After The Close - Wall Street liked some of what it heard today, but not all of the news went down as easily. As a result, Thursday’s stock market patterns felt the weight of a few cross currents. The session saw the major indexes, which include the Dow Jones Industrials, the S&P 500, and the NASDAQ, vary little from the opening bell to the close, and finish hardly changed. Market breadth indicated a modestly downward bias on both the Big Board and the NASDAQ when all was said and done, though.
On the plus side for investors was further progress on the labor front. The week’s initial jobless claims figure came in at a slim 284,000, down 19,000 from the prior week and the lowest level in eight and a half years. That is normally the type of data that raise the bulls’ spirits, since strength in the job market logically means increased consumer spending to fuel economic growth.
Also in the plus column was a batch of earnings reports from companies that, on balance, met or exceeded expectations.
On the down side today was a weak report on new-home sales for June that hurt the shares of homebuilders and offset the positive data on the labor market to a degree.
Denting sentiment somewhat, as well, was news that the International Monetary Fund had lowered its forecast for 2014 global economic growth to 3.4% from 3.7% in April. The silver lining is that the first-quarter struggles the United States’ economy experienced are the primary reason for the downward revision. The IMF is also sticking with its 2015 forecast of 4.0% global GDP expansion.
In other markets, U.S. government bond prices declined as yields rose, suggesting evidence of mounting strength in the economy was given greater weight. But although the yield on the 10-year Treasury note rose from 2.46% to 2.51%, those low rates still suggest there is a high degree of caution in the marketplace. Federal Reserve Chair Janet Yellen did recently say that the nation’s central bank could speed up its timetable to raise interest rates if need be. Today’s market action suggested bond investors are putting faith into that assertion.
Tomorrow brings another heavy round of corporate earnings releases and a report on the nation’s durable goods orders for June. Broadly positive profit numbers are expected, although the durable goods figure is projected to have decelerated from May. The bulls are hoping for a better result to close out the week. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:30 PM EDT - The U.S. stock market got off to a weak start this morning, but has since firmed up a bit. At just past noon in New York, the Dow Jones Industrial Average is up seven points; the broader S&P 500 Index is ahead three points; and the NASDAQ is advancing six points. Market breadth is mildly supportive, as advancers are slightly ahead of decliners on the NYSE. Most equity sectors are in positive territory, which is a positive indication. Specifically, the financial names are displaying leadership today. The energy issues are also performing well. On balance, the healthcare sector is trading lower, due to weakness in the biotechnology names. The technology names are also lagging, reflecting losses in the semiconductor stocks for the second day in a row.
Technically, the stock market has been holding up well lately. Notably, the S&P 500 Index hit a record high mark today, and is closing in on the 2,000 level. While the run in stocks lately has caught the attention of many media commentators, and calls for a correction have been liberally voiced, the market seems intent on marching higher still. Meanwhile, the second-quarter earnings season has been largely positive, and this may be supporting equity prices, at least for now.
Traders received a small dose of economic news this morning. The employment situation appears to be improving. Specifically, initial jobless claims for the week ended July 19th came in at 284,000. This showing was well below the prior week’s figure, and also came in lower than had been widely anticipated. Weekly continuing claims also improved, which is a plus. However, the housing market news was less favorable. Notably, new home sales for the month of June came in at 406,000 units, annualized, falling short of the consensus view. Tomorrow will be a light day for reports, with just the durable goods orders for June due out. Meanwhile, it should be noted that the economic news in Asia was quite favorable overnight. That helped drive those markets generally higher, and may be offering some support to the session here in the United States.
Finally, the corporate earnings reports continue to stream in with some regularity. For the most part, the news has been constructive. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Earnings reports continue to flow in at a feverish pace, with Facebook (FB) garnering a lot of attention on Wall Street. Indeed, FB stock is up sharply ahead of the bell, after the social network operator released better-than-expected financials, thanks to its mobile advertising business. Similar stories are playing out in regard to shares of shoe designer and marketer Skechers (SKX) and telecommunications equipment company Infinera (INFN). Investors also appear pleased with quarterly results and/or outlooks from beverage company Dr Pepper Snapple Group (DPS), drugmakers Bristol-Myers Squibb (BMY), Alexion Pharmaceuticals (ALXN), and Gilead Sciences (GILD), airline operators JetBlue (JBLU) and United Continental (UAL), apparel companies Hanesbrands (HBI) and Under Armour (UA), diversified manufacturer 3M (MMM – Free 3M Stock Report), automaker Ford (F), and furniture company Ethan Allen Interiors (ETH). Indeed, all of these equities are indicating higher openings this morning.
Although much of the earnings news was upbeat, there were a number of disappointing releases, most notably from online travel company Trip-Advisor (TRIP), due to June-period results that missed the mark. The stock is down sharply ahead of the bell, in response. Shares of telecommunications equipment company QUALCOMM (QCOM) are also indicating a weaker opening this morning, although it was softer-than-expected guidance that appeared to spook investors, as the company’s June-quarter financials were solid. Other stocks moving lower in the premarket on earnings news include vehicle maker General Motors (GM), telecommunications giant AT&T (T – Free AT&T Stock Report), restaurant operators The Cheesecake Factory (CAKE) and Dunkin’ Brands Group (DNKN), heavy equipment manufacturer Caterpillar (CAT – Free Caterpillar Stock Report), and semiconductor company Cirrus Logic (CRUS). – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - After declining modestly on Monday and then advancing moderately on Tuesday, the stock market began the latest session in suitably mixed fashion. On point, despite generally better corporate earnings, especially from some heavy hitters in the large-cap space, sent the Dow Jones Industrial Average to an opening loss of some 55 points. But the Standard and Poor's 500 Index held its own, while the tech-laden NASDAQ generally showed an early firming trend. The small- and mid-cap indexes did somewhat better than the Dow, but suggested little aggregate strength, moving back and forth and in and out of positive territory for much of the day. By the close, the key averages were not all that far from where they had ended the previous session, with the NASDAQ the principal area of strength.
Meanwhile, the economic news was sparse following Tuesday's issuances on consumer price inflation and sales of existing homes. Moreover, there was little breaking news from abroad, as the twin problems of Middle East violence and the standoff between East and West over Ukraine and other matters remained in place. As such, the focus was again on earnings, where it usually is at this point in the profit reporting cycle, and away from event risk--at least for one day. However, the tenuous global situation is rarely far from the minds of investors these days.
And on the earnings front, the news remained largely constructive, with a few notable exceptions. Many of the big hits and misses, meantime, have come in the normally volatile technology sector, where some key players have announced their results this week. As noted, the reception has been good, on the whole, but the disappointments have been dealt with swiftly and, at times, harshly, sending some stocks in this realm to new 52-week highs and others to new lows. Besides the tech space, the basic materials issues, especially the steels, were on the rise yesterday in a rare show of strength.
Overall though, yesterday's trends were uneven, with the Dow lower, as noted, and the NASDAQ showing disproportionate strength on the back of a few noteworthy winners. The paucity of economic news, however, will end today, as the government will report on sales of new homes a bit later this morning. That survey should show a moderate downtick in such activity in June. That would contrast with the slight firming noted in Tuesday's existing home sales release. We note, though, that the new home sales category is much more volatile. Indeed, wide swings and major surprises are frequent occurrences. The existing home sales market is about ten times the size of the new homes category.
As to earnings, they continue to come in fast and furious, and will do so for the next two weeks, with the tide moving increasingly towards the mid- and smaller-cap names, which tend to report later than their larger and better-known counterparts. Among the notables that reported after the close yesterday was AT&T (T - Free AT&T Stock Report). That telecom giant and Dow-30 component weighed in with decent, but unexceptional, results and the blue chip stock is laboring a bit in the pre-market this morning, showing modest backtracking. In the meantime, after the close today, financial services giant and Dow member Visa (V - Free Visa Stock Report) will issue its quarterly metrics. In between a whole host of large and small companies will release their quarterly statements.
On the stock market front, yesterday's back-and-forth moves finally resulted in the Dow closing down by 27 points, while the broad based Standard and Poor's 500 Index gained a bit more than three points, and the NASDAQ, on the strength of tech, jumped 18 points, moving closer to the 4,500 mark, a plateau that has proven elusive thus far.
Now, looking ahead to the new day, we find that the markets in Asia were mixed overnight, while their counterparts in Europe are up nicely so far this morning. Over on our shores, the equity futures are suggesting a higher opening when traders and investors get down to business in less than an hour from now, with earnings and the aforementioned data on new home sales, which are due out at 10:00 (EDT) likely to have a say in how the market winds up the penultimate trading day of the week. - Harvey S. Katz