Markets Lower, Closing News 7/21/11

The equity markets surged today, led by financials amid positive negotiations between President Obama and Congress.  It was hot outside today and hotter on the floor of the NYSE as the Dow closed up 152 points and the S&P 500 gained 17 points.  The markets seem to ignore the weak jobs data and march towards higher ground as European leaders met in Brussels in an effort to contain Greece's debt crisis.  Prior to the meeting, two main participants German Chancellor Angela Merkel and French President Nicolas Sarkozy negotiated a  deal  to present to the rest of EU leaders that would provide more aid to Greece.  Out of the gate, the Dow was up 40 points and the S&P 500 Index up 6 points.


The jobless claims data was slightly higher than expected.  The Labor Department reported applications for jobless benefits increased 10,000 in the week ended July 16 to 418,000.  The Federal Reserve reported manufacturing in the Philadelphia region rebounded in July from its first contraction this year, a sign factories are recovering from earlier supply shortages caused by Japan’s earthquake.  Leading economic indicators also rebounded to an increase of 0.3% confirming the Federal Reserve’s forecast that the economy will pick up in the second half of the year.


By mid morning the major indices were nearly all up 1% with the Dow up 131 points and the S&P 500 index up16 points.  Towards the half way point of trading, the Dow was up over 120 points and the S&P 500 was over 1%. 


At the close, stocks rallied as optimism grew that Congress and President Obama were making progress on a deal to cut the deficit.  Also, traders were encouraged by news that European officials discussed a plan to halt the region’s debt crisis. 


Today is the anniversary  of the Dodd-Frank Act. 


Market Indices/Statistics:



  • Dow closed up 152.50 pts/+1.21% to 12,724.41

  • S&P closed up 17.96 pts/+1.35% to 1,343.80

  • Nasdaq closed up 20.20 pts/+0.72% to 2,834.43

  • 29 of the 30 Dow stocks closed higher / only intel closed lower

  • All 10 S&P 500 sectors closed higher

  • Energy, Healthcare, Financials, and Industrial were the best performing sector

  • Telecommunication was the least performing sector (up 0.70%)

  • The VIX was down 1.14 pts to 17.68

  • Oil is up $0.99 to $99.45

  • Nat Gas is down $0.112 to $4.357

  • Gold is down $6.50 to $1,590.00

  • Euro vs. Dollar up $0.0168 to $1.4390

  • Dollar vs. Yen down $0.4200 to $78.4250

Companies in the News:


CNBC reports law makers are trying to block AT&T ( T ) proposed merger with T-Mobile, AT&T reported earnings Q2 EPS $0.60 vs. consensus $0.60, Q2 revenue $31.5 billion vs. consensus $31.33 billion in line with Street expectations. T closed at $30.28, up $0.05.


Representative John Boehner said The House of Representatives will get involved and the NLRB should not prevent any company from relocating from one state to another referring to Boeing’s decision to open a plant in South Carolina.  Boeing (BA) closed at $72.89 up $0.82. 


Express Scripts Inc. (ESRX) announced it is acquiring Medco Health Solutions Inc. (MHS) for $29.1 billion or $71.36 a share.  Holders will receive $28.80 in cash and 0.81 of an Express Scripts share for each Medco share they own.  Express Script Inc. closed at $55.35 up $2.94 and Medco Health closed at $63.83 up $8.05.


 


Earnings:


Morgan Stanley (MS) rose the most in more than two years after reporting a second quarter loss that was smaller than analysts estimated.  Morgan Stanley reported Q2 EPS (38c) vs. consensus (62c), Q2 revenue $9.28 billion vs. consensus $8.04 billion.  MS closed at $24.20, up $2.48. 


 


Robert Half International Inc (RHI) was raised to Outperform  from Neutral at Robert Baird.  The 12-month target price is $35.00 per share.  RHI closed at $29.77, up $3.95


 


Union Pacific Corp. (UNP) surged the most in nine months after posting a second-quarter profit that beat analysts’estimates helped by rising demand for rail shipments.  Union Pacific reports Q2 EPS $1.59 vs. consensus $1.58 Reports Q2 revenue $4.86 billion vs. consensus $4.74 billion.  UNP closed at $104.40, up $4.57.


 


Philip Morris International Inc., (PM) raised its full-year earnings forecast and posted second-quarter profit that topped analysts’estimates aided by strong sales in Asia.  Philip Morris reported Q2 adjusted EPS $1.34 vs. consensus $1.22 Reports, revenue $8.3 billion vs. consensus $7.80 billion.  PM closed at $71.49, up $3.30.


 


PepsiCo Inc., (PEP) said profit this year will increase at a slower pace than previously forecasted because of rising commodity costs and slowing consumer demand.  PepsiCo reported Q2 core EPS $1.21 vs. consensus $1.21 Reports Q2 revenue $16.83 billion vs. consensus $16.41 billion.  PEP closed at $66.17, down $2.32.     


 


 


Coming Thursday:


Economic Reports:None for tomorrow; Companies reporting earnings include Caterpillar, Honeywell, McDonalds, Xerox, Verizon, and GE.


 


 


Paras Madho
NYSE Euronext
Market Watch & Corporate Actions


212 656-5104