Markets End Week Mixed After Week Containing Another Record High

Markets

For the week of Monday, July 21, 2014 through Friday, July 25, 2014:

• Standard & Poor’s 500 Index: 0.01%
• Dow Jones Industrial Average: -0.82%
• NASDAQ Composite: 0.40%

Stocks fell to open the week, as investors hit the pause button after Friday’s sharp gains. Traders said investors were taking stock after Friday’s rally, rather than selling on fundamental worries about military action in Ukraine or the Middle East. The following day, stocks got a lift from strong housing data and upbeat corporate earnings. By mid-week, earnings reports propelled the S&P 500 to a record high. The S&P 500 Index climbed 0.2% to 1987.0, topping its July 3^rd record. Overall, earnings reports have driven stocks higher, giving shares relief despite ongoing international tensions. S&P 500 companies are on pace to grow earnings by 5.6%, whereas analysts previously expected 4.9% growth. The S&P 500 inched higher Thursday, bolstered by strong labor-market data and corporate-earnings reports. Americans filed the fewest applications for unemployment benefits since February 2006. Still, the indices closed in the red on Friday, after retreating on a variety of economic data. Durable goods orders ticked up in June. Commerce Department data showed orders for goods designed to last several years increased by 0.7%. The results matched expectations.

Economic Data

SEMI Book-to-Bill Ratio:

• North American manufacturers of semiconductor equipment posted a book-to-bill ratio of 1.09 in June, rising 9 basis points from the May reading.
• A ratio exceeding 1 indicates that new orders were greater than shipments for the month.

Chain Store Sales Snapshot:

• The ICSC Chain Store Sales Index fell 0.4%.
  • Sales growth slowed from 4.5% to 2.8% from the same period last year.

Consumer Price Index:

• The Consumer Price Index increased 0.3% in June.
  • The main driver was higher gasoline prices.
    • Energy declined in several major categories
    • Food prices barely increased.
• May’s advance was 0.4%.
• The core CPI rose 0.1%.

Existing-Home Sales:

• Existing-home sales increased 2.6% month-over-month, to 5.04 million annualized units.
  • Sales exceeded 5 million for the first time since October 2013.
  • The months of supply held stable at 5.5.
• House price appreciation was 4.3% year-over-year.

MBA Mortgage Applications Survey:

• Mortgage application activity increase 2.4% in the week.
  • The purchase index increased 0.3%.
  • The refinancing index rose 4.1%.

Jobless Claims:

• Initial unemployment claims fell 19,000 to 284,000.
• Continuing claims fell 8,000 to 2.5 million.

New Home Sales:

• New single-family home sales fell 8.1% to 406,000 annualized units, 11.5% below the June estimate.
  • Months of supply rose to 5.8 months.
• The median house price increased to 5.3% year over year.

Earnings:

SunTrust Banks, Inc. (NYSE: STI)

• SunTrust’s earned $399 million, or $0.72 a share, compared to $377 million, or $0.68 a share, last year.
  • Excluding certain items, SunTrust earned $0.81 a share, compared to $0.68 a share, last year.
  • The bank’s revenue increased 4.6% to 2.2 billion, beating analysts’ expectations.
• Analysts expected $0.77 a share and $2.07 billion in revenue.

The Coca-Cola Company (NYSE: KO)

• Coke earned $2.6 billion, or $0.58 a share, compared to $2.68 billion, or $0.59 a share, a year ago.
  • Excluding one-time items, the beverage giant earned $0.64 a share, beating analysts’ estimates by $0.01.
• Revenue fell 1.4% to $12.57 billion, shy of analysts’ estimate of $12.85 billion.

McDonald’s Corp. (NYSE: MCD)

• McDonald’s earned $1.39 billion, or $1.40 a share, compared to $1.4 billion, or $1.38 a share, a year ago.
  • McDonald’s revenue rose from 7.08 billion to $7.18 billion.
  • McDonald’s results fell short of analyst’s expectation of $1.43 a share on revenue of $7.29 billion.
• In the United States, sales fell 1.5%.

Apple Inc. (NASDAQ: AAPL)

• Apple earned $7.7 billion, or $1.28 a share, compared to $6.9 billion, or $1.07 a share, last year.
  • Apple’s revenue increased to $37.4 billion, but was about $600 million below expectations.
  • Analyst expected $1.23 a share on revenue of $38 billion.

Delta Air Lines Inc. (NYSE: DAL)

• Delta’s reported earnings of $801 million, or $0.94 a share, compared to $685 million, or $0.80 a share, last year.
  • After one-time adjustments, Delta earned $1.04 a share.
  • Delta’s revenue increased 9.4% to $10.62 billion,
• Delta beat analysts’ expectations of $1.03 share on $10.59 billion in revenue.

Interest Rates

• The two-year Treasury rate remained at 0.48%.
• The five-year Treasury rate rose one basis point to 1.68%.
• The 10-year Treasury rate increased one basis point to 2.49%.
• The 30-year Treasury yield fell one basis point to 3.28%.

Disclosures

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