Dow: 12,909 (+0.81%) S&P 500: 1,373 (+.67%)
Investors aren’t magicians – but today’s positive trading officially made all of July’s losses so far disappear like some kind of stock market Houdini. Blue chip stocks led the way as the Dow propelled up 103 points on hopes of Federal Reserve actions after Chairman Ben Bernanke’s 2nd day of Congressional testimony and “Beige Book” release. Solid housing data continues, as June home construction increased almost 7% for its biggest monthly gain since ’08. And even earnings reports added to today’s upward drive, with companies beating or barely missing low analyst expectations.
Bernanke reiterates economy is growing at “modest to moderate” pace, “Beige Book” released
Tuesday was the Senate’s turn to hear our econ guru speak and today he had the attention of the House of Representatives. Bernanke pretty much repeated the same thing as yesterday, but also warned that the US fiscal situation (fiscal = the spending and taxing of government) is unsustainable. He is trying to knock some sense into our legislators to stop bickering and find a way to reduce debt and create some economic growth (2 pretty tall tasks, right now). The key takeaway though was his insistence that the Fed is prepared to act if market conditions worsen. The Fed’s 8-times-a-year summary of the nation’s econ conditions, aka the “Beige Book,” was also released today, but only provided specific data and details described in Bernanke’s testimony, focusing on June’s weaker consumer spending and manufacturing numbers.
More Companies beat earnings estimates (73% so far this quarter)
Computer chip producer Intel (INTC) and conglomerate Honeywell (HON) both exceeded analyst estimates and saw shares gain 3.3% and 6.7%, respectively. Although average corporate earnings are down 4.6% so far this young earnings season, stocks are rising as companies beat glass-half-empty estimates. Since the stock market began its slide in April (triggered by global econ-Armageddon concerns), analysts expected poor earnings, but were clearly overly pessimistic as 73% have beaten forecasts. Ebay‘s (EBAY) stock also jumped 3.6% today on increased U.S. sales on the online marketplace (are savvy investors thinking Jeremy Lin’s departure to the Houston Rockets will yield a surge in business as outdated New York Knicks #17 jerseys hit eBay’s secondary market?). The biggest downer was Bank of America (BAC) who did beat expectations, but only thanks to lower tax rates and lower credit costs – not impressing investors who focus on business growth.
- Speaking of Jeremy Lin, Knicks owner Madison Square Garden (MSG) slipped another 1% as investors express concerns that dropping Linsanity was a major investment/basketball mistake
- Initial Jobless Claims unexpectedly dropped last week to 350,000 – so will tomorrow’s report show a trend of reduced weekly job layoffs?
- More housing data (June “Existing Home Sales”)
- Earnings, Earnings, Earnings: Google, Morgan Stanley, Microsoft….
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