US Stocks ended yesterday's choppy trading session mostly higher as investors weighed soft housing data against a flurry pf deal news including the takeover of Family Dollar by Dollar Tree.
Pending home sales fell 1.1% in June to mark the first decline in 4 months showing sales of US homes continue to face headwinds like higher interest rates, tight credit, and stagnant wage growth of prospective buyers. The Case-Shiller home price index is also out this morning showing that house prices nationally declined .3% year over year.(marketwatch)
UPS reported 2nd quarter earnings this morning that missed expectations. The company reported $1.21/share when wall st had been expecting the company to earn $1.25/share. The company also lowered its full year earnings forecast because they plan on increasing expenses. Shares of UPS sold off on that news.(CNBC)
Drug companies Pfizer and Merck both beat 2nd quarter earnings expectations sending those stocks higher. Both are Dow components which will help lift that index today.(marketwatch)
And good news if you are retired. In their annual report issued by the Medicare and Social Security Trustees showed that both programs will run out of money later than expected. Medicare isn't scheduled to be exhausted until 2030 and Social Security will last until 2033. Lower than expected spending extended the life of both programs which will certainly take the heat off lawmakers to address entitlements ahead of Congressional elections.(yahoo finance)
The major stock indexes finished last week mostly unchanged. Stocks have started this trading week slightly lower ahead of the busiest weeks for economic reports of the summer.
Asian stock markets traded at a 3 year high after profits earned by the Chinese industrial sector rose 18% in June reinforcing expectations that the Chinese economy is powering through a recent soft patch.
So far half of the companies that make up the S&P 500 Index have reported 2nd quarter earnings and 77% of those companies have beaten expectations which is a big reason that index is at an all-time high.
One of those companies that missed expectations was Amazon. The online retailer missed earnings expectations for the 2nd straight quarter reporting a loss that was double what was expected. Amazon remains one of the most valuable companies in the US while struggling to turn a profit.
Engine maker Cummins reported a 7% rise in quarterly earnings and raised their full year revenue forecasts, citing improving demand from makers of pickup trucks and motor homes in North America. Even though the company beat expectations shares are trading 2% lower in early trading.
Big boy toy maker, Caterpillar, posted profits almost 17% higher than last year on sales that were down about 4%. Caterpillar cited an uncertain global growth picture that weighed on sales expectations. CAT has seen a revival in its business based largely on strong sales in China, even as activity in the U.S. remains relatively stagnant. (Reuters)
Telecom company AT&T reported second-quarter 2014 profits that were down 7.5%. Significant pricing competition, new device financing plans and other promotional strategies weighed on earnings. (Zacks)
Umpqua Bank reported profits of $17.1 million for the second quarter of 2014, down 29% from last year. The Company's performance included strong organic loan and deposit growth and a higher net interest margin. (Business Wire)
The 10-year Treasury traded at its lowest yield since May as investors bet an uneven economic recovery won’t push the Federal Reserve to accelerate interest-rate increases. The 30-year bonds stayed close to its lowest yield since February 2009. The 10-year stands at 2.47 and the 30-year at 3.26%. (Bloomberg)
The National Retail Federation lowered its retail sales forecast for 2014, citing slow growth during the first half of the year. They now expect retail sales to grow 3.6 percent this year, down from its 4.1 percent forecast in January. (Associated Press)
New unemployment claims for last week were down 19,000 to 284,000. They now set at their lowest level since 2005. (Reuters)
Microsoft stock stands at 15 year highs as they reported a second quarter profit that was down 7% and sales were up 17%. Hitting the bottom-line was Microsoft’s integration of the Nokia phone operations into the company. (Reuters)
Pepsi saw profits drop 2% in the latest quarter as sales were essentially flat. The company raised full year profit guidance upwards in the report to 8% growth. Like most multi-national companies Pepsi is seeing profit decreases due to currency exchange rates. (Wall Street Journal)
Boeings second quarter profits increased 52% as sales increased 1%. The delivery of planes was up 7%. Boeing gave strong future guidance on the increasing demand from low cost airlines and booming airline travel in Asia and China. (Associated Press)
Apple saw 12% profit growth in Q2 as iPhone sales increased almost 13%. But for the second quarter in a row iPad sales fell, this quarter by 9.2% after falling 16% in Q1. The company has $164.5 billion in cash. (Wall Street Journal)
Regulators are expected to vote today to end a long-time staple of the investment industry—the fixed $1 share price for money-market funds. The SEC may also vote to let money funds block withdrawals during periods of financial stress or impose new fees for withdrawals. This could remove a perceived safe haven for investors. (CNBC)
Lots of earnings after the bell today. Stocks are under pressure as international violence continues to be a wet blanket on investors.
A new report shows US companies increased worker wages in the second quarter at a rate more than double of a year earlier. Wage growth has been almost non-existent during this recovery and some see this as a welcome sign. It was the first report since third quarter of 2012 that no respondents reported declining wages. (National Association for Business Economics)
Some tax reform may be coming our way. The US House of Representatives passed the America Gives More Act last week. The bill makes three tax breaks permanent: the charitable deduction for contributions of food inventory by businesses, the deduction for contributions of conservation easements, and a provision that allows senior citizens to tap their IRAs for charitable donations without incurring a tax penalty. (Portland Business Journal)
US mortgage rates continue to be at near historic lows. The 30-year fixed rate stands at 4.15%. Mortgage rates are now below the lows of last year when the Federal Reserve said they would end their bond purchase program. (Associated Press)
Surging consumption of chocolate in Asia is pushing cocoa-bean prices to the highest level in three years. While demand in the region ranked as the world’s lowest per capita in 2013, the market will grow at almost twice the global rate over the next four years putting pressure on supply. (Bloomberg)
Markets took a big plunge yesterday as finger pointing caused confusion on whom and why someone shot down a passenger airliner over the Ukraine. Investors ran for cover as the fear trade was on.
General Electric saw profits rise 13% as the sale of jet engines and oil equipment were on the upswing. Sales were up 3.5%. The company says they will move forward with the spin-off of their retail finance division, that almost brought them down, during the financial crisis of 2008. (Reuters)
Natural gas supplies grew by more than 100 billion cubic feet for the eighth week in a row. That is the longest triple digit increase in 20 years. Stock piles have more than doubled since hitting an 11 year low in March after the rough winter. Natural gas production is up 4.1% in 2014. (Bloomberg)
Paper or plastic? Approximately 78% of Americans, regardless of income, have less than $50 in their wallet and 50% carry $20 or less. Americans are getting comfortable with using their credit cards for even small purchases. The US currently spends $827 million printing money each year. (Bankrate.com)
Federal Reserve Chairman Janet Yellen returns to Capitol Hill today this time to talk to the House of Representatives.
Bank of America posted a second quarter profits of $2.04 billion, down 43% from last year as the bottom fell out of the mortgage market. The bank produced $13.7 billion in new home loans during the quarter down 59% from last year. Litigation costs also shot up to $4 billion as B of A tries to settle loan disputes leftover from the financial crisis. (Reuters)
Oregon’s largest employer, Intel, beat street estimates posting a profit of 55 cent a share. The company was able to increase its profit margins during the quarter and its PC client business grew by 9%. (CNBC)
For the fifth straight month retail sales increased showing the consumer is still out buying. Sales, ex autos, are up 4.3% from last June. Online and catalogue retailers are seeing even better than average sales up 8.1% over the last 12 months. (USA Today)
Producer prices increased 0.$% in June after falling in May. That is a little hotter than expected, but inflation at the manufacturing level remains in check. (Associated Press
Thought your last flight was crowded? Boeing is working on a high capacity 737 designed to carry up to 200 persons on short haul flights. That is about a 10% increase in travelers over the current configuration. (Bloomberg)
Federal Reserve Chairman Janet Yellen will answer economic questions in front of the US Senate today. Let’s hope they listen more than talk.
Terms of the big tobacco merger between Reynolds American (makers of Camels) and Lorillard (makers of Newports) are now known. Reynolds will pay $27.4 billion in cash and stock for Lorillard equaling $68.88 a share. In order to make the deal palatable to regulators, as we go from three to two major US tobacco companies, Reynolds will sell its Kool, Salem, Winston and blu eCigs brands to the British Imperial Tobacco Group. (CNBC)
JPMorgan Chase saw profits fall 8% to $5.99 billion as their bond trading desks saw less business and they do less securities trading. The bank says it continues to see an improving business climate that will help it improve results in coming quarters. (Reuters)
Goldman Sachs saw profits climb 5% to$1.95 billion as sales also increased 6%. Their trading desk income increased 20% over last year. Compensation was the banks largest cost during the last year at $3.9 billion up 6% from last year. (Wall Street Journal)
Drug and consumer product company Johnson & Johnson made a second quarter profit of $4.33 billion up over 13% from last year. Helping boost their bottom-line was strong sales of their new hepatitis C drug. (Reuters)
The domestic economic calendar is blank this morning with no new numbers to report. So we will have to rely on earnings.
Citi Bank announced a $7 billion settlement with the federal government over mortgage practices that led to the fiscal crisis and reported profits of $3.9 billion. There deposits increased 3% and loans were up 8%. (Yahoo Finance)
While we slept China said their economy grew by 7.4% in the second quarter. That is equal to what the Chinese economy saw in the first quarter. (Reuters)
Another old fashioned pension plan bites the dust. Lockheed Martin will freeze its current pension plan for US salaried workers and move them to a new 401k plan. Even though retirement savings and investing are on the shoulders of workers the company will match up to 10% of pay depending on the employees saving level. (Fox Business News)
Hobby Lobby opened its first Oregon store in Albany last month and is looking to open a Springfield store early next year. The company says more Oregon stores are planned. (Oregon Live)
In another example of why the Dow Jones Industrial is a flawed index. In its latest push to the 17,000 mark five of the indices stocks accounted for half the gains. The index took 153 trading days to go from 16,000 to 17,000. Those stocks are Caterpillar, Walt Disney, 3M, Visa and American Express. (Wall Street Journal)
US Stocks closed modestly higher yesterday after the Fed revealed that they have decided to end their bond purchase program by October if the economy stays on track.
The Fed also discussed the slowdown in the housing market in June. The Fed said the reasons the housing market was stalling last month were, tough credit standards, high down payments, weak demand from young families driven by big student loans, a low supply of desirable homes, and rising construction costs.(yahoo finance)
US Jobless claims for the first week of July fell by 11,000 to 304,000. That is a 7 year low and will push the unemployment rate lower.(marketwatch.com)
People from greater China are buying US Real Estate in record numbers. Individuals from China spent $22 Billion on US homes through March which is 72% higher from a year ago. Right now 25% of the homes being bought in the US are by foreign buyers with the Chinese spending the most. The publicly traded home builders are catering to the Chinese like never before.(yahoo finance)
US Stocks are sharply lower this morning over concerns about the Portuguese banking sector.
US Stocks fell in a broad sell-off yesterday, dropping for a second straight session and driving the Dow back down below 17,000 as investors turned cautious ahead of earnings season.
Alcoa, whose earnings report always kicks off earnings season, saw a 2nd quarter profit that topped Wall St. expectations. Alcoa's stock has surged in 2014 as aluminum prices have stabilized. Shares of Alcoa rose 2.5% on that news against a very weak tape.(marketwatch.com)
Small Business optimism dropped in June on a big decline in business owners who had previously expected the economy to improve. The small business optimism index fell 1.6 points in June with 8 of the 10 components that make up the index falling.(yahoo finance)
China's consumer inflation moderated slightly in June. Consumer prices in China rose 2.3% from the same period last year which was in-line with expectations. Chinese stocks fell 1.5% on that news.(marketwatch.com)
As Detroit struggles to climb out of bankruptcy another Michigan city, Flint the birthplace of General Motors, may need to file for bankruptcy. If a judge doesn't allow Flint to cut benefits to retiree's the city will be forced to file for bankruptcy protection.(marketwatch.com)
US Stocks traded higher last week pushing the indexes to record territory with the Dow closing above 17,000 for the first time ever, and the S&P 500 within 15 points of 2,000. The Nasdaq is 12% below the all-time high it reached way back in March of 2000, over 14 years ago. This week investors will be focused on earnings season which starts tomorrow with Alcoa.
Pfizer is abandoning their attempt to buy the British drug maker Astrazeneca. The decision ends a month-long public fight between two of the largest pharmaceutical companies in the world. Pfizer was trying to do the deal to dramatically reduce their tax liability after the passage of Obamacare.(marketwatch)
The President of the European Central Bank, Mario Draghi, announced a new round of emergency measures to get the European economy kicked started. The ECB will now begin lending money to commercial banks under the condition the commercial banks lend that money to households and companies. Draghi estimates the ECB will lend out $1 Trillion Euro's.(marketwatch)
Mercedes-Benz posted their strongest 1st half of a year ever with huge demand coming out of China and the rest of Asia. Rival premium car maker Audi is also on track for a record sales year. That comes on the back of US vehicles sales being on track for their best sales year ever.(Reuters)
Markets set new record highs yesterday as improving economic data added fuel to the fire. The S&P 500 set its 23rd record of the year and the NASDAQ is at 14 year highs. (CNBC)
ADP says the private sector added 281,000 jobs in June. That number is much better than expected. The construction sector surged and strong growth was seen across the economy and company size.
Payroll services company Paychex saw sales increase 5% in the latest quarter resulting in profits surging 18% for the period. The company says revenue and profits were both boosted by increasing demand for HR outsourcing solutions and a growing economy. (Fox Business News)
The Mortgage Bankers Association says applications for all home mortgages were essentially flat for the week and down 37% for 2014. Refinancing applications are down 50% for the year and new home mortgages are down 16%.
New auto sales through the first six months put us on pace to sell 16.3 million vehicles in 2014. That is the strongest sales pace since before the 2008 recession. (Associated Press)
The ISM Manufacturing report remained at 5 month highs in May as orders were at their highest level in a year. Producers of wood products, furniture, metals and machinery were among those seeing a pickup in demand as gains in auto and home sales rippled through the world’s largest economy. (Bloomberg)
US Stocks finished slightly lower yesterday, but finished the 2nd quarter higher. June was the 5th straight monthly gain and the 2nd quarters gain was the 6th straight quarterly gain. The S&P 500 recorded a 6.1% gain in the first half of 2014.
Even though General Motors recalled another 8 million cars yesterday bringing their total this year to 29 million their June sales were 1% higher. GM sold 267,000 vehicles in June. Shares of GM are 2% higher on that news.(marketwatch)
Pending home sales jumped 6% in May to reach the highest level in eight months signaling that upcoming closings of existing homes will speed up.(yahoo finance)
Two separate reports out this morning showing manufacturing in China is rebounding with economists crediting government stimulus measures as reason for the rebound. China's manufacturing sector is now growing again showing its strongest expansion in 15 months after contracting in May.(markwatch)
Paying for college just got more expensive. Every July 1st the interest rate on federal student loans resets. So even though the federal loans have rates that are set for the life of the loan, students taking new loans will be paying higher rates. The Stafford loan is set to rise today from 4% to 4.66%. Student loan debt is now greater than credit card debt in this country, second only to mortgage debt.(Yahoo Finance)