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Stock Market News for July 25, 2014

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Benchmarks closed flat on Thursday as investors received mixed corporate results and economic data. However, S&P 500 managed to finish at another record high. Facebook and Ford reported upbeat quarterly results. However, Caterpillar, General Motors and D.R. Horton posted dismal corporate results. Economic data on initial claims was positive, but new home sales numbers were discouraging.

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) dropped a meager 0.02% to close at 17,083.80. The Standard & Poor 500 (S&P 500) advanced just 0.05% to close at 1,987.98. The tech-laden Nasdaq Composite Index closed at 4,472.11; declining 0.04%. The fear-gauge CBOE Volatility Index (VIX) went up 2.8% to settle at 11.84. Total volume for the day was roughly 5.58 billion shares, somewhat higher than this month’s average of 5.54 billion. Decliners outpaced advancing stocks on the NYSE. For 51% stocks that declined, 45% advanced.
The S&P 500 closed at a record level for the 27th time this year. The S&P 500 also touched an intraday record high of 1,991.
Corporate results came in mixed on Thursday. Shares of Facebook, Inc. (FB - Free Report) surged 5.2% a day after the company reported impressive second-quarter 2014 results. Earnings of 30 cents per share were better than the Zacks Consensus Estimate of 26 cents. Revenues of $2.9 billion in the quarter were also better than the Zacks Consensus Estimate of $2.85 billion. The social networking company had reported its results after the markets closed on Wednesday.

Shares of Under Armour, Inc. surged 14.7% after the company reported a 34% year on year jump in its net revenue to $610 million. Shares of the sports apparel manufacturer and retailer hit an all-time intraday high of $70.25. The company also turned out to be S&P 500’s biggest percentage gainer.

Ford Motor Co. (F - Free Report) posted earnings per share of 40 cents in the second quarter of 2014, beating the Zacks Consensus Estimate of 37 cents. Shares of the auto maker went up 0.3%.

However, shares of General Motors Company (GM - Free Report) dropped 4.5% after the company reported second quarter 2014 adjusted earnings of 58 cents per share, missing the Zacks Consensus Estimate of 78 cents per share. The auto manufacturer reported disappointing second-quarter results largely due to recall costs that chopped $1.5 billion from the company’s bottom line. Further, the company had to bear pre-tax charges of $400 million in order to compensate victims of ignition-switch related crashes.
Caterpillar Inc. (CAT - Free Report) reported second quarter revenues of $14.1 billion, short of the Zacks Consensus Estimate of $14.4 billion. Revenues also declined 3% year over year. Caterpillar’s shares dropped 3.1%.
3M Company (MMM - Free Report) reported second-quarter 2014 earnings per share of $1.91. Earnings per share were in line with the Zacks Consensus Estimate. Shares of 3M went up 0.3%.
S&P 500’s biggest decliner was DR Horton Inc. (DHI - Free Report) . Shares of the homebuilder tumbled 11.5% after the company reported a decline in its net income for the third quarter ending June 30. Earnings were 32 cents a share, less than the Zacks Consensus Estimate of 49 cents a share. Earnings per share were also less than year-ago earnings of 42 cents.
Separately, a report released by the U.S. Census Bureau and the Department of Housing and Urban Development revealed sales of new single-family houses decreased 8.1% from May’s revised rate of 442,000 to seasonally adjusted annual rate of 406,000 in June. New home sales registered its biggest drop in almost a year. The drop in new home sales was in contrast to the consensus estimate of a rise to 479,000.
Housing data and DR Horton’s dismal results had a negative impact on homebuilder stocks. The SPDR S&P Homebuilders (XHB) declined almost 1.7%, the biggest decliner among the S&P 500 sectors. Key housing stocks from the sector such as Toll Brothers Inc. (TOL - Free Report) , PulteGroup, Inc. (PHM - Free Report) , Lennar Corp. (LEN - Free Report) and KB Home (KBH - Free Report) decreased 4.1%, 3.0%, 3.1% and 3.3%, respectively. Overall, 5 out of 10 sectors of the S&P 500 ended in the red.
However, initial claims data was encouraging. The Labor Department said initial claims declined 19,000 to 284,000 in the week ending Jul 19. This claim for unemployment benefits was at the lowest level since Feb 18, 2006. The 4-week moving average decreased to 302,000 from the previous week’s revised average of 309,250. This is the lowest level for this metric since May 19, 2007.

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