NASDAQ tech-stocks sell-off

The German Index is still under a lot of pressure noting 0,51% lower at the end of the week. After a technology sell-off on the NASDAQ yesterday and the continuous rise in the EURUSD investors are having a hard time finding incentives on the German market. Good economic data from the Eurozone and from the U.S. have been no catalysts for bearish buying behavior. The Euro zone sentiment is at its highest since August 2007. In the afternoon only 7 out of the 30 DAX members are recording a positive yield. At the lead of the winners pack is Adidas, which has upgraded its forecast on Thursday, with a yield of 2,54%. On the other end of the statistical tail is Continental with a intraday loss of 2,12%.

Fresh off of an earnings-driven record high in the Dow Jones Industrial Average on Wednesday, generated by a strong profit gain from aerospace and defense giant Boeing and some follow-up gains in that issue. Yesterday morning, Wall Street began the penultimate session of the week pressing nicely higher. In fact, within minutes of the open, the Dow had fashioned a gain of nearly 80 points. A strong profit showing by social networking behemoth Facebook, announced late Wednesday, helped the NASDAQ jump by close to 40 points in the first few minutes, meanwhile. Of course, it was not just earnings that have helped the stock market along in recent weeks, but also relief that the Federal Reserve had ended its FOMC meeting on Wednesday with the decision to keep interest rates unchanged. For the most part, though, the equity market’s strength reflects optimism that the rest of earnings reporting season will be a good one. The upward bias persisted further into the morning, though the early gains would prove the high-water mark for the day. Also on the profit front, Dow issue Verizon pleased investors with its profit report, and the stock perked up nicely, gaining more than 7% by mid-session. Overall, earnings season has been a good one, albeit with some high-profile misses. The reporting period still has another few weeks to go, but as far as the large-cap companies are concerned, this is the biggest week of the cycle. By early next month, more of the mid-and smaller-cap names will be on the clock.

The NASDAQ, which went from the earlier 40-point advance to a decline just north of 100 points. The sharp reversal was apparently brought about by valuation concerns in the tech space, following the morning’s euphoria. Still, Facebook retained some strength as the day wound down. On the other hand, the market was helped by additional firmness in the oil pieces on optimism that output can be better managed. Encouragingly, when the afternoon sell-off did not mushroom into a severe decline, the Dow firmed into the close, with that index, once in jeopardy of closing in the red, pushing up as the final bell sounded, gaining 85 points on the day. Then, after the close, chipmaker Intel, a Dow stock, posted strong second-quarter share net, giving that issue a likely modest lift this morning. Finally, in a pivotal government release just made, the nation’s gross domestic product advanced by a modestly reassuring 2.6% in the second quarter. That was materially better than the downwardly revised 1.2% gain logged in the opening period (initially posted at 1.4%), and in line with estimates issued before the latest GDP release. This was a big improvement over the first quarter, as noted, and suggested that the economy remained on track, with growth likely to hold in the current range going forward. The nice second-quarter pickup reflected positive contributions from personal spending, nonresidential fixed investment, and exports.

Credit Suisse reported a strong rise in net income for its second quarter on Friday, adding that assets under management had hit new highs for the bank. Assets under management hit a record high in the second quarter, led by gains in the wealth management division, as the Swiss bank enters into the second phase of its three-year restructuring program. The stock was up 1.8 percent in opening deals Friday.  The wealth management arm saw net new assets of $23.4 billion, a 12 percent increase on the previous year and the bank’s strongest asset inflows in six years. Overall assets under management were up 8 percent on the year at $737 billion. Net profit was up 78 percent year-on-year while net income came in at 899 million Swiss ($927 million) francs for the first half of this year. This compared to a net loss of 132 million Swiss francs for the same period last year. The surge comes as a boon to the bank’s chief executive, Tidjane Thiam, who was tasked with overhauling the bank and reducing its exposure to market movements. He said the strategy is now starting to pay off.

Intel is up 0,59% after reported better-than-expected earnings for the second quarter. In the second quarter the Client Computing Group made a strong showing with 12 percent revenue growth at $8.2 billion in revenue. The Internet of Things Group, for its part, was up a hefty 26 percent year over year, at $720 million in revenue. Intel’s typically high-margin Data Center Group, which includes sales to public cloud infrastructure providers and also competes with AMD, is key – last year its revenue rose 8 percent year over year, compared with the Client Computing Group’s 2 percent growth. This time around, the Data Center Group was up 9 percent at $4.4 billion. Altera is part of the newly formed Programmable Solutions Group, which had the worst performance of the quarter for Intel — $440 million in revenue, which is down 5 percent year over year. The top performer was Intel’s Non-Volatile Memory Solutions Group, whose revenue of $874 million was a record high, up year over year by 58 percent. With respect to guidance, Intel says it’s expecting 80 cents in earnings per share on $15.7 billion in revenue for the third quarter. For the full year, the company expects $3 in earnings per share and $61.3 billion in revenue. On the company’s conference call with financial analysts, Intel CEO Brian Krzanich committed to a spending target of 30 percent of revenue and said he’s expecting the company to reach that goal no later than 2020. The company will make these ongoing changes to meet that goal while also driving growth, Krzanich said.

The Economic Calendar for today:

1. U.S. GDP
2. Employment Cost
3. Consumer Sentiment

 

 

Daimler profits are up 70%

The DAX has been profiting from the bullish markets and is up 0,35%, reaching the 12310 point mark. The strongly criticized German car industry is still suffering the repercussion from the cartel allegations. Daimler and BMW are the only DAX members recording stock losses. Volkswagen is up 2,35%. Reports have surged, from the usually well-informed Sueddeustche Zeitung, that Daimler was first in coming clean with Germany’s and Europe’s cartel watchdogs, and it could avoid a multi-billion fine. Volkswagen came in second, and could get a 50% rebate on the punishment. BMW, one of the least suspicious in the dieselgate scandal, is kept holding the bag.

Following an inconclusive session on Monday and the start of the Federal Reserve’s two-day FOMC meeting yesterday morning, the bulls got the new session rolling in a big way with an immediate jump forward of more than 150 points in the Dow Jones Industrial Average. Along with the Dow’s snappy opening gain, the Standard and Poor’s 500 Index soared to another intraday all-time high, advancing to just shy of 2,480 at the opening bell. The NASDAQ, however, was held back, posting a small early loss under pressure from a 28-point loss in shares of Alphabet on news of an antitrust fine. The strong start, however, could not be sustained, and as we neared the one-hour mark of trading, the 57-point Dow gain had been pared to some 65 points. The NASDAQ, meantime, barely held at breakeven, while the S&P 500 Index saw its gain cut to a handful of points. The big influence was earnings, as industrial giant Caterpillar posted bottom-line results that exceeded expectations and shares of that Dow-30 component jumped nicely in early dealings. It was a far different story for fellow Dow stock 3M Company. That industrial giant disappointed investors with its top-and-bottom-line miss, and the stock tumbled. The Dow’s pullback didn’t continue, however, and as we passed the one-hour mark, that index again started to press higher, soon returning to past the 100-point advance mark. The strength continued through the morning, so that as the noon hour arrived, the market was up strongly, with the Dow’s advance holding at a formidable 130 points, in spite of the 3M profit miss and subsequent price drop. The strong advance persisted into the close, with the Dow’s triple-digit point gain staying intact until shortly before the concluding bell. As was the case earlier, the bullish tone was driven by better-than-expected earnings, not only from the Dow’s Caterpillar, but also from McDonald’s, another component of that 30-stock composite. Those two issues continued to overcome the further weakness in 3M. Also, most of the leading sectors were trading higher, led by basic materials and energy, while stocks rising in price easily topped those equities falling back. In short, there were few places for the encumbered bears to hide. When all the number were thus in, the Dow, with a last minute push higher closed higher by 100 points; the S&P 500 added seven points; and the NASDAQ eked out a small win. More substantial gains were posted by the smaller indexes. Now, as we await a new day, additional earnings data, and a report on sales of new dwellings (following Monday’s solid report of sales of existing homes, the big story will be the Fed. The central bank, which commenced its latest FOMC meeting yesterday, will end matters this afternoon at approximately 2:00 PM (EDT), with a likely decision, as noted above, to keep interest rates unchanged.

Daimler has posted another quarter of record sales and revenue, creating a strong base off which it says it will be able to “exploit new business models” amid industry disruption. The Stuttgart-based carmaker said net profit for the second quarter rose 2% to €2.51bn, as revenue rose 7 per cent to €41.2bn, Operating margins for Mercedes cars rose from 6.4% a year ago to an amazing 10.2%. Overall operating profit jumped 15% to €3.75bn, led by a stunning 70 % climb in Mercedes-Benz profits, to €2.4bn. Profits fell by double digits at the group’s vans, buses, and trucks’ divisions. After overtaking BMW to be the world leader leader in luxury car sales last year, Mercedes increased car sales by 9 % to 595,178 units.Total Daimler sales across all units were up 8 per cent from a year ago to 822,504 units.Chief executive Dieter Zetsche called the quarter excellent. “We have set ourselves ambitious targets. And we are achieving them – in terms of unit sales and of profitability.” The car industry is in the early stages of being upended by “megatrends” that will see passengers use electric, self-driving cars that are shared rather than owned. Mr Zetsche said Daimler’s “strong core business is the best basis” to meet this transformation. Meanwhile, the legacy business model is expected to keep growing. Daimler said worldwide demand for all cars is expected to 1-2 per cent this year, which would mark an 8th straight year of growth. US sales are expected to fall, but Europe and China should see slight growth, while India should see “significant” growth.

Deutsche to move 300 bn worth of assets

The German Index was able to make some ground up today reaching a high of 12’300 before lunch-time. Right now the German Index is trading at 12’270. This regain of confidence is fueled by the IFO German business confidence report, which hit a third record high. The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, rose to 116.0 from 115.2 in June. That beat a Reuters consensus forecast of 114.9. Investors have been bullish on Commerzbank and Deutsche Bank increasing 1,35% and 2,29% respectively.

In the U.S. unlike so many Mondays this year, the latest start to a new trading week on Wall Street did not begin with another bullish roar. Rather, it commenced with something closer to a bullish yawn. The market did not unravel, to be sure, nor was there a major early reversal. In fact, stocks did comparatively little given how extended the market is these days. Still, there was some tilt to the downside in early dealings, with the loss in the Dow Jones Industrial Average swelling to about 80 points in late morning, before some buying surfaced near noon to pare the deficit somewhat. Still, we entered the afternoon with that blue chip composite off by about 50 points. However, on upbeat sentiment on the technology group ahead of a succession of major profit issuances in the days to come, the NASDAQ was ahead by some 10 points. The Dow pared its losses a little further in the next hour on the optimistic sentiment with regard to earnings. The optimism, meantime, seems warranted as almost 75% of the companies in the S&P 500, which have released earnings in the latest quarter have topped expectations. Meanwhile, stocks continued to waver somewhat as the afternoon proceeded. The equity market, which remains overbought, has been finding it somewhat difficult to carve out a path to still higher prices recently. Analysts expect this range-bound trading to persist for a while assuming that there are no unwanted surprises entering the picture, from any number of sources. The market continued on this uneven path, with the Dow lower and the NASDAQ up nicely into the late afternoon.

In the aftermath of the Brexit vote from a year earlier, German banking giant Deutsche Bank has been making plans to downsize its London operations. Now, the bank led by CEO John Cryan is reportedly thinking about moving an Exxon-Mobil’s worth of assets out of the U.K. Bloomberg reported Monday, citing people with knowledge of the matter, that the bank is considering moving about a fifth of its balance sheets, about 300 billion euro, from the U.K. to Frankfurt.

After a successful start to 2017, the second quarter continued to be positive for Covestro. Ongoing robust demand for polymer materials led to a year-on-year improvement in utilization of available capacities for the industry as well as for Covestro. The result was a sharp increase of 56.5% in EBITDA and 110.4% in net income. At the same time, core volumes dropped slightly by 1.6% against a strong prior-year quarter. On a half-year basis, however, core volumes increased by 3.5% over the same period in the previous year. The company is optimistic for the medium term as well: “We want to keep growing in line with our customer industries, which are expected to grow faster than the global gross domestic product. In the next five years, we anticipate generating a cumulative total of EUR 5 billion in free operating cash flow,” says CEO and interim CFO Patrick Thomas. “This cash could be used for bolt-on acquisitions in the specialties segment, if the opportunity arises. Moreover we follow our intention to grow organically.” In the second quarter of 2017, sales rose by 17.0% to EUR 3,498 million, mainly due to higher selling prices, which had a positive effect of 15.3% on sales. The increase in selling prices is attributable to strong capacity utilization and a year-on-year rise in raw material prices. FOCF amounted to EUR 319 million and was up 34.6% over the prior-year quarter. “We want to continue to take advantage of the ongoing robust demand for our products as much as we can. Especially in the Polyurethanes and Polycarbonates segments, we will further invest in our production plants and take steps to eliminate bottlenecks,” explains Chief Commercial Officer Dr. Markus Steilemann. The company keeps the forecast for the full year unchanged which was adjusted after the strong first quarter. Covestro still expects core volume growth in the low-to-mid-single-digit percentage range, with free operating cash flow still significantly above the average of the last three years. For fiscal 2017, Covestro continues to anticipate ROCE significantly exceeding the previous year’s level.  The same is true for this year’s EBITDA, which is also projected to be significantly above the previous year. For the third quarter of this year, Covestro expects EBITDA to increase substantially above the prior-year quarter. Covestro also still anticipates positive global economic development with stronger overall growth of 3.0% for the world’s economy in 2017 compared to the previous year.

Economic Calendar for today:

1. FOMC Meeting Begins
2. FHFA House Price Index
3. S&P Corelogic Case-Shiller HPI
4. Consumer Confidence

Philips announces share buyback program

The DAX continued its downfall this week, by dropping 0,47%. This downfall is fueled by the German car industry and the strong EURUSD. As we reported on Friday, allegations have surged suggesting that the German auto industry has not complied with various anti-trust regulations. These cartel suspicions have put a lot of downward pressure on the big players in the German auto industry. Daimler AG, BMW and Volkswagen being down 2,86%, 3,58% and 1,88% respectively.

In the U.S. the most recent five-day stretch of trading once again favored the bulls. The second-quarter earnings season, which kicked into gear last week, has thus far proven constructive for equities, but the results have not been as strong as the figures produced by Corporate America during the March period. The trading session on Friday saw some profit taking, as a couple of earnings reports disappointed. The setback, though, was pared into the closing bell. Also hurting stocks on the final day of last week was a drop in oil prices. The price of West Texas Intermediate contracts fell sharply, finishing the week in the vicinity of $45 a barrel, a level that will make it hard for the oil and gas companies to deliver solid earnings results. This comes ahead of some meetings this week among OPEC and non-OPEC leaders looking to find a solution to work down the glut of oil presently in the market. Not surprisingly, the energy sector was the biggest laggard among the 10 major equity groups. There also was weakness in the basic materials and technology areas. Conversely, there was interest in the higher-yielding consumer staples, telecommunications, and utilities sectors. Last week may prove to be the appetizer before the main course for the investment community. Indeed, the volume of quarterly results scheduled to be released over the next five days will far exceed last week, with data due on 12 Dow-30 companies, highlighted by the latest figures from the oil giants Exxon Mobil and Chevron on Friday. Too, the news on the economy will be much heavier this week, including the first reading on second-quarter GDP from the Commerce Department on Friday. These events will keep investors busy and will play a big role in whether the bulls will be able to keep the party going. As of now the Dow is down 0,22%.

Rocket Internet has been given a €22.00 price target by equities research analysts at Barclays PLC in a research report issued to clients and investors on Monday. The firm currently has a “neutral” rating on the stock. This downgrade has pushed the Rocket Internet stock down 5,05%.

Netherlands’ Royal Philips NV PHIA said Monday it will begin a 1.5 billion euros ($1.71 billion) share buyback program as it posted a 36% rise in second-quarter net profit. The health-technology company’s net income from continuing operations during the three months to the end of June rose to EUR161 million from EUR118 million the year earlier, while sales increased 4% to EUR4.3 billion from EUR4.13 billion during the second quarter in 2016. Adjusted earnings before interest and taxes or Ebit, the company’s preferred measure of its operational performance, rose 15% to EUR439 million during the quarter from EUR383 million a year earlier, Philips said.

The Economic Calendar for today:

1. PMI Composite Flash
2. Existing House Sales

 

 

General Electric hits 19 month low

The strong Euro, the falling oil prices and the supposed cartel allegations in the German auto-industry has propelled the German DAX to hit a low this week, quoting at 12‘240 points. At 15 o’clock the index was trading at a minus of 170 bps. U.S. crude prices fell 1 percent today in a sudden move after a report said supply from OPEC is rising. Reuters said OPEC’s July oil supply was set to rise by 145,000 barrels per day (bpd) compared to June, citing PetroLogistics, a company that tracks OPEC supply forecasts. The increase in oil supply would push production above 33 million barrels per day. WTI futures erased earlier gains on the report, trading at $46.52 per barrel. The European Central Bank President Mario Draghi’s difficult task of calming markets was laid bare on Thursday afternoon, as an initial dovish message by the ECB was quickly drowned out by talk of inflation and an end to asset purchases. The bank held interest rates and asset purchases steady on Thursday, amid speculation that it will start to scale back its ultra-loose monetary policy in the fall. It also struck a somewhat dovish tone and insisted that it would be poised to step in should the outlook take a downward turn. The German news outlet “Der Spiegel” reported that the German carmakers Volkswagen, Audi, Porsche, BMW and Daimler secretly worked together from the 1990s onwards on issues including polluting emissions from diesel vehicles. Volkswagen reported the cartel to German competition authorities in a letter seen by the “Der Spiegel”, as did Mercedes- Benz maker Daimler.

The U.S. stock market, which climbed nicely to end a mostly range-bound session on Wednesday, got out of the gate quickly yesterday morning, aided by comments from European Central Bank President Mario Draghi. But the buying was short lived. Indeed, as the half-hour mark of the session was passed, the composites were mixed, with the Dow Jones Industrial Average easing back modestly, while the S&P 500 Index and the NASDAQ scored additional all-time highs. In the case of these latter indexes, their early strength, too, lessened as the morning progressed, with the NASDAQ easing into the red for a spell. Meanwhile, investors were continuing to watch the release of corporate earnings. Most of the issuances were upbeat, if uneven, at times, with some three-quarters of the companies domiciled in the S&P 500 Index topping profit expectations. That is in keeping with the recent past on Wall Street and is reassuring for a market that is certainly not undervalued at this time. The solid earnings performances are helping to keep serious profit taking at bay, for now. Then, after a brief selloff, which took the Dow down to a morning-worst decline of some 65 points, the market, as has so often been the case this year, regrouped and as the afternoon began, the Dow’s loss had eased to a more manageable 10-20 points. The other indexes, both large- and small-cap, meantime, stayed modestly in the black, for the most part. A few stocks underwent moves of note, including PPG Industries, with that diversified chemicals manufacturer announcing an acquisition that did not sit well with investors, even though the giant corporation posted solid quarterly metrics in the meantime. The Streets strength was on display again in the afternoon, as the three large-cap averages all managed to turn positive as the final hour began. The market remained near the breakeven point until late in the session when the Dow saw enough, but still modest, selling to put that average down by 29 points. The S&P 500 Index was essentially flat, while the NASDAQ managed to gain a handful of points. The smaller indexes were little changed. As to economic influences, the Index of Leading Economic Indicators provided an upward surprise, increasing in June by 0.6%. That sharp increase followed unimposing 0.2% gains in both April and May. Expectations had been for a rise of 0.4%, within a forecast range of 0.2%-0.5%. Looking out to the concluding session of this week and casting our eyes abroad, as we most always do, we see that the markets lower in Asia overnight, while in Europe, the principal bourses are tracking downward.

GE slid down 1,7% this morning after releasing its Q2 results and reporting a 12% drop in revenue. Net profit slumped 58 percent to $1.34 billion, or 15 cents a share, in the quarter ended June 30, from $3.30 billion, or 36 cents a share, a year earlier. GE’s energy connections business provides electrification and automation products to the oil and gas, mining, utility and marine industries. Revenue fell to $29.56 billion from $33.49 billion, slightly better than the $29.02 billion consensus estimate of analysts polled by Thomson Reuters I/B/E/S. Adjusted earnings fell 45 percent to 28 cents a share, compared with estimates for 25 cents. GE’s closely watched cash flow from operations fell 67 percent to $3.6 billion from a year ago, reflecting the loss of contributions from the appliances division that the company sold.

 

Morgan Stanley tops expectations

After a bad start to the week the German DAX was able to recover from some of its losses in the early trading hours. In the afternoon the DAX has been has been circling around the 12’430 point mark. The sideward movement in the DAX is mainly due to the ECB meeting tomorrow. The EURUSD had to take a break on its rise and has weakened as of today.

In the US the stock market, following an indecisive start to the week on Monday, looked poised to press higher yesterday–or at worst mark time once again. And, in fact, the equity futures were showing little change several hours before the start of trading on our shores. Then, in some apparent rethinking, the bears started to flex their muscles. This shift was not dramatic at first, and there was no wholesale selloff of stocks through much of the morning, but there was some movement lower from the start. However, the impetus was not earnings season, which now is under way, but rather the dysfunction in Washington, which has taken a turn for the worse. Specifically, the bears resurfaced following news that the Republican leaders in the U.S. Senate had decided to abandon their health care bill, which was designed to repeal and replace the Affordable Care Act (ACA). The reason is that two more GOP Senators had gone on record with their intention to oppose the measure. That would leave the Senate Republicans two votes short of the 50 needed for approval. And without a new health care bill, efforts at tax reform–a key part of the bull market story–would be that much harder. So, stocks wilted and fell, even with no worse than a mixed early showing on the corporate earnings front. As noted, stocks pulled back, and the situation worsened as the morning progressed, with the Dow Jones Industrial Average falling to a morning-worst loss of almost 160 points before some subsequent buying surfaced to pare the deficit. For the moment, at least, earnings are taking a back seat to Washington. Interestingly, it was mostly the Dow that fell back, as the NASDAQ, on comparative strength in the technology group, managed to hold with just modest losses. As for the Dow, it was also influenced by a drop in the shares of Goldman Sachs, as the financial services giant reported a drop in bond trading revenues. Meanwhile, the Dow’s loss continued to ease into the lunch hour as a one-time near 160-point deficit was cut in half as the noon hour arrived. The S&P 500 Index’s loss was minimal at that time, while the NASDAQ was in the black. As we entered the afternoon, it looked as though we would remain in the loss column throughout the day’s session. The stock market continued to press lower as the afternoon moved along, but the deficit on the Dow gradually eased as the session proceeded, even though a proposal to just repeal the ACA failed as a third GOP Senator voiced her opposition even before a vote could be taken. When the final numbers were in, the worst morning’s setback had been overcome, with the Dow cutting its loss by some two-thirds to end matters off just 55 points. The S&P 500 Index managed to end on the plus side of the ledger, if incrementally, while the NASDAQ inked a 27-point increase. Just modest losses were tallied by the smaller composites, as losing stocks, once well ahead of winners, were just narrowly in the lead on the Big Board.

Morgan Stanley reported second quarter earnings Wednesday that soundly topped expectations, helped by an increase in stock trading revenues and profits from its wealth management business. Earnings per share: 87 cents vs. 76 cents expected by a Thomson Reuters consensus estimate. Revenue: $9.50 billion vs. the $9.09 billion estimate. The shares are trading about 3 percent higher this morning. Equity sales and trading net revenues increased by $100 million to $2.2 billion, little changed from a year ago but up 7 percent from the first quarter, “reflecting strong contributions across products and regions,” Morgan Stanely said in a statement. Overall sales and trading revenue decreased by $100 million, or 2 percent, from a year ago, to $3.2 billion. Bond trading revenue fell $100 million, or 4 percent, to $1.2 billion in the second quarter, “driven by lower volatility and sporadic activity during the quarter,” the release said. Fixed income trading revenue was $1.7 billion in the first quarter. The second quarter marked the second in a row for which Morgan Stanley’s fixed income trading revenue topped that of Goldman Sachs.

Today’s Economic Calendar:

1. MBA Mortgage Applications
2. Housing Starts
3. EIA Petroleum Status Report

 

Earnings Season: Goldman, Bank of America, Johnson & Johnson, Lockheed Martin

The ever increasing Euro is leaving its trail on the German DAX. The EU currency is on a bullish path and about to reach the 1,16 mark. The uncertainty reigning in Washington these days has put the US Dollar under a lot of pressure and the EURUSD opened at 1,1564. The Germany industry being very export-dependent is suffering from this evolution and so are the German export-sensitive companies. The DAX plotted a downward movement being down 1,42% to 12’408 points after opening at 12’540.

In the U.S. the stock market, which has made a habit recently of rising nicely on most Mondays, pretty much marched in place. On point, through much of the morning, the Dow was off marginally, while the S&P 500 and the NASDAQ were modestly higher in advance of earnings. As for the economy, following a week in which there was a succession of mixed data, including stronger results on industrial production and factory use and weaker metrics on retail sales, we will be getting figures on homebuilding tomorrow. This unimposing pattern then continued into the last part of the morning, when just around noon in New York, the Dow nudged into the black, while the other large-cap indexes held nominal gains. Boosting the market modestly was a report showing that China’s economy had expanded by 6.9% in the second quarter, which was better than expected. Meanwhile, in other news on this early flat-line session, oil was off a few pennies a barrel; gold was fairly flat; and Treasury yields had ticked down slightly. A holding pattern then evolved during the afternoon, as Wall Street awaited a slew of earnings reports this week from mostly larger companies, which tend to report early in the cycle. Among the high-profile names set to release results this week is Dow-30 component Microsoft. Overall, expectations are high and the flat performance through most of the session yesterday reflects the Street’s caution ahead of the heavy pace of reports that will have a major impact on the market’s showing in the weeks to come.

Johnson & Johnson tops 2Q profit forecasts. The maker of blood thinner Xarelto, Tylenol and other pain relievers, and medical devices on Tuesday reported net income of $3.83 billion, or $1.40 per share, down from $4 billion, or $1.43 per share, a year earlier. Adjusted results, excluding one-time charges, amounted to $5 billion, or $1.83 per share, 4 cents better than Wall Street analysts expected. Revenue was $18.84 billion, just shy of analyst expectations for $18.89 billion. The company’s prescription drugs business, its largest segment, saw sales dip 0.2 percent to $8.64 billion, while sales of consumer health products such as Johnson’s baby care items edged up 1.7 percent to $3.48 billion. Meanwhile, sales of medical devices and diagnostic products climbed 4.9 percent to $6.73 billion, indicating the restructuring is turning around problems in the segment. J&J said it now expects full-year earnings in the range of $7.12 to $7.22 per share, up from it April forecast of $7 to $7.15 per share. It forecast revenue in the range of $75.8 billion to $76.1 billion, up from $75.4 billion to $76.1 billion.

Goldman Sachs beat Wall Street estimates in the second quarter. The US bank delivered earnings per share of $3.95, ahead of $3.43 EPS expected. The bank reported net revenues of $7.89 billion, ahead of the $7.5 billion that was expected. The bank had its third best ever quarter for debt underwriting revenues, with $721 million in fees. Equities had its best quarter in two years, with $1.89 billion in revenues, up 13% from the first quarter. Fixed Income, Currency and Commodities Client Execution had a weak quarter, with revenues of $1.16 billion 40% lower than the second quarter of 2016. The bank put that down to “significantly lower net revenues in interest rate products, commodities, credit products and currencies, partially offset by higher net revenues in mortgages.” Investment management had record quarterly management and other fees of $1.28 billion. Assets under supervision increased to a record $1.41 trillion.

Lockheed Martin Corp, the Pentagon’s No. 1 weapons supplier, reported a better-than-expected quarterly profit, helped by higher sales in its aeronautics division that makes fighter jets. Lockheed raised its 2017 profit forecast for the second time and said it now expects to earn $12.30 to $12.60 per share. The company in April forecast $12.15 to $12.45 per share. The company raised it 2017 sales forecast to $49.80 billion to $51.00 billion, from $49.50 billion to $50.70 billion. Lockheed said sales in its aeronautics business, the company’s biggest, rose 19.4 percent during the second quarter. The F-35 program is the Pentagon’s costliest arms program and has been criticized by U.S. President Donald Trump and other U.S. officials for being too expensive. The company’s net income from continuing operations rose about 5 percent to $942 million, or $3.23 per share, in the quarter ended June 25. Net sales rose to $12.69 billion from $11.58 billion.

Bank of America said Tuesday its second quarter earnings rose 10% as demand for its retail banking services generated higher deposits and interest income. Net income totaled $4.9 billion, compared with $4.4 billion a year ago. Net interest income climbed 9% to $11 billion. Earnings per share were 46 cents, beating the 44 cents estimated by analysts who were polled by S&P Global Market Intelligence. Shares of Bank of America dipped 0.2% in pre-market trading to $23.98. The consumer banking unit, which operates more than 4,500 branches, was clearly the performance star, reflecting the robust job market and consumers’ healthy appetite for loans amid low interest rates. The unit’s revenue rose 9% to $8.5 billion. Net income spiked 21% to $2 billion. The unit’s deposits were up $56.3 billion to $652.8 billion. Loans rose by 8%. Combined credit and debit card spending climbed 6%.

Today’s Economic Calendar:

1. Import and Export Prices
2. Redbook
3. Housing Market Index

BlackRock earnings: EPS up 10%

After a good start to the week, the German Index had to incur some losses in the afternoon and is now steadily tumbling around the 12580 mark and the market seems to have given up on the 12600 mark for the day. The up and coming ECB conference scheduled for Thursday is leaving Investors worried. After some ECB members had announced an easing of the imposed monetary policy, the actual inflation rates don’t support this possibility, making an easing unlikely. The Euro zone headline inflation slowed in June but the core figure excluding volatile unprocessed food and energy rose, the European Union’s statistics office said on Monday, confirming its earlier flash estimates. Eurostat said consumer prices in the 19 countries sharing the euro rose 1.3 percent year-on-year in June, in line with market expectations, decelerating form 1.4 percent in May and 1.9 percent in April. But its core measure of price growth, which excludes unprocessed food and energy and is closely watched by the European Central Bank, rose to 1.2 percent on the year from 1.0 percent in May.  The figure was above market expectations of a 1.1 percent rise, but matched Eurostat’s earlier flash estimate released at the end of June.

The major U.S. equity indexes ended a strong week for those long equities on a very upbeat note on Friday. On Friday, U.S. stocks began the day on a positive, albeit uneven note. Each of the major indexes spent most of the opening hours above their respective breakeven line, save for the Dow’s momentary, finance-related dip shortly after the opening bell. But after traders digested some mixed information from Corporate America and the business beat, most equities extended their morning gains well into the afternoon. The Dow and S&P 500 each set all-time intraday trading highs in the final hour, while the tech-laden NASDAQ, Friday’s strongest performing index, rose to within striking distance of its own high mark, as well. Despite the broad-based gains in nearly every pocket of the exchange, there was some selling pressure stemming from the earnings front early on. Disappointing updates from a trio of banking giants contributed to the financial sector’s morning struggles. That is, while JPMorgan Chase and Citigroup each beat consensus earnings estimates for the June interim, lackluster investment income figures and less-than-encouraging outlooks weighed on investor confidence. Speaking of earnings, the second-quarter reporting season kicks into high gear this week, highlighted by reports from nine Dow-30 companies. This week will provide many clues as to how the second-quarter earnings season will likely play out. Over the next several weeks, analysts expect to see updated corporate earnings data play an outsized role in determining how the market moves. Sure, investors also will be keeping a close eye on the Capitol, particularly as it relates to the healthcare developments, but the performance of Corporate America will be the headlining force in trading through early August.

Today BlackRock posted second-quarter earnings and revenues that missed expectations. The world’s largest asset manager reported second-quarter adjusted earnings per share of $5.24 on revenue of $2.965 billion. In the year-earlier period, the company had posted adjusted earnings of $4.78 per share on sales of $2.804 billion, documenting a Quarter on Quarter increase of 9,62%. BlackRock shares fell 2.8 percent in the premarket following the report’s release. The firm’s second-quarter assets under management rose 16 percent year over year to $5.689 trillion, topping analyst expectations. The company, which now oversees $5.7 trillion in assets, received $94 billion in net investor money during the quarter, with $74 billion of that amount flowing into the company’s iShares-branded exchange traded funds. BlackRock now manages $1.5 trillion in exchange traded funds, passive investment vehicles that track a wide variety of indexes and investment strategies.

Valeant Pharmaceuticals International Inc. has agreed to sell its skincare business, Obagi Medical Products, to a Hong Kong-based firm for US$190mln in cash. Obagi, a drug company that specialises in products for skin aging, skin damage and other skin probems, will be sold to Zhonghua Finance Acquisition Fund I LP. Proceeds from the sale will be used to cut Valeant’s debt as the company works to turn around the business following a troubled year. The deal is expected to be completed in the second half. Valeant sees Obagi generating a net profit of US$85mln and adjusted underlying earnings (EBITDA) of US$30mln.

Bitcoin briefly fell below $2,000 for the first time in two months amid anxiety its dominant status is under threat. As enthusiasts consider adopting two competing software updates, raising the possibility that bitcoin will split, it’s lost about a third of its value since attaining a peak of just below $3,000 on June 12. Calls for a revamp of the cryptocurrency come as exchanges have struggled to keep up with rising volumes.

A reading of New York-area manufacturing cooled in July from a two-year high, according to data released Monday. The New York Fed’s Empire State manufacturing index fell to a seasonally adjusted reading of 9.8 from 19.8 in June. Economists polled by Econoday expected a reading of 15, on a scale where any figure above zero indicates improving conditions. Readings in July for new orders, shipments, inventories, delivery times and number of employees all decelerated. That said, the Empire State index has been positive for six out of seven months in 2017.

 

JPMorgan Chase and Citigroup beat Wall Street estimates.

The German indices seem to be with nailed down and are not able to profit on the front-running in the U.S. The DAX is stuck at the moving average of 12’640 points and the MDAX is floating around the 25’124 point mark. The main catalyst for the cooling down on the European markets (CAC 40 +0,01%) is the strong rise of the European currency.

In the U.S. equities put in a choppy session yesterday, but ultimately made some progress. At the close of trading, the Dow Jones Industrial Average was ahead 21 points; the S&P 500 Index was up five points; and the technology-heavy NASDAQ was higher by 13 points. Market breadth was supportive, as advancers outpaced decliners by a modest margin on the NYSE. Most of the major equity groups pressed ahead, with respectable gains in the financial and energy names. In contrast, the utility and industrial issues were areas of weakness. Meanwhile, traders received a few economic reports. Specifically, the Producer Price Index (PPI) rose 0.1% in the month of June. Analysts had been looking for a somewhat tamer reading, but inflationary pressures still are not likely a concern. Elsewhere, initial jobless claims came in at 247,000 for the week of July 8th, which was in line with expectations. Tomorrow we will get look at the Consumer Price index (CPI) for the month of June. Retail sales and the latest monthly industrial production figures also will be released. Today we will hear from quite a few big banks, including JPMorgan Chase, Wells Fargo and Citigroup. JP Morgan Chase crashed Wall Street estimates with adjusted earnings per share of $1.71 versus $1.58 estimated by Thomson Reuters analysts’ consensus. JP revenues was 26.41 billion USD versus a 24.96 billion USD estimate. The bank lowered its net interest income forecast for the year by about half a billion dollars to a $4 billion increase from the prior year. JPMorgan’s Chief Financial Officer Marianne Lake said on the firm’s conference call that the majority of that reduction came from lower-than-expected net interest income in the second quarter. Citigroup reported a 1,28 USD EPS and Revenue of 17,9 billion USD. Citigroup also stated that its fixed income markets revenue totaled $3.215 billion, down from $3.432 billion in the prior-year period and down from $3.622 billion in the first quarter of this year. These reports signal that the second-quarter earnings season is underway. Traders will, no doubt, be looking carefully at the numerous reports being released over the coming weeks. Of ultimate importance will be the guidance that companies offer for the remainder of the year.

Fiat Chrysler Automobiles said today it is recalling 1.33 million vehicles worldwide in two separate campaigns for potential fire risks and inadvertent airbag deployments.  The Italian-American automaker said it is recalling about 770,000 sport utility vehicles because of a wiring issue that may lead to inadvertent deployment of the driver-side air bag and is linked to reports of five related minor injuries, but no crashes.The recall covers 538,000 2011-2015 Dodge Journey vehicles in North America and 233,000 2011-2015 Fiat Freemont crossovers sold elsewhere. The automaker is also recalling 565,000 vehicles to replace their alternators because of fire risks. The company said hot ambient temperatures could lead to premature diode wear, may result in a burning odor or smoke, could impact the anti-lock braking system or lead to engine stalls.

Today’s economic calendar:

1. CPI
2. Retail Sales
3. Industrial Production
4. Consumer Sentiment

 

Nvidia triples share value in 12 months

Today the DAX seems to be stuck around the 12‘634 mark in another indecisive session. During his speech today Draghi gave some indications that the ECB is likely to signal September that its 2.3 trillion euros bond-buying program would be gradually wound down next year. This was obviously pretty bad news for all investors, who are expecting a decrease in liquidity.

Following back-to-back indecisive sessions to start the week the bulls stepped out front yesterday morning on Wall Street  and wound up fashioning another wire-to-wire win. And, in fact, there was little question about the ultimate outcome, as stocks soared from the opening bell, with the Dow Jones Industrial Average jumping out to a triple-digit gain in minutes. The bulls sustained most of that momentum through the morning, entering the afternoon hours with that composite up by better than 125 points, securing another record in the process. Breaking the advance down, it was, as noted, led by energy, as oil prices rose on a larger-than-expected drawdown of fuel stocks. Health care also did well, gaining almost a percentage point in the morning. The industrials, technology, and the recently struggling telecoms likewise acquitted themselves quite well, while gaining stocks held a formidable lead over declining issues. At the end of the day the Dow Jones was able to record a 123 points increase at the end of the day. The S&P 500 Index was better by 18 points and the NASDAQ, buoyed by notable strength in technology, advanced by a strong 68 points, or 1.1%.

Delta Air Lines reported a 2,5% increase in quarterly passenger unit revenue. The Passenger unit revenue is a keys ratio in the aviation industry that measures sales relative to flight capacity. Nonetheless the company’s net income fell 20.8 percent to $1.22 billion, or $1.68 per share, in the quarter ended June 30, from $1.55 billion, or $2.03 per share, a year earlier. This was merely due to a higher cost structure. Aircraft fuel related expenses rose 18 percent to $1.45 billion during the quarter, while salary costs were up 9 percent to $2.62 billion. Shares of the No. 2 U.S. airline by passenger traffic fell as much as 2.4 percent to $54.13 in early trading.

Nvidia‘s shares have more than tripled in the last 12 months, beating out the returns of any other company in the S&P 500. Early last month, Citi set a 12-month price target of $180 on Nvidia. That’s a tad more bullish than SunTrust. The stock posted a record close of $159.94 in early June before pulling back. Nvidia closed today up $6.63 to $162.51. The shares are still a few dollars short of their all-time intraday high of $168.50 touched last month.

Oil prices slumped Thursday after the International Energy Agency said global oil supply rose in June as producers “opened the taps. Light, sweet crude futures for delivery in August dropped 31 cents, or 0.7%, to $45.18 a barrel on the New York Mercantile Exchange, while September Brent crude gave up 39 cents, or 0.8%, to $47.34 a barrel.

Todays Economic Calendar:

1. Jobless Claims
2. PPI-FD
3. Bloomberg Consumer Comfort Index
4. EIA Natural Gas Report