Get the latest data from stocks futures of major world indexes. Find updated quotes on top stock market index futures. · A four-day, point rally in the S&P lost steam Wednesday, pausing on the eve of one of the best earnings seasons in a decade, as investors got a reminder that the trade war still exists.
Accounting Problems At General Electric. Over the last couple of years, more and more attention is being paid to accounting practices, so it's no surprise that GE's irregularities have finally moved centerstage. The Securities and Exchange Commission has been flagging the use of non-GAAP numbers more and more over the last couple of years, noting that companies which favor non-GAAP methods typically do it so they can make their fundamentals look better than they actually are. Despite those guidelines, many companies continue to find ways to mislead investors, and GE has been among them for many years.
For example, General Electric had been displaying as many as four different numbers for earnings per share on its releases and making it difficult to discern what the real number should be. CEO John Flannery pledged toward the end of last year to improve transparency in the company's reporting, and while some progress has been made in terms how the appearance of the release itself, there's still plenty of room for improvement. Clearly, not enough progress has been made because investors still seem unsure of just how well GE is doing fundamentally.
More recently, investors have become concerned about the company's dividend since Goldman Sachs analysts suggested that it should stop paying the dividend for about 18 months. The industrial giant has been paying dividends for the last years, even during the Great Depression and the financial crisis, so it has long been a staple for investors who favor dividend stocks. But what if GE stops being a dividend stock?
That would certainly have an impact on the company's valuation, and that impact isn't factored in by just looking at fundamentals. Not everyone is convinced that General Electric will suspend its dividend, and while GE management has decided to pay the for at least one more quarter, it's easy to see why the issue is still a concern. While GE's payout ratio, at around 5 percent, isn't exactly high-flying, it has been enough to attract dividend investors because of the company's historical blue-chip status.
Although they haven't eliminated the dividend yet, GE management is trying to attack the company's debt problem in other ways, however. At this point, the industrial giant is trying to attack its debt problems through asset sales.
Included in the deal are the Waukesha and Jenbacher engine brands and manufacturing facilities in the U. The deal with Advent follows the sale of its railroad business to Wabtech, and more asset sales are expected in the near future. GE is also trying to sell its light bulb business, but it has found no takers since it started searching for a buyer almost a year ago.
That's certainly not a good sign. So with all these problems weighing on GE stock, analysts are now debating what it's worth. A stub quote is essentially a place holder quote because that quote would never—it is thought—be reached.
When a market order is seeking liquidity and the only liquidity available is a penny-priced stub quote, the market order, by its terms, will execute against the stub quote. In this respect, automated trading systems will follow their coded logic regardless of outcome, while human involvement likely would have prevented these orders from executing at absurd prices.
As noted below, we are reviewing the practice of displaying stub quotes that are never intended to be executed. Officials announced that new trading curbs , also known as circuit breakers , would be tested during a six-month trial period ending on December 10, By Monday, June 14, 44 had them.
By Tuesday, June 15, the number had grown to , and by Wednesday, June 16, all companies had circuit breakers installed. On May 6, the markets only broke trades that were more than 60 percent away from the reference price in a process that was not transparent to market participants. A list of 'winners' and 'losers' created by this arbitrary measure has never been made public.
By establishing clear and transparent standards for breaking erroneous trades, the new rules should help provide certainty in advance as to which trades will be broken, and allow market participants to better manage their risks.
In a article that appeared on the Wall Street Journal on the eve of the anniversary of the "flash crash", it was reported that high-frequency traders were then less active in the stock market.
Kaufman and Michigan senator Carl Levin published a op-ed in The New York Times a year after the Flash Crash, sharply critical of what they perceived to be the SEC's apparent lack of action to prevent a recurrence.
In high-frequency traders moved away from the stock market as there had been lower volatility and volume. Trading activities declined throughout , with April's daily average of 5. Sharp movements in stock prices, which were frequent during the period from to the first half of , were in a decline in the Chicago Board Options Exchange volatility index, the VIX, which fell to its lowest level in April since July These volumes of trading activity in , to some degree, were regarded as more natural levels than during the financial crisis and its aftermath.
Some argued that those lofty levels of trading activity were never an accurate picture of demand among investors. It was a reflection of computer-driven traders passing securities back and forth between day-trading hedge funds.
The flash crash exposed this phantom liquidity. In high-frequency trading firms became increasingly active in markets like futures and currencies, where volatility remains high. However, the growth of computerized and high-frequency trading in commodities and currencies coincided with a series of "flash crashes" in those markets. The role of human market makers, who match buyers and sellers and provide liquidity to the market, was more and more played by computer programs.
If those program traders pulled back from the market, then big "buy" or "sell" orders could have led to sudden, big swings. It would have increased the probability of surprise distortions, as in the equity markets, according to a professional investor.
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Government policy and spending responses. List of banks acquired or bankrupted during the Great Recession. Auction rate securities Collateralized debt obligations Collateralized mortgage obligations Credit default swaps Mortgage-backed securities Secondary mortgage market.
The year's final field roundup found some farmers still waiting on a few unharvested acres, while others are hauling grain, finishing up fall fertilizer and tillage, buying seed and reflecting on the year.
In this respect, automated trading systems will follow their coded logic regardless of outcome, while human involvement likely would have prevented these orders from executing at absurd prices. This page was last edited on 25 December , at