Benchmarks settled in the green on Tuesday banking on
encouraging housing data and upbeat corporate earnings results.
Investors were encouraged by strong existing home sales data that
hit the highest level since Oct 2013. Earnings results from
Chipotle Mexican Grill, Comcast and Verizon Communications were
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) advanced almost 0.4% to
finish at 17,113.54. The Standard & Poor 500 (S&P 500) rose
0.5% to 1,983.53. The S&P 500 touched an intraday record high
of 1,986. The tech-laden Nasdaq Composite Index closed at 4,456.02;
gaining 0.7%. The fear-gauge CBOE Volatility Index (VIX) dropped
almost 4.5% to settle at 12.24. Total volume for the day was
roughly 5.05 billion shares, lower than this month's average of
5.56 billion. Advancers outpaced declining stocks on the NYSE.
For 66% stocks that advanced, 30% declined.
The National Association of Realtors reported existing home sales
rose 2.6% to a seasonally adjusted annual rate of 5.04 million in
June from May's upwardly-revised figure of 4.91 million. This was
also more than the consensus estimate of 4.98 million. Existing
home sales rose for the third consecutive month in June, touching
the highest level since Oct 2013.
The SPDR S&P Homebuilders (XHB) advanced 1.3%, the biggest
gainer among the S&P 500 sectors. Key housing stocks from the
sector such as DR Horton Inc. (
), Toll Brothers Inc. (
), PulteGroup, Inc. (
), Lennar Corp. (
) and KB Home (
) increased 1.9%, 0.7%, 1.1%, 1.3% and 1.9%, respectively.
Separately, the US Bureau of Labor Statistics reported Consumer
Price Index for all Urban Consumers (CPI-U) improved 0.3% in June
following a gain of 0.4% in May. The rise in consumer price June
was in-line with the consensus estimate. The rise in consumer
prices was driven primarily by an increase in cost of gasoline. The
gasoline index rose 3.3% in June, accounting for two-third of the
rise in overall June prices.
The day's better-than-expected earnings results also had a positive
impact on the benchmarks. Shares of Chipotle Mexican Grill, Inc. (
) surged 11.8%, making it the S&P 500's biggest percentage
gainer, a day after the company reported better-than-expected
earnings results. After the closing bell on Monday, Chipotle
Mexican Grill posted second quarter 2014 earnings per share of
$3.50, well above the Zacks Consensus Estimate of $3.05. Earnings
also increased 24.1% year over year.
Comcast Corporation's (
) second-quarter adjusted earnings per share of 75 cents beat the
Zacks Consensus Estimate of 72 cents. The company's net earnings
outpaced the Zacks Consensus Estimate on the back of a 4.5%
year-over-year rise in average revenue per user (ARPU) per month to
$137.24. Verizon Communications Inc. (
) reported second-quarter 2014 adjusted earnings of 91 cents per
share, beating the Zacks Consensus Estimate by a penny. Shares of
Comcast and Verizon Communications gained 1.5% and 0.6%,
Netflix, Inc. (
) reported second-quarter 2014 earnings of $1.15 per share, beating
the Zacks Consensus Estimate by a penny. However, shares of
Netflix dropped 4.6%.
On the other hand, quarterly results from McDonald's Corp. (
) and The Coca-Cola Company (
) were discouraging. McDonald's reported adjusted earnings of $1.40
per share in the second quarter of 2014, which missed the Zacks
Consensus Estimate of $1.43. Coca-Cola posted second quarter
revenues that declined 1% year over year to $12.57 billion and
missed the Zacks Consensus Estimate of $12.85 billion. Shares of
McDonald's and Coca-Cola declined 1.3% and 2.9%, respectively.
According to FactSet Research Systems Inc. (
), 116 companies have reported earnings till the close of Tuesday's
trading session, out of which 93 have beaten expectations.
Separately, shares of Herbalife Ltd. (
) jumped 25.5%; its biggest one-day percentage gain after Bill
Ackman's accusation against the company fell flat. On Monday, Bill
Ackman told CNBC that he will provide evidence on Tuesday that
Herbalife is an "incredible fraud".
Meanwhile, investors kept an eye on the latest developments
related to Malaysian Airline MH17 that was shot down near the
Ukraine-Russian border last Thursday. Pro-Russian separatists
agreed to hand over the black boxes from the Malaysian jet.
Meanwhile, Israel continued its ground offensive along the Gaza
strip and said they would not announce a cease-fire despite
repeated appeals from international communities. On Monday,
President Obama had sent U.S. Secretary of State John Kerry to
Cairo to call for a truce between Israel and Hamas militants.
Coming back to domestic events, 8 out of 10 sectors of the
S&P 500 ended in the green. The Health Care Select Sector SPDR
(XLV) advanced 0.9%, the second-highest among the S&P 500
sectors. Key stocks from the sector such as Johnson & Johnson (
), Pfizer Inc. (
), Merck & Co. Inc. (
), Gilead Sciences Inc. (
) and AbbVie Inc. (
) gained 1.2%, 0.5%, 0.7%, 0.5% and 0.1%, respectively.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
D R HORTON INC (DHI): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
LENNAR CORP -A (LEN): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
CHIPOTLE MEXICN (CMG): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
FACTSET RESH (FDS): Free Stock Analysis Report
HERBALIFE LTD (HLF): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
MERCK & CO INC (MRK): Free Stock Analysis
To read this article on Zacks.com click here.