Markets Lower, Closing News 7/26/11

Markets were lower for the third straight day, as concerns about the debt crisis outweighed earnings and economic news today. The uncertainty had investors running to safety as gold traded higher and the Dollar fell against major currencies.

With the August 2nd deadline now just one week away, Democrats and Republicans have yet to make any progress on the debt ceiling debate. President Obama addressed the nation last night, appealing to congress to compromise, and today threatened to veto the Republican plan pending in the House of Representatives. Investors continued their flight to safety as gold (+0.42% to $1,621.20) and Swiss Franc (+0.60% to $1.2481 vs. US Dollar) continued trading at record highs.

Consumer confidence came in higher than expected (59.5 vs. 56) as consumers’ concerns about inflation appeared to ease, but labor market woes continue to weigh on the reading. The present situation index fell to 35.7 from 36.6 in June, and the number of people saying jobs were “hard to get” rose 0.9% from June to 44.1%.

New Home Sales fell 1.0% to 312k, below economists’ forecasts of 323k for the month of June. The drop was accelerated by a weak market in the Western regions of the US as well as an excess supply of previously built homes, which is cheaper than new home construction.

On Saturday, a man in Tulsa, Oklahoma found out five cups that he brought to be appraised at the PBS program Antiques Roadshow are worth over $1 million. The cups are carved from rhinoceros horns, are from China and date to the late 17th to 18th century. A payout like that has me tempted to crawl up into my parents attic with a flashlight, even if we are in a heat-wave.

Market Indices/Statistics:

  • Dow closed down 91.50 pts/-0.73% to 12,501.30
  • S&P closed down 5.49 pts/-0.41% to 1,331.94
  • Nasdaq closed down 2.84 pts/-0.10% to 2,839.96
  • 25 of the 30 Dow stocks closed lower / 5 closed higher
  • 8 of the 10 S&P 500 sectors closed lower
  • Information Technology was the best performing sector (up 0.42%)
  • Industrials was the worst performing sector (down 1.94%)
  • The VIX was up 0.84 pts to 20.20
  • Oil is up $0.32 to $99.52
  • Nat Gas is down $0.015 to $4.338
  • Gold is up $6.50 to $1,620.90
  • Euro vs. Dollar up $0.0132 to $1.4508
  • Dollar vs. Yen down $0.33 $77.93

Companies in the News:

After coming under fire by consumer groups concerned about the nutritional value of children’s meals, McDonald’s announced it will be serving smaller portions of french fries with happy meals, and adding apple slices. Additionally McDonald’s will be reducing the use of sodium on its menu by 2015.  Shares of MCD traded slightly lower (-0.11% to $88.02) on the day.

Pinnacle Data Systems Inc., a global provider of services and products for original equipment manufacturers, skyrocketed today (+70.78% to $2.35) after reaching an agreement to design and sell products based on IBM’s System p and System x technologies.

Earnings:

US Steel Corp announced earnings per share of $1.12 (adjusted) on $5.1 billion revenue vs. estimates of $1.21 per share on $5.49 billion revenue after the closing bell yesterday. Shares fell today (-8.29% to $40.62) after the CEO’s comments that the US and Europe still face an uneven economic recovery.

Shares of Cummins Inc. climbed today (+3.90% to $110.82) after reporting Q2 earnings that beat analysts’ expectations on both the top and bottom lines. Cummins reported Q2 earnings per share of $2.41 (excluding items) on $4.6 billion vs. estimates of $2.01 per share on $4.27 billion in revenue. Full year guidance was also increased as CMI now expects full year revenue to be $18 billion ($17.46 billion expected) because of increased demand for truck engines.

Radioshack Corp shares shot higher today (+19.86% to $15.69) after announcing Q2 results before the opening bell. Earnings per share and revenue ($0.24 / $941 million) both missed expectations ($0.37 / $1.03 billion), but shares were driven higher by the announcement that effective September 14, 2011 Radioshack stores will cease selling T-Mobile products and services and will begin offering Verizon Wireless products and services.

UPS traded lower today (-3.32% to $71.59) after reporting Q2 earnings per share of $1.05 (adjusted) on $13.2 billion in revenue. The results were in-line with expectation, but shares were under pressure today because of the CEO’s comments saying that the uncertainty about the debt ceiling is impacting business and keeping customers from adding to their inventories, and that growth expectations have slowed.

Coming Wednesday:

Economic Reports:Durable Goods (expected to be 0.3%) at 8:30 am and Crude Inventories at 10:00 am; Earnings from AutoNation, Boeing, ConocoPhillips, Corning Inc., Delta, Hess, United Health Services and Visa.