Markets Lower, Closing News 7/28/11

Markets continued trending lower because of concerns about the debt crisis as we near the August 2nd deadline. The Dow had been trading 20 points higher on good earnings and economic data until 3:00 pm, when the (albeit small) gains started to dissipate as Republicans began to present their plan for the debt crisis to the House of Representatives. The Dow closed 62 points lower on the day and the S&P 500 slipped 4.22 points.

There is a vote scheduled this evening (between 5:45 and 6:00 pm) on the deficit reduction bill proposed by Speaker of the House, Rep. John Boehner. Even if the bill passes the vote in the House of Representatives, many people are thinking it will be considered dead on arrival in the Democratic-controlled Senate, although there are concerns that the bill will not gain enough votes in the house because of dissent within the Republican Party. The August 2 deadline is now only five days away.

The initial jobless claims finally broke below the 400k barrier, ending a 16 week run above the key level where the economy sheds more jobs than it creates. The claims number appears to be even stronger than first glance because a labor department official stated that the claims data were not aided by any special seasonal factors.

The National Association of Realtors reported that pending home sales increased 2.4% in June as growth in the West and South outpaced declines in the Midwest and Northeast. Sales in the South jumped 4.4% and the West increased 6.4% while the Northeast fell 0.4% and Midwest fell 3.7%.

The earnings story today was also a good one as 33 of the 46 S&P 500 companies reporting today beat the earnings per share estimates. The earnings were led by DuPont, International Paper, Boston Scientific, and Aflac.

The clue:  “One Tough Game Show Host”….”Who is Alex Trebek?”. The 71 year old Alex Trebek ruptured his Achilles Tendon chasing down a burglar who had broken into his San Francisco hotel room and stolen cash and several personal items. Trebek recovered most of the stolen items and the thief was apprehended, but the Jeopardy! host is expected to be in a cast for up to six weeks.

Market Indices/Statistics:

  • Dow closed down 62.44 pts/-0.51% to 12,240.11
  • S&P closed down 4.22  pts/-0.32% to 1,300.67
  • Nasdaq closed up 1.46 pts/+0.05% to 2,766.25
  • 17 of the 30 Dow stocks closed lower / 12 closed higher / GE was flat
  • 7 of the 10 S&P 500 sectors closed lower
  • Information Technology was the best performing sector (up 0.12%)
  • Telecommunications Systems was the worst performing sector (down 2.24%)
  • The VIX was up 0.76 pts to 23.74
  • Oil is down $0.22 to $97.17
  • Nat Gas is down $0.078 to $4.240
  • Gold is up $1.00 to $1,618.20
  • Euro vs. Dollar down $0.0051 to $1.4321
  • Dollar vs. Yen down $0.16 to $77.75

Companies in the News:

Teavana Holdings Inc. (NYSE: TEA), a specialty retailer of premium loose-leaf teas and tea-related merchandise, traded higher (+63.53% to $27.80) in its first day of trading after pricing its Initial Public Offering at $17.00.

Homebuilders gained after the surprising pending home sales data this morning as DR Horton (+2.59% to $11.90), Lennar Corp (+1.03% to $17.64), and Toll Brothers (+0.10% to $20.07) all closed higher on the day.

Earnings:

Shares of LSI Corp jumped higher today (+14.13% to $7.35) after reporting earnings per share of $0.13 on $501 million in revenue, beating expectations of $0.10 per share on $482 million. Shares were also pushed higher on LSI’s Q3 outlook, guiding $0.11-0.17 per share vs. consensus of $0.12 per share.

Sprint traded lower (-15.89% to $4.34) after reporting a $0.28 loss per share on $8.31B in revenue, disappointing investors who were anticipating a $0.12 loss on $8.3 billion in revenue. Shares were also under pressure because subscribers fell 100k, far more than the 24k loss that analysts forecasted.

Exxon Mobil Corp reported earnings per share of $2.18 on revenue of $125 billion vs. estimates of $2.33 per share on revenue of $121 billion. Shares of XOM closed lower (-2.22% to $81.46) on the day.

Boston Scientific Corp. moved higher (+8.49% to $7.28) after pulling off the earnings hat-trick, beating on top and bottom lines as well as guiding higher than consensus. BSX reported Q2 earnings per share on $1.98 billion revenue vs. analysts’ expectations of $0.08 per share on $1.97 billion in revenue. The company also guided higher for Q3, saying it now expects earnings per share to be $0.11-0.14, higher than the $0.08 expected.

Shares of Interpublic Group of Companies Inc. slid today (-16.28% to $10.23) after reporting earnings per share of $0.19 on $1.74 billion in revenue, both of which were in-line with expectations. Shares fell because operating margin was reported as 10% for the quarter, down from 11% a year ago.

Clearwater Paper Corp. surged higher today (+13.74% to $76.26) after reporting earnings per share of $1.17, missing analysts’ expectations of $1.62. Shares were pushed higher because of the announcement of a 2-for-1 stock split and a $30 million stock repurchase program.

Coming Friday:

Economic Reports:GDP (expected to be +1.8%) and the Employment Cost Index (expected to be 0.5) at 8:30 am, Chicago PMI (expected to be 60.0) at 9:45 am, and Consumer Sentiment (expected to be 63) at 9:55 am; Earnings from Chevron, Merck, Newell Rubbermaid, and Weyerhaeuser