After The Close - Stocks traded broadly lower today as corporate earnings from some big names failed to excite investors. At the end of the day, the Dow Jones Industrial Average finished 26 points lower, although the NASDAQ closed essentially unchanged. Market breadth was weak overall, with many more stocks turning down than up.
A weak quarterly profit report and a reduced outlook from Caterpillar (CAT -Free Caterpillar Stock Report) fueled the bears today at a time when many of the major averages are near all-time highs, and perhaps ripe for some profit-taking. Slower growth in China is taking a toll on results at heavy equipment makers, including Caterpillar, and many of the basic materials companies, such as Rio Tinto (RIO) and Southern Copper Corp. (SCCO).
Another bellwether company and Dow-30 component, AT&T (T -Free AT&T Stock Report), also turned in a performance that got a thumbs down on Wall Street. Shares of the old Ma Bell fell in active trading.
It wasn’t all doom and gloom today, though. Apple (AAPL) stock, which has become a fallen angel, moved nicely higher as the company turned in impressive results after last night’s closing bell.
Another shining star this session was the stock of VMware (VMW). The software maker generated higher revenues and profits in the second quarter, dispelling concerns about whether its new products were starting to take hold. Its shares jumped, and lifted those of EMC Corp. (EMC), which owns a large stake in VMware.
In other markets, the yield on the 10-year U.S. Treasury note rose closer to 2.6%, from near 2.5%, as bond prices fell. That put extra pressure on the interest-rate sensitive utility sector. Shares of Virginia-based power company Dominion Resources (D), for example, gave up ground.
Meantime, quotations for oil and gold fell, as signs of demand for those commodities have eased a bit in the last day or two.
Tomorrow brings fresh economic data in the form of durable-goods orders for June, where a more modest increase is expected, compared to May’s advance. The weekly initial unemployment claims figures are also projected to show further indications of a gradually improving labor market.
On the earnings front, results are on deck from Dow component 3M (MMM -Free 3M Stock Report), Bristol-Myers Squibb (BMY), Colgate-Palmolive (CL) and, after the bell, Amazon.com (AMZN). The bulls will be looking to take back the upper hand if there is a strong underlying tone to the news on earnings and the economy. -Robert Mitkowski
At the time of this writing, the author did not have a position in any of the companies mentioned.
12:15 PM EST - The U.S. stock market opened higher this morning, pulled back sharply in mid-morning, and is now firming up, at least partially. All told, there is still a mixed tone to the session. At just past noon in New York, the Dow Jones Industrial Average is off its lows, but is still down 24 points (-0.2%); the S&P 500 Index is off three points (-0.2%); and the tech-heavy NASDAQ, which is showing some leadership, is adding on 13 points (0.4%). Market breadth suggests that there is some weakness to the session, as declining stocks are ahead of advancers by about 2 to 1 on the NYSE.
Further, the market sectors are largely in negative territory. Despite some signs of improvement lately, the basic materials issues are off sharply today. The energy group is also quite weak. The one area of strength is the technology sector, and that is pushing the NASDAQ higher. A favorable report from Apple (AAPL), and a strong move up in that company’s stock, are likely the main catalysts.
Technically, the market is taking a breather today. Notably, the S&P 500 Index is likely encountering some resistance at the 1,700 mark. Given that this is a large round number, it likely holds some “psychological” significance with investors. Furthermore, volumes have been a bit light lately, which can make for volatile trading. This may be a reflection of the fact that we are now in the middle of the summer, and institutions and the retail crowd may be a bit less engaged with the market.
The mixed-to-weaker weaker market is a bit surprising today, given that we received some constructive economic news this morning. Specifically, new home sales came in at 497,000 units, annualized, for the month of June. This showing, which was better than many had anticipated, was also an improvement from the downwardly revised 459,000 figure logged in May. This latest report should offer some comfort to those traders that might have become concerned that the housing market recovery could be losing steam. Notably, over the past several days we received a few lackluster housing-related reports.
In corporate news, we heard from several Dow-components recently. AT&T (T - Free AT&T Stock Report) stock is off a bit after the telecom leader posted mixed results. Also, Caterpillar (CAT - Free Caterpillar Stock Report) stock is slipping, after the earth mover put out a weak report. However, Boeing (BA - Free Boeing Stock Report) shares are trading higher on an encouraging release. - 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 – Investors certainly have their hands full with earnings reports today, as a slew of high-profile companies have released quarterly financials. Many delivered solid second-quarter numbers and pleased the investment community, such as aerospace companies Boeing (BA – Free Boeing Stock Report) and Northrop Grumman (NOC), computer and personal electronics powerhouse Apple (AAPL), beverage and snack maker PepsiCo (PEP), automaker Ford (F), video game publisher Electronic Arts (EA), software developer VMware (VMW), airline operator US Airways (LCC), and health insurer WellPoint (WLP). Indeed, all of these stocks are indicating higher openings this morning, with VMW showing the most strength.
It was not all good news, however, and telecommunications companies AT&T (T – Free AT&T Stock Report) and Broadcom (BRCM), heavy equipment manufacturer Caterpillar (CAT – Free Caterpillar Stock Report), restaurant operator Panera Bread (PNRA), and railroad Norfolk Southern (NSC) failed to live up to investors’ expectations and are seeing their shares trade lower in the premarket as a result.
On the M&A front, shares of Maidenform Brands (MFB) are soaring ahead of the bell, after the apparel company agreed to be acquired by industry peer Hanesbrands (HBI). That issue is up modestly in pre-market trading. Meanwhile, Michael Dell and Silverlake Management have increased their bid for Dell (DELL) by a dime, to $13.75 a share, in the latest development over the fight for the computer maker. – 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 - Wall Street largely spun its wheels yesterday, gaining modestly in the Dow Jones Industrial Average, on some compelling quarterly earnings from blue-chip component United Technologies (UTX - Free United Technologies Stock Report), largely marching in place on the Standard and Poor's 500 Index, and retracing a portion of the recent gains in the tech-heavy NASDAQ, on some skittishness ahead of the profit issuance from tech icon Apple Inc. (AAPL) after the close of trading (more below), and some selling in a couple of other high-priced names in that volatile index.
The focus on earnings yesterday was logical, and it should again be a key ingredient in the stock market's performance today among equity investors. Indeed, quarterly results were the lone source of interest in the latest session. However, today, the U.S. Commerce Department is scheduled to issue its latest monthly metrics on new home sales, where a modest gain is the consensus forecast. However, even with that report, the eyes of Wall Street will be clearly on earnings. Here, a succession of large names have either reported already or will do so shortly after the conclusion of trading this afternoon.
Overall, the news on this front has been good, as the majority of companies, both large and small, have beaten lowered net targets, and a few have outperformed on the sales front, although strength at the top line has been a more daunting achievement in this era of modest revenue strength, but successful cost cutting. Somewhat comforting results from ailing coal producer Peabody (BTU) yesterday, helped that beaten down stock and some other basic industry components, show some rare strength in the latest session, suggesting that we could at last be seeing some sector rotation.
The focus on earnings will continue in the days to come, meanwhile, as June's economic numbers wind down, and we are still a week, or so, from the first releases for July. Next week, for example, we will get a trio of critical data points for July, as the National Association of Purchasing Managers will report on manufacturing activity across the country, the Conference Board will weigh in on Consumer Confidence, and the Labor Department will issue the most closely watched economic report of the month when it reports on job creation and the unemployment rate for the fast-concluding month. At the same time, the Commerce Department will release its first estimate of second-quarter gross domestic product growth.
For now, though, save for the aforementioned report on new home sales, which should show a small increase, the focus, as noted, will be on earnings, with yesterday afternoon's report from one-time tech darling Apple stoking much needed buying in the after market, as well as in the pre-market this morning. Overall, earnings tumbled here last quarter, but demand for the iPhone held up well, apparently reassuring the remaining bulls.
Also in the news, as far as earnings are concerned, are the quarterly metrics from telecom giant AT&T (T - Free AT&T Stock Report), issued after the market closed yesterday, aerospace and defense behemoth Boeing (BA - Free Boeing Stock Report) and earthmoving mainstay Caterpillar (CAT - Free Caterpillar Stock Report). As to these stocks, Boeing pleased investors with its report, and that issue is suggesting a nicely higher opening, while AT&T's results were met with little reaction. However, Caterpillar shares are indicating a modestly lower start to the trading day. Overall, meantime, the markets were mostly lower in Asia overnight, but reports of solid manufacturing data in Europe has the Continent's markets moving nicely higher. And over here, the calming good Apple news has the NASDAQ futures roaring ahead, while the Dow and Standard and Poor's 500 futures climb modestly. In short, the bulls seem likely to remain in charge, at least at the opening.
At the time of this article's writing, the author had positions in T.