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Deal Activity Keeps US Stocks in the Green


Today's financial recap and tomorrow's financial outlook.

US stocks were higher early today helped by strength from Apple (NASDAQ:AAPL) overnight. The tech giant announced an enterprise deal with IBM (NYSE:IBM) that had its stock up more than 3% in early trading. Gains were moderated to +0.75% during the session, but the benchmark indices were able to recover and finish right around where they started. Poor earnings from Bank of America (NYSE:BAC), the only major bank this quarter to miss earnings and trade negative, kept in check a further advance in the broad indices. China's second quarter GDP, released overnight, also gave global risk assets a positive tone to start the day.

Fed Chair Janet Yellen gave testimony to the House Financial Services Committee earlier today and her comments were very similar to yesterday's. She did face a tougher line of questioning from the committee members in the House, but no new information on monetary policy was revealed.

Industrial production rose 0.2% month-on-month in June, a bit slower than the +0.3% expected, and the prior month's growth was revised down by 0.1%. However, economists are optimistic that the orders pipeline will lead to stronger growth in the second half of the year. The NAHB survey of real-estate builders and agents showed a second straight month of broad-based increases, rising to 53 in July from 49 last month. This should lead to further outperformance by homebuilder stocks.

A few events in Portugal helped propel European bank stocks higher. Yesterday Rioforte Investments, a holding company within the Portuguese holding group Espirito Santo Financial Group (ESF), filed for bankruptcy protection after missing a repayment to Portugal Telecom on commercial paper. Portugal's central bank governor said that existing shareholders of Banco Espirito Santo (ELI:BES) would be willing to invest additional capital to avert a restructuring event. Other European banks that had been on shaky ground until now  have outperformed over the past two days as investors have become less concerned about weakness spreading to banks with direct or indirect ownership of the Espirito Santo group.

Tomorrow's Financial Outlook

Tomorrow morning, June new housing starts and building permits will be reported. New permit activity usually predates the former category by a few months. Starts are expected to increase to an annualized rate of 1.025 million from 1.001 million in the month prior while permits are expected to rise to 1.042 million from 991K. Weekly jobless claims will also be released.

The only major global economic report scheduled for tomorrow is the final estimate of June eurozone consumer prices. No change is expected.

Most of the last financial companies will report earnings tomorrow. These include Capital One Financial (NYSE:COF), Keycorp (NYSE:KEY), Fifth Third Bancorp (NASDAQ:FITB), Blackstone (NYSE:BX), and Morgan Stanley (NYSE:MS). Also scheduled to report are UnitedHealth (NYSE:UNH), Baker Hughes (NYSE:BHI), Philip Morris (NYSE:PM), IBM (NYSE:IBM), Schlumberger (NYSE:SLB), and Google (NASDAQ:GOOG).

Twitter: @Minyanville

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No positions in stocks mentioned.

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