U.S. stocks finished the regular trading session well off the lows, but still in negative fashion amid a blank economic calendar, mixed earnings releases and lingering political and monetary policy uncertainty. The Street welcomed some upbeat results from Dow member Visa and Honeywell, while earnings releases from Dow components Microsoft and GE received some scrutiny. Treasuries and gold were higher. The U.S. dollar and crude oil prices moved to the downside. Overseas, European equities traded lower as the euro extended its recent rally.
The Dow Jones Industrial Average (DJIA) lost 32 points (0.1%) to 21,580, the S&P 500 Index was 1 point lower at 2,473, and the NASDAQ Composite decreased 2 points to 6,388. In moderate volume, 834 million shares were traded on the NYSE and 1.8 billion shares changed hands on the NASDAQ. WTI crude oil declined $1.15 to $45.77 per barrel and wholesale gasoline was $0.05 lower at $1.56 per gallon. Elsewhere, the Bloomberg gold spot price increased $9.66 to $1,254.15 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% lower at 93.94. Markets were mixed for the week, as the DJIA decreased 0.3%, the S&P 500 Index advanced 0.5% and the NASDAQ Composite gained 1.2%.
Dow member Visa Inc. (NYSE:V $100) reported fiscal Q3 earnings-per-share (EPS) of $0.86, above the $0.81 FactSet estimate, as revenues rose 26.0% year-over-year (y/y) to $4.6 billion, topping the projected $4.4 billion. The company said its results reflect strong growth in payments volume, cross-border volume, and processed transactions, which were powered by economic tailwinds in the U.S. and globally. Shares traded higher.
Dow component Microsoft Corp. (NASDAQ:MSFT $74) posted fiscal Q4 EPS of $0.83, or $0.98 ex-items, versus the projected $0.71, with revenues increasing 9.1% y/y to $24.7 billion, above the expected $24.3 billion. The company said innovation across its cloud platforms drove strong results this quarter. MSFT finished lower.
Dow member General Electric Co. (NYSE:GE $26) announced Q2 profits of $0.15 per share, or $0.28 ex-items, compared to the expected $0.25, as revenues declined 12.0% y/y to $29.6 billion, topping the forecasted $29.1 billion. GE issued full-year EPS guidance that had a midpoint above expectations. Shares saw pressure as analysts expressed some concern about the company's revenue decline and its lack of a 2018 outlook as it transitions to new Chief Executive Officer John Flannery in August.
eBay Inc. (NASDAQ:EBAY $37) reported Q2 profits of $0.02 per share, or $0.45 ex-items, versus the $0.45 estimate, as revenues grew 4.0% y/y to $2.3 billion, roughly matching expectations. EBAY issued mixed Q3 guidance and reaffirmed its full-year outlook. Additionally, the company approved a $3.0 billion addition to its share repurchase program. Shares closed lower.
Honeywell International Inc. (NYSE:HON $136) posted Q2 EPS of $1.80, versus the projected $1.78, with revenues rising 1.0% y/y to $10.1 billion, exceeding the estimated $9.9 billion. HON raised the lower end of its full-year earnings outlook and increased its revenue forecast. Shares traded higher.
Bond yields continue to slip
Treasuries finished higher and the economic calendar was void of any major releases today. The yield on the 2-year note dipped 1 basis point (bp) to 1.34%, while the yields on the 10-year note and the 30-year bond declined 2 bps to 2.24% and 2.81%, respectively.
Bond yields and the U.S. dollar slipped this week amid heightened political uncertainty and mixed economic data, while the markets grappled with recent dovish commentary from Fed Chair Janet Yellen and some confusion toward the European Central Bank after it left its monetary policy stance unchanged.
The stock market's major indexes were mixed this week but remain near record highs and the NASDAQ has posted a string of gains lasting two weeks with the technology sector regaining some of its market-leading prowess, while the energy sector slipped as crude oil prices gave back some of a recent run. Healthcare issues finished with a solid weekly gain in the wake of the failed Senate healthcare reform bid and the pullback in bond yields weighed on financials, along with Dow member Goldman Sachs Group Inc's(NYSE:GS $221) disappointing earnings report and despite upbeat earnings results from Morgan Stanley(NYSE:MS $46). Netflix Inc. (NASDAQ:NFLX $185) was a standout winner after posting blowout results. Thus far, of the 96 companies in the S&P 500 that have reported profit results, about 77% have bested revenue forecasts and approximately 81% have exceeded earnings expectations, per data compiled by Bloomberg.
This week's economic calendar will continue to share the stage with ratcheted-up earnings season, but will deliver some key reports that may command attention. Existing and new home sales, Markit's business activity reports, and Consumer Confidence will precede the mid-week Fed monetary policy decision. However, with no updated economic projections and press conference, coupled with the recently perceived change in tone, the Central Bank is not expected to make any policy changes. The second half of the week will remain robust, with the first look (of three) at Q2 GDP, preliminary durable goods orders and the final University of Michigan Consumer Sentiment Index.
Europe lower as euro extends rally after ECB decision, Asia mixed amid earnings
European equities finished lower in late-day action, with the euro adding to yesterday's rally that came as the European Central Bank (ECB) left its monetary policy unchanged and President Mario Draghi noted that talks of tapering its stimulus measures will begin in the fall. However, bond yields remained under pressure as Draghi also appeared to offer a more dovish tone than the markets had anticipated, fostering some confusion.
Stocks in Asia finished mixed as the markets grappled with heightened political uncertainty in the U.S., mixed earnings results and unchanged monetary policy decisions yesterday from the Bank of Japan and European Central Bank, with the latter fostering some confusion in its statement. Japanese equities declined as the yen gained ground and Australian securities fell amid some dovish comments from a Reserve Bank of Australia member and weakness in basic materials issues. Shares trading in Hong Kong and mainland China dipped as traders digested recent upbeat economic data and regulatory concerns persisted. However, Indian stocks rose, remaining near all-time highs, and South Korean equities extended a record high winning streak.
International reports of note for next week include: Australia—CPI, PPI and trade data. Japan—Leading Index, jobless rate, household spending, CPI, PPI and retail sales. China—leading indicators and industrial profits. Eurozone—Markit Services and Manufacturing PMIs and consumer confidence and German CPI, import prices and Ifo business climate survey. U.K.—Q2 GDP, Index of Services and consumer confidence.