Stock Market News for July 22, 2010

Federal Reserve Chairman Ben Bernanke’s afternoon testimony yesterday validated what is by now a common worry – an unusually uncertain economic outlook.  The Fed chairman’s afternoon speech, containing the word “unusually uncertain,” was enough to vex traders who were expecting some encouraging steps.  Concerns mounted and traders dumped shares even as Bernanke tried to stanch the damage, noting the Fed would take further policy actions as needed.

Benchmark indexes dropped sharply on the remark, with the technology-laden Nasdaq tumbling 1.6%.  The Dow industrials were somewhat restrained in their reaction to the remark, and fell 1.1% while the S&P 500 index, which is tracked widely, gave up 1.3%.  Volume remained a moderate 1.2 billion shares on the NYSE where advancing shares beat those that declined in price two to one.  

Flight to safety sent treasury prices higher and the corresponding yields lower. The yield on the benchmark 10-year note, which is used to determine rates on mortgages and other kinds of loans, dropped to 2.88% from 2.96% late Tuesday.  The Vix fear factor shot up 7.2% to 25.64.

Meanwhile, mixed earnings reports continued to pour in. Morgan Stanley (NYSE:MS - Analyst Report), iPhone maker Apple Inc. (NASDAQ:AAPL - Analyst Report) and Wells Fargo (NYSE:WFC - Analyst Report) came out with better-than-expected earnings but Yahoo’s (NASDAQ:YHOO - Analyst Report) earnings failed to impress. Although Yahoo’s earnings beat estimates, its revenues came in below expectations.

The Fed said is now expects the economy to grow 3% to 3.5% this year, with the rate of growth inching up to 3.5% to 4.5% in 2011 and 2012. However, there was no assurance that the unemployment rate would abate any time soon.  The Fed noted the unemployment rates would moderate to only 7-7.5% by the end of 2012.

None of the ten S&P 500 industry sectors could manage gains on the day.  President Obama’s signing of the financial reform bill into law sent financials to the top of the losers’ list; the shares fell 1.9% drop. Consumer services shares fell 1.8%, with health care (-1.6%), oil and gas (-1.4%), utilities (-1.4%), tech (-1.4%), consumer goods (-0.9%), industrials (-0.4%), telecommunications (-0.3%), and basic materials (-0.3%) following on.

Fed Chairman Bernanke's testimony is due to begin this morning at 9:30 ET.

Stocks futures this morning are pointing to sharp gains following impressive earnings numbers from Caterpillar (NYSE:CAT - Analyst Report), which also boosted its dividend, 3M (NYSE:MMM - Analyst Report), and economic-bellwether, UPS (NYSE:UPS - Analyst Report). Before the opening bell, Dow Jones industrial average futures jumped 98 points, or 1%, to 10,156. Standard & Poor's 500 index futures were up 11.90 points, or 1.1%, to 1,075.80, while Nasdaq 100 index futures rose 18.50, or 1%, to 1,834.00.

Big names such as AT&T (NYSE:T - Analyst Report), Bristol-Meyers Squibb (NYSE:BMY - Analyst Report), Eli Lilly (NYSE:LLY - Analyst Report), and Travelers (NYSE:TRV - Analyst Report) are slated to reports their earnings. Microsoft (NASDAQ:MSFT - Analyst Report), and Amazon.com (NASDAQ:AMZN - Analyst Report) release results after the close.

Read the full analyst report on MS

Read the full analyst report on AAPL

Read the full analyst report on WFC

Read the full analyst report on YHOO

Read the full analyst report on CAT

Read the full analyst report on MMM

Read the full analyst report on UPS

Read the full analyst report on T

Read the full analyst report on BMY

Read the full analyst report on LLY

Read the full analyst report on TRV

Read the full analyst report on MSFT