Stock Market News For July 22, 2016

Benchmarks closed lower on Thursday, dragged down by declines in transportation and energy stocks. Airlines were the worst performers in the S&P 500, led by decline in Southwest Airlines’ shares after the company warned about revenue slow down. On the other hand, a glut of gasoline continued to weigh on oil prices, which adversely affected energy companies. The S&P 500 retreated from Wednesday’s record close, while the Dow also snapped its seven straight session all-time record winning streak to end in the red. The blue-chip index took a beating as Intel’s shares tanked on slower revenue growth.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) declined 0.4% to close at 18,517.23. The S&P 500 also dropped 0.4% to close at 2,165.17. The tech-laden Nasdaq Composite Index closed at 5,073.90, decreasing 0.3%. The fear-gauge CBOE Volatility Index (VIX) soared 7.1% to settle at 12.60. A total of around 3.4 billion shares were traded on NYSE on Thursday. Decliners outpaced advancing stocks on the NYSE. For 56% stocks that declined, 41% advanced.

Southwest Airlines Co.’s (LUV) second quarter earnings per share of $1.19 fell short of the Zacks Consensus Estimate of $1.22. However, revenues of $5,384 million edged past the Zacks Consensus Estimate of $5,372 million. But, Chief Executive Gary Kelly warned that a challenging fare environment might have a negative on revenues in the current quarter. During the said quarter, revenues are expected to fall 3% to 4%. Shares of Southwest Airlines plunged 11.2%.

Other airline stocks including Delta Air Lines (NYSE:DAL), Inc. (DAL), United Continental Holdings Inc (UAL) and American Airlines Group Inc (AAL) to name a few, dropped 4.2%, 3.4% and 2.7%, respectively. The broader Industrials Select Sector SPDR (XLI) decreased 1% and was the biggest loser among S&P 500 sectors.

Oil prices fell yesterday on rising gasoline stockpiles. According to government data, gasoline inventory grew by 911,000 barrels last week. Such a glut of gasoline came in the middle of high demand season. WTI crude and Brent crude decreased 2.2% and 2.1% to $44.75 per barrel and $46.20 a barrel, respectively.

Fall in oil prices weighed on energy shares. Companies such as Exxon Mobil Corporation (NYSE:XOM) (XOM), Chevron Corporation (NYSE:CVX) (CVX), Kinder Morgan (NYSE:KMI), Inc. (KMI) and Halliburton Company (NYSE:HAL) (HAL) declined 0.1%, 0.2%, 5.2% and 1.7%, respectively. The Energy Select Sector SPDR (XLE (NYSE:XLE)) dropped 1%, the second highest among the S&P 500 sectors.

Among major earnings reports, Intel Corporation (NASDAQ:INTC) (INTC) posted second quarter earnings per share of $0.59 per share, surpassing the Zacks Consensus Estimate of $0.52. Whereas, revenues of $13.53 billion came in-line with the Zacks Consensus Estimate.

But, revenues in its key data center group of $4 billion turned out to be lower than the expected figure of $4.16 billion, which eventually dragged the shares of the semiconductor giant down almost 4%. Decline in Intel’s shares weighed on the Dow.

On the economic front, sales of existing homes rose 1.1% in June from May to a seasonally adjusted rate of 5.57 million, its highest level since Feb 2007, according to the National Association of Realtors. Such strong sales of previously owned homes came in contrast to the consensus estimate of sales falling to 5.46 million from May’s figure of 5.51 million. Additionally, shares of the first time buyers touched 33% in June, the highest level since July 2012.

Separately, initial claims for the week ending July 16 came in at 253,000, a decrease of 1,000 from the prior week. Jobless claims were also less than the consensus estimate of 260,000. Its 4-week moving average was 257,750 that fell from previous week’s unrevised average of 259,000.

SOUTHWEST AIR (LUV): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

AMER AIRLINES (AAL): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

KINDER MORGAN (KMI): Free Stock Analysis Report

HALLIBURTON CO (HAL): Free Stock Analysis Report

INTEL CORP (INTC): Free Stock Analysis Report

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