Dow Ends Flat as Earnings Season Ramps Up

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"It was an incredibly calm day without a lot of movement," said Senior Equity Analyst Joe Bell, CMT. "McDonald's ( MCD ) reported worse-than-expected earnings, but did little to put a damper on the market. Financial stocks continued their upward momentum, as many banking stocks have beaten analyst expectations this earnings season." As a result, the Dow Jones Industrial Average (DJI) ended up closing modestly higher.

Continue reading for more on today's market, including :

  • Schaeffer's Senior Trading Analyst Bryan Sapp opines that "all eyes are on the round-number 1,700 level" for the S&P 500 Index (SPX) and takes a closer look at Apple ( AAPL ).
  • The latest installment of The Week Ahead includes upcoming events for Adobe Systems ( ADBE ) and D.R. Horton ( DHI ).
  • Speculators kept up their bullish devotion to Molycorp ( MCP ), despite the stock's year-to-date decline.
plus...
    Existing home sales unexpectedly dropped, McDonald's ( MCD ) hinted at weak full-year guidance, and Apple ( AAPL ) scored some upbeat analyst attention on earnings eve.

The Dow Jones Industrial Average (DJI - 15,545.55) spent time on both sides of breakeven today, as Wall Street digested the latest batch of earnings reports. At one point, the index climbed to an intraday high of 15,576.21, but erased most of its gains to finish just 1.8 points, or 0.01%, higher. Microsoft (MSFT) led the blue-chip barometer's 18 advancers with an increase of 1.9%, while McDonald's ( MCD ) paced the 12 decliners with a loss of 2.7%.

The S&P 500 Index (SPX - 1,695.53) tagged a new all-time intraday high of 1,697.61, and finished the session just shy of this milestone with a gain of 3.4 points, or 0.2%. Meanwhile, the Nasdaq Composite (COMP - 3,600.39) fared the best of its peers, adding 12.8 points, or 0.4%.

The CBOE Market Volatility Index (VIX - 12.29) hovered in negative territory for most of the day to finish 0.3 point, or 2%, lower -- marking the lowest close since mid-April.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"We are in the heart of earnings season, with a ton of companies reporting this week," continued Bell. "As alluded to earlier, financials have stood out above the rest during the first few weeks of earnings season. With only about 20% of the companies reporting so far, we still have a long way to go."

3 Things to Know About Today's Market :

  • Existing home sales declined by 1.2% in June to an annual pace of 5.08 million units, according to the National Association of Realtors (NAR). However, although economists had expected an increase to 5.25 million, last month's figure was still the highest since November 2009. On a year-over-year basis, home resales were up 15.2%. (CNBC)
  • McDonald's ( MCD ) was in the negative spotlight today, following the release of its second-quarter earnings results . The popular burger chain reported a profit of $1.40 billion, or $1.38 per shares, south of analysts' estimates of $1.40 per share. Also, global same-restaurant sales are expected to hold steady in July. Adding insult to injury, CEO Don Thompson stated, "Based on recent sales trends, our results for the remainder of the year are expected to remain challenged." (Reuters)
  • Internet giant Yahoo! (YHOO) inked an agreement with Third Point LLC to repurchase 40 million shares of the hedge fund's common stock. Such a move will leave Third Point -- who had been a key shareholder -- with roughly 20 million shares, or less than 2%. The deal is a step closer toward YHOO's plan to buy back about $2 billion worth of its stock. (USA Today)

5 Stocks We Were Watching Today :

  1. Apple ( AAPL ) received a bullish brokerage note ahead of its turn in the earnings confessional post-close tomorrow.
  2. Weekly call buyers zeroed in on the SPDR Gold Trust (NYSEARCA:GLD) , as prices for the precious metal surged.
  3. Recent weakness on the charts may have triggered some negative analyst attention for Crocs (CROX) .
  4. One optimistic trader wagered on some long-term upside for Micron Technology (MU) by scooping up LEAPS calls.
  5. August call sellers bet on price stagnation for Advanced Micro Devices (AMD) over the next several weeks.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude oil futures were volatile today ahead of August expiration, and ended up finishing the session in the red. By the time the dust settled, August-dated oil was off $1.14, or 1.1%, to close at $106.91 per barrel.

Meanwhile, gold futures notched their largest daily advance since June 2012, buoyed by weakness in the greenback. By the closing bell, the August contract soared $43.10, or 3.3%, to end at $1,336 an ounce -- the malleable metal's highest finish in nearly a month.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: AAPL , ADBE , DHI , MCD , MCP

Schaeffer's Investment Research

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