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Stock Market News for July 31, 2013

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Mixed results from major companies pushed the Dow Jones marginally into the red. Investors also took a cautious stance ahead of the two-day FOMC meeting. The S&P 500 and the Nasdaq finished in the green, but only just. This was due to positive investor sentiment towards the technology sector. On the domestic front, Conference Board Consumer Confidence Index and S&P/Case-Schiller home prices were released. On the international front, economic sentiment index for July of the Euro Zone region reached its highest level in 15 months. Of the top ten S&P 500 industry groups, technology stocks gained the most.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.  

The Dow Jones Industrial Average (DJI) lost 0.01% to close the day at 15,520.59. The S&P 500 increased 0.04% to finish yesterday’s trading session at 1,685.96. The tech-laden Nasdaq Composite Index rose 0.5% to end at 3,616.47. The fear-gauge CBOE Volatility Index (VIX) remained unchanged at 13.39. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.9 billion shares, below 2013’s average of 6.4 billion shares. Declining stocks outnumbered the advancers. For the 49% that declined, only 47% advanced.

About 60% of the S&P 500 companies have declared their results, out of which earnings of nearly 67.4% have beaten the Streets estimates. Benchmarks oscillated between small gains and losses during Tuesday’s trading session. Pfizer disclosed results which marginally beat the Street’s estimates, while Merck missed expectations. Results from Coach Inc also dampened investor sentiment. Investors were also cautious regarding the outcome of the two-day FOMC meeting. The focus is now on the fate of the bond purchase program which helped benchmarks reach their highest level several times in the first quarter.

Pfizer Inc. (NYSE:PFE) disclosed its second quarter results which marginally beat estimates. Adjusted income of the company declined 10% to $4 billion or 56 cents a share. Sales of the company came in at $12.97 billion, down 7%. Low sales are attributable to declining sale of its off-patent cholesterol fighter product named Lipitor. Another drug company, Merck & Co., Inc. (NYSE:MRK) reported profits of $906 million or 30 cents per share, 50% down year over year. Revenues of the company declined 11% to $11.01 billion. Revenues of the company were negatively affected by the foreign currency headwinds to the extent of 3%.  Low revenues of the company are attributable to declining sales of allergy and asthma drug Singulair.

Shares of Sprint Nextel Corporation (NYSE:S) surged nearly 7.3% despite posting operating loss of $874 million. However, revenues of the company came in at $7.2 billion, an increase of 8% year over year. The company was also successful in gaining back the 4 million subscribers it lost when the connection was discontinued.

Shares of Coach, Inc. (NYSE:COH) dropped 7.9% after it reported disappointing results. Net income of the company declined to $221.3 million or 78 cents a share, compared to year-ago figures of $251.4 million or 86 cents per share. Excluding one-time items, Coach garnered profits of 89 cents a share, in line with the Street’s estimates.

On the domestic front, the Consumer Board Confidence Index for July dropped marginally to 80.3 compared to 82.1 in June. The index was also below the consensus estimate of 80.9. Additionally, the Expectations Index dropped to 84.7 from 91.1 recorded in the previous month. However, the Present Situation Index improved to 73.6 from 68.7 recorded during last month. 

The S&P/Case-Schiller Home Prices Indices for 10- and 20- City composites for May increased month over month to 2.5% and 2.4%, respectively. Annually, the 10- and 20- City Composites increased 11.8% and 12.2%, respectively. These were the highest year over year gains posted since March 2006. Among all the cities, home prices at Dallas and Denver broke the record levels which were set during the housing bubble.

On the international front, the economic sentiment index of the Euro Zone region in July touched a 15- month high. Economic sentiment came in at 92.5 in July ahead of June 2013’s figure of 91.3. However, it fell marginally short of estimates of 92.6. The barometer measuring Euro Zone’s business climate index increased significantly to -0.53 from previous month’s figure of -0.67. Of the five largest economies in Euro Zone region, confidence in Netherlands dropped. Confidence in Germany, France and Spain grew 0.7, 1.2 and 1.2 points, respectively.

The technology sector was the biggest gainer among the S&P 500 industry groups. The Technology SPDR (XLK) gained 0.5%. Shares of Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Intel Corporation (NASDAQ:INTC), Google Inc. (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) gained 1.2%, 1.0%, 0.6%, 1.0% and 0.4%, respectively.

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