Markets Higher, Closing News 7/25/11

Credit Crunch Cereal

Image by Adam Crowe via Flickr

The Dow closed down 88 points today, well off the day’s low of down 144, as good earnings news this morning began to lessen the impact of the continuing impasse on the US debt ceiling.

With eight days remaining until the August 2nd deadline, lawmakers remain unable to reach a compromise on a plan for the debt after democrats and republicans submitted dueling proposals to the President. Ratings agencies have warned that even if an agreement to raise the debt ceiling is reached, the United States may still face a downgrade from its AAA credit rating.

Five S&P 500 companies reported earnings today, Lorillard, Roper Industries, Kimberly Clark Corp, Baker Hughes and Eaton Corp., all beating earnings per share expectations. That brings this quarter’s earnings scorecard to 128 companies in the S&P 500 reporting, and 84% beating the earnings per share estimates.

Gold hit a new record high today as investors flocked to safe-havens ahead of a potential US debt crisis. As of 4:00 pm gold is trading at $1,614.50 per ounce, just below the intraday high of $16,24.30 which was hit this afternoon. Gold is up 7.50% for the month, the largest monthly gain since April.

On Day 135 of the NFL lockout, the players and owners finally reached an agreement to save this year’s NFL season. The players signed the collective bargaining agreement this afternoon, and teams will begin their offseason activities when they are allowed to sign draft picks and free agents beginning tomorrow.

Market Indices/Statistics:

  • Dow closed down 88.36 pts/-0.70% to 12,592.80
  • S&P closed down 7.59 pts/-0.56% to 1,337.43
  • Nasdaq closed down 16.03 pts/-0.56% to 2,842.80
  • 25 of the 30 Dow stocks closed lower / 5 closed higher
  • 9 of the 10 S&P 500 sectors closed lower
  • Utilities was the best performing sector (up 0.27%)
  • Telecommunication Services was the worst performing sector (down 1.36%)
  • The VIX was up 1.83 pts to 19.35
  • Oil is down $0.71 to $99.16
  • Nat Gas is down $0.018 to $4.352
  • Gold is up $13.00 to $1,614.30
  • Euro vs. Dollar down $0.0018 to $1.4376
  • Dollar vs. Yen flat at $78.25

Companies in the News:

Bridgepoint Education shares slid today (-11.44% to $27.01) after it announced that its largest shareholder, private-equity firm Warburg Pincus, who owns 66% of Bridgepoint’s outstanding common stock, is offering to sell its entire stake.

Validus Holdings, Ltd. (-1.59% to $27.26) commenced a hostile exchange offer today for Transatlantic Holdings Inc. (-1.05% to $51.95) in a deal that gives holders of TRH $8.00 in cash and 1.5564 shares of VR for each TRH share held.

Regions Financial eeked out a 0.16% gain to $6.21 after Reuters reported that Blackstone and Stifel Financial Corp. could place rival bids valued at $1.5 billion for Region’s Morgan Keegan unit.

Earnings:

Shares of Lorillard Inc. (-4.45% to $107.29) fell after reporting Q2 results before the bell this morning. Lorillard reported earnings per share of $2.05 vs. analsts’ estimates of $2.02 on revenue of $1.69 billion. Shares fell because of comments from the CFO that earnings per share will not continue to grow at a 20% or more pace.

Roper Industries traded higher (+3.16% to $87.13) after reporting Q2 earnings per share of $1.08 on $700 million revenue vs. consensus of $0.99 on $680 million. Shares were also pushed higher because ROP raised its FY outlook to $4.20-4.30 from $3.97-4.12, and above the consensus view of $4.13.

Eaton Corp. also traded higher on earnings news (+2.80% to $52.59) after reporting Q2 earnings per share of $0.97 on revenue of $4.09 billion vs. estimates of $0.95 per share on $4.02 billion revenue. ETN shares were also pushed higher by a good outlook as management revised guidance to $3.90-4.10, ahead of consensus of $3.92 per share.

CNH Global shares shot higher (+11.53% to $41.59) after reporting 2Q earnings per share of $1.33 on $4.9 billion in revenue. CNH said it sees global demand for agricultural and construction equipment remaining firm for the rest of the year, and sees an annual profit of €1.5 billion for the year.

Coming Tuesday:

Economic Reports:Case-Shiller Home Prices (expected to be -1.0%) at 9:00 am, Consumer Confidence (expected to be 55.5) and New Home Sales (expected to be flat) at 10:00 am; Earnings from 3M, Calloway Golf, Glaxosmithkline, Lockheed Martin, Office Depot, UBS, and US Steel.

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