So far it’s been a strong earnings season, and stock prices moved higher this morning after another robust batch of quarterly reports.
By Peter Martin
Thursday, July 24, 2014
The day’s macroeconomic reports have been less clear cut, though, with improvements in the labor market offset by weak new home sales. By late morning in New York, the Dow Jones Industrial Average was up 0.14% or 23 points, while the broader-based S&P 500 index gained 0.21. By early afternoon those gains had largely evaporated, though, leaving the DJIA down a touch at 17,083 and the S&P 500 up just 0.08% at 1988.5.
Facebook’s share price advanced to a record high after the online social media giant report smashed forecasts for both earnings and revenue and Ford Motor Co climbed 0.73% on the back of earnings of 40 cents per share excluding items, compared to the consensus estimate of 36 cents per share given by analysts polled by Reuters. Dow component Caterpillar sunk 3.44%, despite beating estimates for earnings, but missing with revenue.
Jobless claims continue to improve, sinking by 19,000 last week to a post-recession best of 284,000, which was well below the consensus estimate of 310,000. The four-week moving average improved to 302,000, from 309,250 in the week prior, to also set a post-recession low. These numbers come with a potential caveat, which is the effect of layoffs in the auto industry for summer retooling. How much influence this factor may have is yet to be determined, but this report still suggests a surprising upswing in employment.
Despite indications of some loss in momentum this month, the manufacturing sector still appears to be growing at a rapid pace based on the first estimate from Markit of its manufacturing PMI for July. The index, compiled from a survey of manufacturing firms, slipped to 56.3 from June’s final reading of 57.3, and therefore failing to reflect the level of growth seen in recent regional surveys conducted by the Federal Reserve banks of New York and Philadelphia.
New home sales was the most disappointing report of the day, showing a steep decline for June. The annualized, seasonally-adjusted rate was a measly 406,000 last month, while May’s data was downwardly-revised from 504,000 to 442,000. Along with weakness already seen in housing starts and building permits, this paints a rather pessimistic picture of the housing market for the start of the summer.
In the forex market, the US dollar gained strength from the drop in jobless claims, with USD/JPY rising 0.34% to 101.84 and GBP/USD dropping 0.33% to 1.6988, while the dollar index, a gauge of the dollar’s strength against a basket of six major currencies, climbed 0.05%. The euro managed to gain against the dollar though, after the eurozone composite PMI (a gauge measuring the combined performance of the manufacturing and services sectors) advanced to a level of 54.0 in the flash reading for July from the 52.8 seen in June, beating expectations which had called for an unchanged result.
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