“Stimulus, Schimulus – don’t cry Jennay, the Fed gotsta do something”
Dow: 13,058 (-0.88%) S&P 500: 1,402 (-0.81%)
Run out of Power Rangers popsicles? Kids will throw a temper tantrum. Ditto for investors (except over economic stimulus – not dessert). Yesterday’s release of the Federal Reserve “minutes” (details of the most recent central bank policy on July 31st) weighed on markets again today. More of the Fed’s members seem open stimulus that will boost the economy faster – but investors want definitive policy decisions and expressed their dissatisfaction by dropping the Dow 115 points for its biggest loss of the month. Material stocks led declines and Hewlett-Packard‘s headline earnings disappointed as economic data came in mixed with some key housing highlights.
Housing data impress, but jobless claims increase
Just like mama used to say, you just can’t have your ice cream cake and eat it too. Housing data impressed early today: The Commerce Department reported that “New Home Sales” rose in July for its 3rd increase in 4 months and the Federal Housing Finance Agency observed a larger-than-expected increase in June “Home Prices.” The housing market isn’t by any means fixed, but investors hope positive data shows it has at least bottomed-out on the road to recovery. On the flip side, the number of Americans filing for unemployment ticked up for the 2nd week in a row. Weekly jobless claims increased by 4,000 to 372,000, its highest level in a month – a sign of how the labor market is all-over-the-place. Fresh off all the talk yesterday about the Fed potentially enacting stimulus policy (like a 3rd round of quantitative easing, or QE3), investors are hoping disappointing employment data might prompt the central bank to juice up the economy.
Boeing just can’t get its 787 sales up, HP falls on poor PC sales
American jumbo jet manufacturer Boeing (BA) got a cancellation from the Australian airline Qantas for 35 new 787 jets scheduled to be delivered in 2014 (if Foster’s has taught us anything, it’s that Qantas is Australian for “F my life”). Boeing execs were not pleased to receive a letter saying, Sorry, we’re going to go ahead and cancel that $8.5 billion order. This new “787 Dreamliner” is Boeing’s biggest investment of the past decade, intended to upgrade the 747 as a more efficient and modern jet and potentially inspire another Airplane movie. After loads of delays, Boeing actually has already paid millions to airlines already in late delivery fees, so the 787 has been something of a disaster so far. Boeing execs in Washington are crossing their fingers that they will sell a few hundred more to make the hefty investment pay off, but the stock still fell 3.5% on the cancellation. Hewlett-Packard’s (HPQ) shares also dropped today as the 2nd PC maker this week reported poor earnings on falling PC sales – the 8% slam is an unwelcome slap in the face for new CEO Margaret Whitman.
Tomorrow:
- July Durable Goods Orders
- Over in Europe: UK 2nd quarter GDP, German Chancellor Angela Merkel meets with Greek Prime Minister Antonis Samaris in Berlin – will the Greeks get an extension on their bailout package?
- Second quarter earnings season reports: Madison Square Garden
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