After The Close - Today was another day of subdued trading on Wall Street, with the Dow Jones Industrial Average closing up 22 points, but the technology-laden NASDAQ in the red by 21 points. The tone of the broader market echoed the showings of those indexes, with winners outnumbering losers on the New York Stock Exchange, but with a much less compelling advance-decline line on the NASDAQ.
Tech stocks may have been hampered by a poor session from Apple (AAPL), which is expected to report a decline in earnings after the closing bell. Rivals, such as Samsung, have recently noted that the market for high-end smartphones isn’t what it once was, since most people that want one already have one.
Among Dow stocks, United Technologies (UTX - Free United Technologies Stock Report) was the star of the day. The maker of Otis Elevators, Pratt & Whitney engines and Carrier air conditioning systems easily beat profit expectations and raised its earnings guidance. The company was helped by last year’s acquisition of Goodrich Corp.
The shares of Travelers Cos. (TRV - Free Travelers Stock Report), another Dow-30 member, didn’t get the same reception, though, even though the insurance underwriter reported good earnings. Its stock fell after investors appeared to be less-than-thrilled by indications that auto insurance rates might have to be reduced to meet rising competition. Higher interest rates of late also caused bond prices to fall, trimming Travelers’ book value per share, a common measure for financial companies.
Elsewhere, the shares of Freeport-McMoran Copper & Gold (FCX) advanced on heavy volume as the miner surpassed analysts’ earnings estimates. It should be noted that the company is now also involved in substantial oil drilling, following the acquisitions of Plains Exploration & Production and McMoran Exploration, which closed in June.
Other notable gainers in the session included the shares of lender CapitalSource (CSE), which accepted a buyout offer from PacWest Bancorp (PACW) and MGIC Investment (MTG), which surprised Wall Street by posting a second-quarter profit. MGIC’s mortgage-insurance business had rolled up big losses for a number of years after the bursting of the housing market bubble.
Tomorrow will be another day that investors find themselves knee-deep in earnings releases. Scheduled to report second-quarter results on Wednesday are big names the likes of Ford Motor (F), PepsiCo (PEP), Qualcomm (QCOM), Visa (V), and Dow components Boeing (BA - Free Boeing Stock Report) and Caterpillar (CAT - Free Caterpillar Stock Report). Year-over-year gains are expected for all except Caterpillar. Also on tap is economic data detailing new-home sales figures for June, where a modest advance is projected, compared to May. - Robert Mitkowski
At the time of this writing, the author did not have a position in any of the companies mentioned.
12:25 PM EDT - The U.S. stock market is putting in a mixed showing today. At just past noon in New York, the Dow Jones Industrial Average is up 19 points (0.1%); the S&P 500 Index is off two points (-0.1%); and the tech-heavy NASDAQ, which is leading the averages lower, is shedding 12 points (-0.3%). Market breadth also shows a mixed session, as advancing stocks are roughly even with decliners on the NYSE. The trading on the NASDAQ is a bit more bearish, as decliners are leading there.
The market sectors, too, are divided. There is some leadership in the basic materials issues once again, and that is encouraging. The metals issues seem to be strengthening, notably the steels. The telecommunications stocks are also doing well. But, there is some weakness in the healthcare area, as the high-flying biotech stocks are down sharply.
Technically, the market is taking a pause today, which is understandable, as the S&P 500 Index has logged several daily advances. Notably, yesterday’s advance was surprising, as the economic news was mixed, and this may suggest that sentiment is really quite bullish.
Overseas, the markets in Asia put in a strong showing overnight. To wit, the markets in China posted strong gains, as that country’s Premier offered some encouraging remarks. In Europe, the markets started out strong, but have since given up their gains.
On our shores, today’s economic news has been limited to just one report. The FHFA Housing Price Index showed a 0.7% increase in May, which comes after a 0.5% advance in April. Tomorrow, we get a look at new home sales for June, which should shed some further light on the housing market recovery. Overall, traders will not get too many economic reports this week, but next week will be chock full of information, including an FOMC rate decision, the ADP employment figures, and the Government’s employment report for the month of July.
For now, traders are likely concentrating on the parade of earnings reports being released. Today, we heard from Dow-component DuPont (DD -Free DuPont Stock Report). That company put out a mixed report, and continues to explore strategic initiatives to reposition the company. The stock is up slightly. In the high-priced crowd, NetFlix (NFLX) stock is off a bit, to $256.00 a share, even though the company delivered decent profits. Investors may have some concerns about the company’s top-line showing, however. - 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 – The earnings floodgates are now wide open. Three Dow-30 components have released second-quarter financials this morning, with DuPont (DD – Free DuPont Stock Report) being the big winner out of that group. The diversified chemicals company’s June-period results weren’t head turning, but the stock is trading nicely higher in the premarket on news that DuPont may explore spinning off its performance chemicals business. Elsewhere, shares of insurer Travelers (TRV – Free Travelers Stock Report) are up modestly ahead of the bell on earnings news, while the stock of diversified manufacturer United Technologies (UTX – Free United Technologies Stock Report) is flat.
Investors are pouring over a slew of other earnings reports, too. Notable decliners include subscription-based media content provider Netflix (NFLX), tobacco company Altria Group (MO), and oil refiner Valero Energy (VLO). On the bright side, investors appeared pleased with quarterly results from chipmaker Texas Instruments (TXN), coal company Peabody Energy (BTU), electronics retailer RadioShack (RSH), restaurant operators The Wendy’s Company (WEN) and Domino’s Pizza (DPZ), aerospace and defense company Lockheed Martin (LMT) and miner Freeport-McMoRan (FCX). All these stocks are indicating higher openings this morning as a result.
In other news, shares of CapitalSource (CSE) are surging in pre-market trading, after the commercial lender agreed to be acquired by PacWest Bancorp for about $2.29 billion in cash and stock. – 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 - Another day, another record high for the Standard and Poor's 500 Index, which managed to parlay mostly better corporate earnings into a further modest step forward during the latest session. Conversely, the Dow Jones Industrial Average, weighed down by a lackluster showing by fast-food icon McDonald's (MCD – Free McDonald’s Stock Report), missed an opportunity to set another record, though that 30-stock composite, which spent the day either just above or slightly below the neutral line, did manage to grudgingly eke out a two-point gain. But that nominal step in the right direction received no assist from the aforementioned McDonald's, which gave back nearly $3 a share on its non-compelling report and forecast.
Elsewhere, there was enough good news on the corporate front to keep the bulls in line and make it hard for the bears to make any headway. This has been the case since the brief mid-June swoon, when concerns about perceived Federal Reserve intentions on the asset-buying front had caused some skittish bulls to allow some nasty profit taking. There have been no such tendencies to sell en masse of late.
Of course, not all the news has been market friendly. Of note, we did see a nasty surprise on the housing front last week, when the Commerce Department reported sharp reversals in housing starts and building permits. Then, yesterday, the National Association of Realtors chimed in with data showing a slight downtick in sales of existing homes in June. Now, this report was not necessarily a very dour one, as in spite of the nominal setback in volume, inventories remained lean and prices continued to press forward. These two indicators clearly affirm that a durable recovery is still in place in this important consumer category. The market's ability to ride out last week's homebuilding report and yesterday's much more mild sales setback suggest that most still believe that all is well in this critical economic arena.
As to other potential market moving events, the Federal Reserve seems on board with the idea of keeping interest rates low for the foreseeable future, while earnings are generally proceeding in decent fashion, albeit with a few disappointments along the way. The largely supportive tone of these quarterly issuances is acknowledged by the absence of wholesale selling when a disquieting profit metric comes across the tape, although the company that has provided the disappointment is often dealt with harshly. On the whole, though, this benign aggregate market reaction is indicative of a fully functioning bull market. Finally, the economy, which never fully rests, will have a rare day at ease today before results come out tomorrow on new home sales. Once again, this sector is expected to post a gain during June. We shall see. Then, later in the week, we are scheduled to receive data on durable goods orders, initial jobless claims, and consumer sentiment.
As to the day ahead, in addition to a succession of corporate reports, we are seeing better performances abroad, with the markets in both Asia and Europe in the black, while on our shores, the equity futures are moderately higher with just under an hour to go before the start of the new trading day. Helping sentiment across the board this morning are China's announced intentions to pull out all the stops to avoid a hard landing. Also of note, gold is now lower following yesterday's outsized gains; the dollar, too, is heading downward, which is supportive for growth on our shores.
The bull is thus still in charge, and while we sense that the market is now frothy and rather overbought, the bears seem to have no ability to shift the argument. It is always hard to fight the tape, as the saying goes, and one need do no more than ask the forlorn bears about that truism. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.