Market Wrap-up for July 17 – The Week in Review

Market sentiment stepped up a gear this week, with positive reactions to Greek bailout news, and corporate earnings helping drive gains on the Nasdaq and the other major indexes. Chinese equity markets continued to respond to stabilization measures, with the Shanghai Composite closing 3.51% higher on Friday. JP Morgan CEO Jamie Dimon reiterated Chinese economic confidence, and believed the recent events were nothing more than ‘bumps in the road’.

Returning to the black for the year, the Dow Jones finished Monday 1.22% higher, with the Greek bailout deal helping subdue investor concerns. Agreeing to new terms, Greece looks set to unlock $95 billion in loans, over the next three years. This is subject to approval from the European and Greek Parliaments.

On the economic front, the Treasury Budget was released with a better than expected surplus of $51.8 billion for the period.

• Markwest Energy Partners (MWE) reacted to news that Marathon Petroleum would purchase the company for $15.63 billion with the stock finishing 13.96% higher. MWE has a dividend yield of 5.40%.

The positive trend continued, with key earnings and takeover news pushing the tech heavy Nasdaq 33 points higher. Dividend stock Texas Instruments was dragged higher, with investors reacting to reports that Micron Technology could be a target of China’s Tsinghua Unigroup.

Retail Sales for June came in below estimates at -0.3%, with Import and Export Prices also disappointing. Business inventories rose 0.3% in May, which was 0.1% higher than forecasts.

• Johnson & Johnson (JNJ ) beat earnings forecasts on Tuesday with an EPS of $1.71 vs consensus $1.67. Sales softened for the quarter. JNJ has a dividend yield of 2.97%.
• JP Morgan Chase (JPM ) finished the session 1.4% higher off the back of a better than expected EPS of $1.54. JPM has a dividend yield of 2.53%.

Profit taking coupled with concerns that Greek riots could escalate, pushed the Dow Jones into the red on Wednesday. The index finished marginally lower at 18,050.17.

Economically PPI, Industrial Production and Capacity Utilization beat market forecasts with Core PPI rising 0.3% in June. The Fed’s Beige Book cited moderate growth with a rebound in consumer spending and auto sales.

• Delta Airlines (DAL) was benefited by softening oil prices in the quarter, with the airline reporting $1.49 billion in earnings on Wednesday. The airline was cautious on its revenue outlook. DAL has a dividend yield of 0.80%.

Records tumbled on Thursday with the Nasdaq surpassing its previous high of 5,160.095 to finish at 5,163.18. Google earnings coupled with better than expected Unemployment Claims of 281,000 drove session gains.

• Mattel (MAT) the maker of Barbie, reported another disappointing quarter with losses touching $11.4 million. MAT has a dividend yield of 6.20%.
• Goldman Sachs (GS ) earnings were marred by litigation costs with the investment bank reporting earnings of $3.99 per share. This was above market consensus. The surprising legal omission pushed the stock price lower in early trade. GS has a dividend yield of 1.24%.

The Dow Jones began the Friday session on a negative note with the index falling 78 points. This was in contrast to the tech heavy Nasdaq, which continued to react to earnings from the previous session.

CPI came in as expected at 0.3%, with Housing Starts topping consensus at 1.17 million in June. The Consumer Sentiment index fell to 93.3 from a previous level of 96.0.

• General Electric (GE ) posted a loss of $1.36 billion in earnings for the second quarter on Friday, with revenues hitting $29.663 billion. GE has a dividend yield of 3.40%.
• Honeywell (HON ) opened the session 2.6% higher with an EPS of $1.51. This was above market consensus. The company confirmed strong growth in the aviation sector. HON has a dividend yield of 1.96%.

Next week will see earnings reports from: Cal-Maine Foods (CALM ), IBM Corp (IBM ), Ace Limited (ACE), Microsoft (MSFT ), Travelers Co. (TRV ), Verizon (VZ ), Ameriprise Financial (AMP ), Qualcomm (QCOM ), Raymond James Financial (RJF ), Richardson Electronics (RELL ), Texas Instruments (TXN ), 3M (MMM ), Caterpillar Inc (CAT ), Dow Chemical (DOW ), Eli Lilly(LLY ), Kimberly-Clark (KMB ), Starbucks (SBUX )

The following economic data will also be reported: Existing Home Sales and the Housing Price Index on Wednesday, Initial Claims, Continuing Claims and Leading Indicators on Thursday, Flash Manufacturing PMI and New Home Sales on Friday.

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