Stocks finished higher as the S&P 500 touched a new intraday all-time high, but failed to make a new closing record high, while the Dow and Nasdaq also rallied.
First, the scoreboard:
- Dow: 17,120.58, +68.9, (+0.4%)
- S&P 500: 1,984.25, +10.6, (+0.5%)
- Nasdaq: 4,457.06, +32.5, (+0.7%)
And now, the top stories of the day:
1) On the economic data front, this morning we got June inflation data from the latest Consumer Price Index, or CPI, which showed that the core reading, which excludes food and gas, in June rose 0.1% month over month, less than the 0.2% that was expected by economists. Headline CPI, which includes food and gas, rose 0.2%, which was in-line with expectations. On a year over year basis, core CPI rose 1.9% while headline CPI rose 2.1%. Following the report, Michael Gapen at Barclays said, “Overall, we see this report as softer than expected, but we see the structural drivers of a gradual reflating in the U.S. economy as remaining in place.”
2) Existing home sales in June climbed 2.6% to an annualized rate of 5.04 million, better than the 1.9% rise and 4.99 million rate that was expected. Of the report, Lawrence Yun of the National Association of Retailers said, “Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country. This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”
3) The Richmond Federal Reserve’s latest manufacturing survey came in at 7, better than the 3 reading that was expected by economists and up from economists’ expectations for a reading of 5. In a release, the Richmond Fed said, “Survey participants expected faster growth in the number of employees along with solid growth in wages and a pickup in the average workweek.” The report also said that manufacturers were optimistic about future business conditions.
4) Activist hedge fund investor Bill Ackman made what he called yesterday, “the most important presentation of his career,” today, holding yet another lengthy presentation regarding Herbalife, the multi-level marketing firm Ackman has said is a “pyramid scheme,” and will go out of business. Following Ackman’s presentation, which lasted over three hours, shares of Herbalife soared, gaining as much as 24% intraday.
5) Shares of Chipotle were the S&P 500’s biggest gainer after the burrito chain last night reported earnings that crushed expectations, with comparable store sales that rose 17.3%. Chipotle’s earnings were also contrasted by a disappointing quarter from fast food stalwart McDonald’s, which reported global comparable store sales that were flat while quarterly profit came in $US0.04 short of expectations.
6) Earnings season is in full swing and tonight is set to be a huge evening for tech companies, as Apple and Microsoft are both scheduled to report their quarterly results after the bell. Analysts are expecting Apple to report earnings of $US1.23 per share, while Microsoft is expected to earn $US0.61 per share.
7) In mergers & acquisitions news, CIT Group, the commercial lender lead by former Merrill Lynch Chairman and CEO John Thain, announced a deal to acquire OneWest, a regional bank based in Southern California for $US3.4 billion. Following the deal, the combined company will have $US67 billion worth of assets with $US28 billion in deposits. Shares of CIT Group were up more than 10% following the deal.
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