Markets Higher, Closing News

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Markets surged higher as we approached the close, climbing over 600 points from 2:45 to the close.  Markets had another choppy session climbing 150 points at the open, dropping back to yesterday’s close, climbing back to up 200 points before selling off into the FOMC statement. After the statement at 2:15, the Dow dropped to its lowest level (-205) before snapping back and closing over 400 points higher.

The FOMC announcement said it expects the economy to recover at a slower pace in the coming quarters, citing the weakness in the housing sector and consumer spending. Unemployment is also expected to decline slowly, but should be aided by declining food and energy prices. There was discussion about tools the Fed could use to promote a stronger economy, although details of the discussion were not disclosed. The largest announcement was the decision to keep the Fed Funds rate at 0-0.25% through mid-2013. Three Fed officials (Fished, Kocherlakota, and Plosser) dissented against the timeline, saying they preferred not adding a specific timeline, but keeping the “extended period” language.

The preliminary 2Q productivity reading showed that productivity slowed in the 2Q, although the decline (-0.3%) was narrower than the decline expected (-0.8%) by economists. A decline in productivity usually signals that businesses have to hire new workers to maintain production, however given the labor readings and state of the recovery, the negative reading may be more indicative that businesses are instead looking to cut costs to protect profits.

China’s inflation rose to 6.5% in July, up 0.1% from June. Forecasts had expected that the reading would drop to 6.3%.  Chinese officials said prices should be falling in coming quarters, meaning that Beijing would not need to tighten monetary policy.

On this day 75 years ago Jesse Owens became the first American to win four medals at one Olympics, winning four gold medals at the 1936 Olympics in Berlin. With gold climbing to almost $1,775 an ounce, investors may be using their own Olympic-speed to trade in their own gold to take advantage of the historic prices.

Market Indices/Statistics:

  • Dow closed up 429.92 pts/+3.98% to 1,1239.77
  • S&P closed up 53.07 pts/+4.74% to 1,172.53
  • Nasdaq closed up 124.83 pts/+5.29% to 2,482.52
  • All 30 Dow stocks closed higher
  • All 10 S&P 500 sectors closed higher
  • Financials was the best performing sector (up 8.21%)
  • The VIX was down 12.84 pts to 35.16
  • Oil is down $0.91 to $80.40
  • Nat Gas is up $0.076 to $4.011
  • Gold is up $14.10 to $1,727.40
  • Euro vs. Dollar up $0.0179 to $1.4356
  • Dollar vs. Yen down $0.79 to $77.00

Companies in the News:

Shares of Getty Realty Holding Co. fell today (-12.58% to $17.44) after announcing it has not received the monthly rental payment from Getty Petroleum Marketing Inc., its largest tenant, and that it was unlikely that Getty Petroleum Marketing would be able to pay full rent for August.

After yesterday’s  sell-off there was an influx of companies announcing share repurchase programs. Anixter International Inc. (+5.57% to $51.73),  iStar Financial (+25.81% to $5.80), and Westwood Holdings Group Inc. (+15.31% to $36.90) all closed higher today after announcing repurchase plans.

Ralcorp Holdings (+1.00% to $75.03) announced this morning that it will purchase Sara Lee’s (+4.44% to $17.89) private brand refrigerated dough business for approximately $545 million. RAH expects the deal to add $0.30 per share to earnings in the first year.

Earnings:

Sempra Energy traded higher (+4.65% to $47.71) after reporting earnings per share of $0.97 excluding items vs. $0.99 expected. SRE confirmed their FY earnings view of $4.00-4.30 per share, also in-line with analysts’ estimates of $4.20 per share.

Shares of Northern Oil and Gas Inc. shot higher (+39.77 to $18.52) after announcing Q2 earnings before the market open.  NOG announced earnings per share of $0.12 per share on $35 million in revenue vs. estimates of $0.19 per share on $39 million revenue. 

Enterprise Products Partners LP traded higher (+8.64% to $40.74) after reporting Q2 earnings that beat expectations this morning. EPD reported Q2 earnings per share of $0.51 on $11.2 billion vs. estimates of $0.44 per share.

AOL Inc. slid in trading today (-25.75% to $11.19) after reporting disappointing Q2 results. AOL reported a Q2 loss of $0.11 per share on $542 million revenue, but shares were pushed lower because advertising sales, although higher, did not meet analysts’ forecasts.

Coming Wednesday:

Economic Reports: Mortgage Applications at 7:00am, Crude Inventories at 10:30 am, and Budget Deficit at 2:00 pm; Earnings from Advance Auto Parts,CAE Inc., Macy’s, InterOil Corp., and Kinross Gold Corp.

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