Disappointing results from Caterpillar and AT&T
overshadowed positive home sales data during yesterday's trading
session, pushing the Dow Jones and the S&P 500 into the red.
However, the Nasdaq, buoyed by Apple's better-than-expected
results, finished in the green. On the international front, the
flash HSBC/Markit Purchasing Managers' Index for China came in
below expectations. The Euro Zone region finally received
encouraging news, following an increase in consumer confidence
and private factory output. Of the top ten S&P 500 industry
groups, the technology sector was the sole gainer.
For a look at the issues currently facing the markets, make
sure to read today's
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) slipped 0.2% to close
the day at 15,542.24. The S&P 500 fell 0.4% to finish
yesterday's trading session at 1,685.94. The tech-laden Nasdaq
Composite Index gained 0.01% to end at 3,579.60. The fear-gauge
CBOE Volatility Index (VIX) jumped 4.1% to settle at 13.18.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.2 billion shares, below
2013's average of 6.4 billion shares. Declining stocks
outnumbered the advancers. For the 23% that advanced, 74%
The Dow and the S&P 500 were pulled down into negative
territory following weaker-than-expected results from Caterpillar
and AT&T. Shares of Caterpillar Inc. (NYSE:
) declined 2.4% after the company reported low earnings and
revenue. Earnings of the company came in at $1.45 per share, 43%
below estimates. Revenues of the company declined to $14.6
billion compared to previous year's figure of $17.4 billion. The
company said it might witness further revenue decline in the
range of $1.5 billion - $2 billion during the current financial
year. The company also reduced its guidance. The company expects
a profit of $6.50 a share below than the Street's estimates of
$6.83 a share. This is also well below its previously estimated
figure of $7 a share. In revenue terms, sales of the company are
expected to be in the range of $56 billion and $58 billion.
Shares of AT&T Inc. (NYSE:
) dropped 1.1% after its revenue topped the Street's estimates
but missed out on earnings. Revenues of the company were recorded
at $32.08 billion, better than the Street's estimates of $31.81
billion. However, earnings of the company missed estimates by a
cent. This quarter witnessed an increase of 550,000 in the
contract customer-base. This figure is better than previous
year's figure of 320,000 and expectations of 500,000.
On the positive side, the Nasdaq managed to post gains after
the technology bellwether Apple reported better-than-expected
results. Shares of Apple Inc. (NASDAQ:
) increased 5% after the company's topline results came in better
than the Street's estimates. Net income of the company dropped
22% to $6.9 billion. Revenues of the company increased marginally
year over year to $35.3 billion. Sales of iPhones increased 20%
to 31.2 million while sales of iPads and Macs declined. Sales of
iPads dropped to 14.6 million from the year-ago figure of 17
million. Sales of Macs witnessed a decline of 5% to 3.8 million.
Gross margin of the company came in at 36.9%, down from 42.8%
witnessed last year. Apple expects to garner revenues in the
range of $34 billion and $37 billion for the last quarter.
Shares of Ford Motor Company (NYSE:
) gained 2.5% after it posted better-than-expected results and
raised its guidance for the year. Revenues of the company came in
at $38.1 billion, 14% higher than the year-ago period and 9%
higher than the Street's estimate. The company garnered profits
of $177 million in Asia, propelled by a 47% growth in vehicle
sales in China during the past six months. However, it
experienced losses of $348 million in Europe. For the full year,
Ford expects a loss of $1.8 billion compared to $2 billion a year
ago in Europe.
On the home front, U.S. home sales data for June came in
497,000 units. This is well above the consensus estimate of
482,000 units and previous year's figure of 360,000 units.
These are the best figures recorded since May 2008. Compared to
the year-ago figure, single family homes have increased 38.1%,
reflecting the largest increase in past 20 years.
Disappointing economic figures from China continue to raise
questions about future growth. The flash HSBC/Markit Purchasing
Managers' Index came in at 47.7 in July, lower than June's figure
of 48.2. This is also the third consecutive decrease on a month
over month basis. The barometer measuring employment slipped to
47.3, the weakest level in more than four years. The new orders
sub-index and output came in below 50 and declined to a 11 month
and a 10 month low, respectively. These figures come directly
after China recorded a quarterly growth rate of 7.5%.
Meanwhile, Japan's export figures substantiate the fact that
China's economy is slowing. Export figures till June increased
7.4%. Exports now pose a challenge for Prime Minister Shinzo Abe.
Weak export figures refute the idea that a weaker yen will boost
exports. Exports to Japan's major export partners, China and the
U.S. have witnessed a decline. Exports to China grew at a tepid
pace at 4.8% in June, well below the annual increase of 8.3% in
May. Exports to the U.S. grew 14.6%, below previous month's
figure of 16.3%. Imports of the country increased 11.8%. Due to
these factors, the trade deficit of the country has increased to
180.8 billion yen compared to the median estimate of 160.6
Meanwhile, Euro Zone's private factories' output increased
unexpectedly . The Markit's flash Eurozone Composite PMI
increased to 50.4 in July. This was also the first time when the
PMI came in above the 50-level in the past 18 months. The flash
manufacturing PMI came in at 50.1 while the output index was
52.3.The business expectations index increased to 56.9.
Of the top ten S&P 500 industry groups, technology stocks
were the only gainers. The Technology SPDR (XLK) gained 0.6%.
Stocks such as Microsoft Corporation (NASDAQ:
), Yahoo! Inc. (NASDAQ:
), International Business Machines Corp. (NYSE:
) and Intel Corporation (NASDAQ:
) gained 0.4%, 1.8%, 0.8% and 0.8%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
FORD MOTOR CO (F): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis
INTEL CORP (INTC): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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