Financials Lead the Market Higher
Today's financial recap and tomorrow's financial outlook.
Later this week, EU finance ministers will meet to discuss better ways to utilize the region's new bailout fund, the European Stability Mechanism (ESM). Earlier today, a news article from Reuters pointed towards November as the time for Spain to ask the EU and the ECB for an aid package to reduce borrowing costs for the nation.
Mortgage REITs (real estate investment trusts) continue to get hammered as prepayment speeds increased as the result of the Fed's MBS purchase program and increased housing activity. Notable decliners included Annaly Capital Management (NYSE:NLY) and American Capital Agency (NYSE:AGNC). mREITs typically carry higher dividends, but falling interest rates for mortgage loans have caused market speculation over whether or not these companies can continue to pay 13% dividends.
Citigroup (NYSE:C) reported earnings before market open, earning $1.06 per share last quarter, beating estimates of $0.97. The company reported revenues of $19.41 billion, topping estimates of $18.75 billion. Despite investor uneasiness over many of the one-time items that attributed to Citigroup's earning beat, the stock rose over 5% today.
Tomorrow's Financial Outlook
The pace of economic data and earnings will not abate tomorrow. In the morning, the US will report the consumer price index (inflation) and capacity utilization. Economists are expecting the inflation index to rise to 1.9% from 1.7% annually. Increased industry capacity utilization is an integral part of increasing employment and manufacturing growth.
Later in the morning, the National Association of Home Builders (NAHB) will report its monthly home index. The index, which tracks builder and agent confidence in new home production and sales, is expected to rise to a reading of 41 from last month's 40, the highest point since mid-2006.
This week will be busy in terms of earnings Coca-Cola (NYSE:KO), Goldman Sachs (NYSE:GS), and Johnson & Johnson (NYSE:JNJ) will report before market open tomorrow. After market close, Intel (NYSE:INTC), State Street (NYSE:STT) and CSX (NYSE:CSX) will report.
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