Lukewarm batch of earnings reports impact stocks
US stocks ended the Tuesday affair on a mixed note on 19 July 2016, responding to a lukewarm batch of earnings reports and a negative bias in global bourses. Today's trade also featured a downturn in oil futures and strengthening in the dollar. The Dow Jones Industrial Average extended its winning streak to eight sessions and finished at a record high close for a sixth straight day on Tuesday even as the broader market retreated on disappointing quarterly results from Netflix.
The Dow Industrials gained 25.96 points, or 0.1%, to close at 18,559.01. The S&P 500 edged down 3.11 points, or 0.1%, to end at 2,163.78. The Nasdaq Composite shed 19.41 points, or 0.4%, to finish at 5,036.37.
Equity indices began the day on a lower note as global markets tilted to the downside. European indices led the losses as disappointing earnings results and a below-consensus reading of Germany's July ZEW Economic Sentiment Survey (-6.8; consensus: 9.0) weighed. Additionally, the International Monetary Fund added to the negative tone when it cut the United Kingdom's 2016 projected growth rate to 1.7% (from 1.9%). The organization also trimmed its global growth estimate for the year to 3.4% (from 3.5%).
Today's economic data was limited to Housing Starts and Building Permits for June. Housing starts jumped 4.8% to a seasonally adjusted annual rate of 1.189 million units (consensus 1.165 million) in June on the heels of a downwardly revised 1.135 million (from 1.164 million) in May. Building permits increased to a seasonally adjusted annual rate of 1.153 million (consensus 1.150 million) while the prior month saw a small downward revision to 1.136 million from 1.138 million. By and large, then, the starts and permits data for June were largely as expected when factoring for the downward revisions to May.
In Europe, stocks were mostly lower. The German ZEW economic sentiment survey fell to its lowest since 2012 on Brexit fears, according to Dow Jones Newswires. The Stoxx Europe 600 index was down around 0.4%.
McDonald's and Johnson & Johnson offset declines in Microsoft and Goldman Sachs Group shares. Johnson & Johnson advanced 1.7% after profit and sales beat a raised outlook.
Shares of Netflix sank 13%, their worst percentage drop in a single day since October 2014, after growth for the streaming service fell short of expectations.
IBM slipped 0.2% after the tech giant reported better-than-expected quarterly earnings and revenue. Shares of Yahoo gained 0.6% despite the internet company's adjusted earnings falling short of Wall Street expectations.
Crude oil futures fell on Tuesday, 19 July 2016 with the U.S. benchmark settling at a 10-week low. Traders fretted over ample inventories of crude and petroleum products and the potential for a slowdown in energy demand on the back of a lower global economic outlook from the International Monetary Fund.
August West Texas Intermediate crude fell 59 cents, or 1.3%, to settle at $44.65 a barrel on the New York Mercantile Exchange, after losing 1.6% a day earlier. The August WTI contract expires at Wednesday's settlement, which often fuels trading volatility. September Brent crude on London's ICE Futures exchange fell 30 cents, or 0.6%, to end at $46.66 a barrel.
Oil futures fell Monday after it was confirmed the attempted coup in Turkey over the weekend didn't impede the flow of oil and natural gas. Any supply disruptions in the currently well-supplied market would have been taken as welcome relief to the current glut.
Precious metal prices ended in a mixed mode on Tuesday, 19 July 2016. While gold prices ended higher, silver prices slipped. Gold futures tiptoed higher in subdued action notching their best settlement in almost a week as some a pull back in U.S. stocks helped to support haven demand. Gold has generally maintained its uptrend, but has been tracking stocks recently. Equities were trading mostly lower Tuesday by the time gold prices settled. Prices ended in a mixed fashion amidst lower global economic outlook from the International Monetary Fund and stronger dollar.
Gold staged a modest afternoon rally, consolidating near its afternoon highs despite notable strength in the dollar index. August gold rose $3, or 0.2%, to settle $1,332.30 an ouncethe highest settlement since last Wednesday. September silver fell 6.8 cents, or 0.3%, to $20.01 an ounce.
The Treasury complex settled near its session high as the yield on the 10-yr note slipped three basis points to 1.56%.
Today's trading volume was below the recent average as fewer than 736 million shares changed hands on the NYSE floor.
Tomorrow's economic data will be limited to the 7:00 ET release of the weekly MBA Mortgage Index.
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