Stocks finished lower, but little changed, after economic data early in the session was mixed and a flood of corporate earnings again poured in. By virtue of a higher close, the S&P 500 made yet another all-time high.
First, the scoreboard:
- Dow: 17,089.81, +3.2, (+0.02%)
- S&P 500: 1,988.87, +1.9, (+0.09)
- Nasdaq: 4,474.12, +2.4, (0.06%)
And now, the scoreboard:
1) This morning, weekly initial jobless claims data came in way better than expected, as 284,000 individuals filed for unemployment, down from 302,000 last week and lower than the 307,000 that was expected by economists. This reading was the lowest number for the index since February 2006. Following the report, Neil Dutta at Renaissance Macro said that the underlying trend in weekly claims remains healthy, but noted that this data, “likely informs more about production than employment.”
2) Markit’s preliminary U.S. PMI reading came in at 56.3, worse than last month’s 57.3 and below the 57.4 that was expected by economists. The report also indicated that job creation was the weakest since September 2013, but Markit’s Chris Williamson said recent data remains strong. “U.S. manufacturers are enjoying a summer of scorching growth,” Williamson said. “Output grew in July at a rate only just below the four-year peak seen in June as inflows of new orders surged higher again. The data suggest the sector is growing at an annualized rate of roughly 8% as we moved into the second half of the year. The growth rebound that the survey has signaled for the second quarter therefore looks to have been sustained into the third quarter.”
3) Housing data also disappointed, as new home sales fell 8.1% in June to an annualized rate of 406,000, worse than the 5.8% decline expected by economists. Following the report, Michael Gapen at Barclays said, “The June decline plus revision to May have erased the rebound in Q2 new homes sales that we had expected… Altogether, this is a much softer report than expected and suggests housing demand has stabilised in recent quarter, as opposed to improving.”
4) It was a tough day for traders betting against Zillow or SodaStream, as shares of both companies soared following possible deal reports from Bloomberg. Zillow shares gained more than 15% after Bloomberg said the company is seeking to acquire online real estate rival Trulia. Following the report, Trulia shares gained nearly 32%. SodaStream shares also surged, gaining about 10% after Bloomberg reported the company is in talks with a private investment company to go private.
5) The International Monetary Fund, or IMF, cut its global GDP forecast to 3.4% from 3.6%, with the organisation saying that, “Global growth could be weaker for longer, given the lack of robust momentum in advanced economies.” Among the biggest cuts was the IMF’s slashing of 2014 U.S. GDP growth, to 1.7% from 2.8%.
7) Among notable companies reporting earnings before the market open were Caterpillar, which reported better than expected results but saw shares fall more than 3%, and General Motors, which took a $US900 million charge on potential future recalls and saw shares fall nearly 5%.
8) Notable earnings reports expected after the market close include Amazon, Visa, and Starbucks.
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