Lower crude price weighs on overall market as Dow falls a little shy of 14,000 mark
US Market closed at new highs today, Tuesday, 17 July, 2007, but closed mixed and Dow just fell a little short of touching the 14,000 mark while going into close. Though Dow crossed the 14,000 mark thrice during intra day trading, a drop in crude prices weighed on the Energy sector and the broader market later in the session.
The Dow Jones Industrials closed higher by 20.57 points at 13971.55. Tech heavy Nasdaq gained 14.96 points to close at 2712.29. Yahoo and Intel pushed the index higher ahead of their earnings report which was due after close. But S&P 500 closed marginally lower by 0.15 points 1549.37.
Sixteen out of the thirty Dow stocks closed in green today. Intel, American Express, Microsoft were the top most three Dow winners today.
Johnson & Johnson beat forecasts and backed its full-year profit outlook but lowered its 2007 sales growth guidance. Coca-Cola also checked in better than expected but continued weakness in North American sales weighed on the stock today. Lack of participation from both stocks inspite of beating forecasts failed to push the indices further higher.
The Dow and the Financial sector got an added boost from American Express. It was up nearly 4% after Goldman Sachs upgraded the stock to Buy.
The Producer Price Index unexpectedly fell 0.2% in June, its first decline since January. Market had been expecting a rise of 0.2%.The core PPI, which excludes volatile food and energy prices, rose 0.3%, higher than the 0.2% rise economists had expected. The increase was due in part to rising car and truck prices.
Producer Price Index slips for the first time in five months
When market opened in the morning, stocks open modestly higher as solid earnings reports and more deal making helped investors deal with mixed economic data. The indices extended their reach to the upside as the bulk of key industry leadership remained positive. Of the seven sectors trading higher, Materials paced the way.
Better than expected earnings from Dow components Johnson & Johnson and Coca-Cola and broker Merrill Lynch lent additional proof that Q2 earnings growth will not be as poor as previously thought.
But weakness in Financial sector was noticed after constituent Merrill Lynch shares slipped a bit. Though the share opened up more than 2% after posting a 31% jump in Q2 profits, its CFO later saying the market for subprime debt has yet to stabilize has prompted a reversal in the shares.
Intel and Yahoo, both disappoint Wall Street
After the close, Intel came out with its second-quarter earnings and disappointed investors. Intel said it earned 22 cents in the quarter on revenue of $8.7 billion. Intel shares were almost 4% down during after hours trading. Wall Street wasn't too happy with Yahoo earnings report either. Yahoo said it earned 11 cents a share, down slightly from a year ago and in line with Wall Street estimates.
Crude oil futures were steady today after rising to 11 month highs since the past couple of days. Though crude crossed $75 mark today during intra day trading, it fell in closing hours as gasoline futures slipped to their lowest levels in one month. Crude-oil futures for light sweet crude for August delivery closed at $74.02/barrel (lower by $0.13/barrel or 0.18%) on the New York Mercantile Exchange. Futures retreated from $75.35 reached earlier in the session. Prices are up 21% this year.
Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange and 2.2 billion on the Nasdaq. Declining issues outpaced gainers by 18 to 13 on the NYSE, while gainers outpaced decliners by 15 to 14 on the Nasdaq.
A host of earnings report and Inflation report from CPI data will help set the tone of trading tomorrow. at 8:30 ET will be June Housing Starts and Building Permits. Energy Dept.'s weekly inventories report at 10:30 ET will also attract some added attention. On the earnings front, Dow components Altria, JP Morgan Chase, Pfizer, and United Technologies will be tomorrow’s headliners.