Dow: 13,169 (+0.39%) S&P 500: 1,401 (+0.51%)
It may only be as psychologically significant as catching a double-rainbow in the sky (which usually appear after Mother Nature has ruined your weekend BBQ with an unrelenting series of downpours), but on Wall Street numbers and digits are what move things. And today’s number was “1,400.” The S&P 500 stock index finished above that magic level today for the first time in 3 months (it’s been, like, forever) on positive earnings and some stimulus squeaks out of the Federal Reserve. Some minor US econ data came in flat, with US consumer credit (the amount we pile on credit cards) expanding at its slowest pace in 8 months in June (economists hope to see Americans confidently spending more with MasterCards). The blue chip-heavy Dow added 51 points for its 3rd straight gain.
Boston Federal Reserve President calls for “open-ended” quantitative easing
Boston is known for loud, outspoken sports fans not hesitant to express their loudest feelings (did we mention how loud they are) and the MarketSnacks team suspects that Boston Federal Reserve President Eric Rosenberg was raised by the Fenway Park bleacher creatures. He boldly claimed in a speech today that the Fed must initiate the 3rd round of quantitative easing “QE3″ or the unemployment rate will increase and GDP will barely grow by year-end. By flooding the economy with newly printed Fed money to buy long-term bonds, QE3 will lower long-term interest rates and promote economic growth through increased lending amounts (that’s why our textbook says at least). The difference between the first two rounds of quantitative easing and Rosenberg’s proposed QE3 is that this round should be unlimited until the desired economic outcomes are achieved (QE1 was $1.25 trillion of bonds and QE2 was $600 billion). Some investors reportedly stimulus OD’d, but most were just hopeful today that some much-needed help from the fed is inevitable.
Disney, Chesapeake, Sirius, Fossil and MGM beat earnings expectations
We’re huge fans of Disney (DIS) here (if dinner at Epcot’s Mexican-themed restaurant and a Goofy autograph don’t sound like the perfect date night then we’re not interested in her) and Disney shareholders were bigger fans of Mickey’s earnings. Quarterly profits rose 24%, beating estimates, as their superhero film The Avengers neared $1.5B in global ticket sales (2nd biggest ever). We’ll take visionary director Christopher Nolan’s Dark Knight films any day of the week comparatively, but the Captain America-Thor-Iron Man combo Avengers did impressively save Disney’s earnings after box-office miss John Carter lost millions. The nation’s 2nd largest natural gas producer, Chesapeake Energy (CHK), added nearly 10%, Sirius XM Radio (SIRI) jumped 4.6% and apparel firm Fossil (FOSL) climbed 22% after they all also beat earnings expectations. Over in the desert, MGM‘s (MGM) smaller-than-expected loss amid lower gambling winnings at their Vegas Casinos helped it rally 7.5%.
- Another stretch of more minor econ data (“2nd Quarter Labor Productivity,” “Survey of Mortgage Applications”)
- The Treasury auctions off more 10-year Treasuries (US government bonds)
- China reports consumer and producer prices (a measure of inflation)
- Earnings: News Corp, Ralph Lauren, Macy’s
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