down 20% in the second quarter, based on the slow-as-molasses market environment thus far in the quarter. Friday's news was reflected in Monday morning's opening stock price, which was down 2.5%.
If things are bad at JPMorgan, they're most likely bad for all of Wall Street -- big trading firms Goldman Sachs, Morgan Stanley, and Bank of America all had stock drops of over 1% as investors assumed the poor trading environment was widespread.
The takeaway is that the disclosure was freaky news for market profits. As the middleman between investors, JPMorgan can take a little bit of money, which amasses to billions of dollars spread out over many trades. These huge NYC-based investment banks make big money by trading market securities -- so it was ironic that the news caused a stir of trading activity (with orders to sell JPM stock).
- First-quarter earnings reports: DirecTV, Walt Disney, Whole Foods Market
- Details on the U.S.-international trade balance
MarketSnacks Fact of the Day: Over $6 trillion (about 8% of the world's annual economic production) is spent on projects that cost over $1 billion -- we're talking megaprojects, like huge bridges, buildings, and transportation systems.
As originally published on MarketSnacks.com
John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.
Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Bank of America, DirecTV, Goldman Sachs, Walt Disney, and Whole Foods Market and owns shares of Bank of America, JPMorgan Chase, Walt Disney, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.