Markets Lower, Closing News 7/14/11

Markets closed lower today despite a better than expected jobless claims report this morning as well as strong earnings from JP Morgan and Yum! Brands. Ben Bernanke’s testimony in the Capitol weighed on markets, as he largely backed away from an immediate additional round of quantitative easing.

Ben Bernanke concluded his two-day testimony at the Capitol today, but backed away from a third round of quantitative easing.  Bernanke did confirm that the Fed would be ready to inject more capital into the economy, but noted that there has not been any real increase in inflation this year, and that the Fed is not prepared to take action at this point.

The Italian Senate approved a four-year austerity package worth €48 billion, attempting to balance the budget by 2014. The vote passed 161-135 with three abstentions, and the bill will not be passed the lower house of Parliament tomorrow.

Jobless Claims fell more than expected, falling by 22k (economists had been expecting -12k) to 405k. While the claims number is above 400k (the level where the economy is creating jobs) for the fourteenth consecutive week, bulls are pointing to a government shutdown in Minnesota that cost 11,500 jobs that kept the number above 400k.

A fall in gasoline sales pushed the PPI reading to -0.4% a wider gap than the 0.2% decline that economists had been forecasting. The core PPI (ex food and energy) beat expectations, up 0.3% vs. 0.2% forecasted. Retail Sales rose 0.1%, beating economists’ forecasts for a 0.1% decline, despite the largest drop in gasoline sales in a year. Retail sales were boosted by the automotive sales, which was up 0.7% in June -2.0% in May.

The perjury trial of Roger Clemens, relating to charges that he lied to Congress by denying he used steroids or other performance enhancing drugs in 2008, ended today when a judge declared a mistrial because the prosecution used a video that had been barred from the courtroom.

Market Indices/Statistics:

  • Dow closed down 54.49 pts/-0.44% to 12,437.12
  • S&P closed down  8.85 pts/-0.67% to 1,308.87
  • Nasdaq closed down 34.25 pts/-1.22% to 2,762.67
  • 23 of the 30 Dow stocks closed lower /7 closed higher
  • All 10 S&P 500 sectors closed lower
  • Industrials was the worst performing sector (down 0.97%)
  • The VIX was up 0.89 pts to 20.80
  • Oil is down $2.38 to $96.15
  • Nat Gas is down $0.015 to $4.372
  • Gold is up $1.80 to $1,587.30
  • Euro vs. Dollar down $0.0042 to $1.4141
  • Dollar vs. Yen up $0.30 to $79.12

Companies in the News:

Conocophillips announced that the board of directors has approved pursuing the separation of the company’s Refining & Marketing and the Exploration & Production businesses, creating two stand-alone publicly traded companies. COP shares traded higher (+1.63% to $75.61) today on the news.

Southern Union Co.’s board of directors confirmed the receipt of a proposal from The Williams Companies, Inc. to acquire SUG for $44.00 in cash per share. The new proposal is valued at $5.6 billion, higher than the $5.1 cash and stock deal originally proposed by Energy Transfer Equity. Shares of SUG (+4.45% to $43.45) and WMB (+1.08% to $29.10) traded higher, while Energy Transfer traded down 1.56% to $44.08.

Earnings:

Google shares are trading higher (+11% to $587) in after hours trading after reporting earnings that beat analysts’ forecasts. Google reported earnings per share of $8.74 (adjusted) on $9.03 billion in revenue vs. estimates of $7.85 per share on $6.55 in revenue.

Shares of JP Morgan traded higher today (+1.84% to $40.35) after reporting 2Q earnings that beat on both the top and bottom line. JPM reported 2Q earnings per share of $1.27 on $27.4 billion vs. analysts’ forecasts of $1.21 per share on $25.13 billion.

Progressive Corp. traded lower (-3.78% to $20.13) after reporting earnings before the bell this morning. Progressive reported Q2 earnings per share of $0.38 vs. estimates of $0.39, and a 6% net decrease in June Net Income to $53.1 million.

Yum! Brands traded 1.42% higher today to $56.37 after reporting Q2 earnings of $0.66 per share on $2.82 billion, ahead of analysts’ estimates of $0.61 per share on $2.7 billion in revenue. YUM also announced FY earnings per share guidance to be at least $2.83 per share vs. forecasts were calling for $2.83.

Shares of Marriott International fell (-6.60% to $34.69) after announcing earnings after the bell yesterday. MAR reported Q2 earnings of $0.37 on $3 billion, both in-line, but what pushed shares lower was their outlook, forecasting Q3 earnings per share of $0.25 -0.29 vs. analysts’ expectations of $0.30 per share.

Coming Friday:

Economic Reports:CPI (expected to be -0.1% / Core +0.1%) and Empire Fed Index (expected to be 3.0) at 8:30; Earnings from Citi and Genuine Parts Group.