The market - or should we say programmed traders reading said headlines - response was to bust through the S&P 500 (SPX) 1926 level of support, triggering a wave of stop losses. The benchmark index finished the day down 0.97% after churning in a range below resistance. Utilities stocks continued to underperform despite little change in interest rates today. Energy stocks were also very weak thanks to another rally in the US dollar, which momentarily pushed crude oil to $97/barrel. High yield bonds, which have been a notable source of weakness lately, managed to show some signs of strength today, but new debt issuance remained sparse.
US same-store sales posted strong gains in the last week of July, thanks to a sales-tax holiday in 12 states. As a result, Johnson/Redbook upgraded its preliminary sales forecast for August to 4.5%. The ISM non-manufacturing index rose to 58.7 in July (versus 56.5 expected) from 56.0 in the previous month. It was the fastest pace of expansion since 2005. The new orders component reading of 61.2 was the third highest ever. Factory orders rose 1.1% in June, better than the 0.6% that was expected.
After the close, 21st Century Fox (FOX) announced that it was withdrawing its bid for Time Warner (TWX), citing the company's refusal to engage in a deal. Fox instead authorized a $6 billion buyback of its shares. Time Warner stock fell more than 12% in post-market trading as the premium for a bidding war was removed from the stock.
Tomorrow's Financial Outlook
The only economic report scheduled for tomorrow is the June US trade balance. Its results will contribute to any revisions to second quarter GDP should it substantially miss the expected net deficit of $45 billion. The Fed's Beige Book summary of anecdotal information on current economic conditions in its 12 districts will be released in the afternoon.
A main catalyst for risk assets overnight now becomes any further escalation from Russia, which appears to be telling the Ukrainian government that it will not tolerate humanitarian violations of ethnic-Russians. As far as economic reports go, New Zealand will report its employment situation for the second quarter. Its currency has been increasingly volatile and key for commodities. Also scheduled for tomorrow morning is German factory orders, UK industrial production, and Swiss consumer price index.
Sixty four major US companies are scheduled to report earnings tomorrow. Notable reports include Molson Coors (TAP), MBIA (MBI), Time Warner (TWX), Chesapeake Energy (CHK), NuSkin (NUS), Nationstar Mortgage (NSM), Keurig Green Mountain (GMCR), AOL (AOL), Dish Network (DISH).
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.