Dow: 12,617 (-0.82%) S&P 500: 1,338 (-0.90%)
Hide ya kids – Hide ya wife. The Dow dropped 104 points today for its 3rd straight triple-digit decline. It’s not quite time to head for the fallout shelter, but investors are clearly scared – the primary culprit was poor earnings reports from more blue chip companies. Minor housing data suggested a rise in home prices, a brief feel-good moment for homeowners, but a Federal Reserve announcement that manufacturing activity in the Central-Atlantic (Richmond, VA) region contracted in July was louder news. Stocks were down nearly 200 points midday after Greece’s (in)ability to repay its debts jumped back into the picture, but rebounded in the final minutes of trading on unsubstantiated hopes the Fed will stimulate the economy.
AT&T and UPS miss earnings expectations
It wasn’t perfectly analogous to a dropped call, but AT&T (T) fell over 2% after reporting 2nd quarter revenues below analysts’ forecasts. The wireless giant is such a big player in the phone field that the news hit telecommunication stocks hard to become the worst performing sector today in the S&P 500 stock index (although all sectors were down). UPS (UPS) earnings and revenues also missed Wall Street’s expectations and the CEO dropped the 2012 earnings outlook on US economic uncertainty and weakness in Asia (MarketSnack nation may recall the recent growth slowdown in China). Investors focused on the UPS news because the delivery firm is considered a barometer for the state of global business since it controls the movement of so much commerce across the world.
Rumors from European Union of another Greek debt restructuring
Greece reared its ugly head in the global finance arena again when sources reported major doubts that Greece can meet its debt reduction targets that are conditions for more aid. Investors loathe the prospect of another Greek bond restructuring. This report suggests another episode may be coming soon if Greece fails…another restructuring is just finance talk for forgiving Greece of more debt, and bondholders always pay the price. Those sad Greek bond holders out there may lose even more (they’ve already lost over 75% of the value of their bonds).
Apple falls after missing analyst estimates for just second time since 2003
Apple’s (AAPL) 2nd quarter earnings grew 21% compared to last year to $8.8 billion. But Apple, a company worth $561 billion, is expected to blow our socks off every quarter, and this one was short of analysts’ lofty expectations so the stock’s down about 5% in after-hours trading. People are holding out for the iPhone 5, hampering sales of Apple’s main money-maker. Companies often have strong and weak quarters that vary depending on the time of the year, with Apple, however, the craze over Apple’s new products is so strong that iPhone releases are what defines their seasonality. Expect another round of galactic earnings post iPhone 5 (with Apple you need to dig deep into your vocab to find words appropriate for its insane profitability). It sold 26 million iPhones in the April through June period and 17 million iPads, both short of expectations.
- June New Home Sales, Earnings: Delta, Boeing, Whole Foods, JetBlue, US Airways
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