No matter how down Greece gets, Mario Draghi will hold the EU together
Dow: 12,888 (+1.67%) S&P 500: 1,360 (+1.65%)
Whatever someone over in Europe is mixing into Mario Draghi’s morning Nutella and breakfast Fanta, we hope the Italian stallion (we’ll spare you the obvious “Super Mario” pun) keeps devouring it. The European Central Bank President’s confidence-boosting announcement today about maintaining the euro boosted stocks to their biggest gain in a month – the Dow was up over 200 points after the open and managed to close with a 212 point gain. Major earnings news from Sprint, Exxon and 3M strengthened gains, even though most eyes were on Facebook‘s first earnings report as a public company. US econ data also came in solid, with the number of Americans filing for unemployment (“weekly jobless claims“) falling more than forecast last week and orders for durable goods (like cars/machinery) rising in June.
ECB President proclaims EU will not break-up, Greece will not leave
European Central Bank President Mario Draghi was responsible for most of the enthusiasm today. Draghi emphatically announced that the ECB is willing to do whatever is necessary to keep the EU intact. His purpose was to relieve rumors and investors’ growing concerns over the last few months that the struggling PIIGS nations increasingly incapable of paying back their debts might exit the Eurozone (just this morning Citibank analysts released a research report pegging Greece’s chances of exiting the euro at 90%). Confidence in Draghi’s remarks (finally, a sign of European unity) was like a creatine-laced shot of 5-Hour Energy to both European & US markets, boosting demand for the declining euro, which gained 1% in value against the US dollar.
Sprint, 3M, Amazon report earnings, Exxon Mobil sets record
We’re always looking for oil around MarketSnacks headquarters – Exxon Mobil (XOM) boasted a record $15.9B in quarterly earnings, beating its previous high of $14.8B from ’08. Investors are so jaded by the amount of cash they rake in that the stock barely budged, edging up 1.28%. Famed “sticky-note” inventor 3M (MMM) added 2% after beating forecasts and wireless carrier Sprint (S) jumped 20% after a less-than-expected quarterly loss on greater-than-expected revenues thanks to a gain in subscribers. Amazon (AMZN) though disappointed – it added nearly 3% in anticipation of its after-the-close earnings announcement only to report a huge drop in earnings. Amazon has made a lot of major business purchases recently to build out its operations and is also expecting a 3rd quarter operating loss.
Facebook meets earnings estimates, but slips after Zynga drops
After the stock market closed, Facebook‘s (FB) first quarterly earnings report as a public firm met Wall Street’s expectations thanks to slightly better-than-anticipated revenue growth – but the market’s reaction was sheer rejection. The stock actually dropped 8.5% during the day and continued to fall another 7% in after-hours trading once the earnings report had been released. Analysts point out that before and after the announcement investors were (and clearly still are) concerned because of Facebook’s cousin company Zynga (ZNGA). Facebook relies on the internet game developer for part of its revenue and Zynga’s dismal 40% drop today after its own terrible earnings announcement is killing confidence in Zuckerberg’s creation.
Tomorrow:
- Hefty econ news: 2nd quarter real GDP numbers
- How do you feel? The final Reuters/University of Michigan Consumer Confidence poll for July
- Earnings, Earnings, Earnings (though not the sexiest names): Chevron, Merck…
- And post-MarketSnacks, we’ll be looking for Harry Potter at the Olympics Opening Ceremonies
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