Personal Income rose 0.5% in June, but Spending was flat. S&P / Case Shiller Home Price Index rose 2.2% in May, and was down 0.7% year over year. The Chicago PMI came in at 53.3 in July. The Conference Board reported that their Consumer Confidence Index rose to 65.9 in July, above expectations, but still well below the 90 to 120 neutral range. The Dow Jones Industrial Average traded up slightly to 13,082.66 then down to 13,022.41. The NASDAQ traded up to 2959.62 then down to 2939.95.
Asian stocks continued to rally on Tuesday. The Nikkei 225 ended the day at 8,695 – up 0.69%. The Hang Seng ended the day at 19,797 – up 1.08%. European exchanges opened mixed on Tuesday, then closed lower. The FTSE 100 ended the day at 5,635 – down 1.02%. The DAX ended the day at 6,772 – down 0.03%. The CAC 40 ended the day at 3,292 – down 0.87%. The yield on the 10-Year US Treasury note declined from 1.522% to 1.465%.
Gold traded rallied from $1619.0 the Troy ounce to $1627.5, then declined to $1610.0, with the 50-day simple moving average rising to $1592.3 and 200-day simple moving average $1656.9. Crude oil rallied from $89.34 per barrel to $90.30 then declined to $87.52 with the 50-day simple moving average at $85.99. The euro versus the dollar traded up from 1.2251 to 1.2328.
Energy
BP (BP) reported a Q2 net loss of $1.38 billion versus a profit of $5.7 billion a year ago after taking $5 billion in writedowns on key US assets. BP expects its earnings momentum to build in 2013. Valero (VLO) beat Q2 EPS estimates by six cents with better than expected revenue. Marathon Petroleum (MPC) beat Q2 EPS estimates by seven cents with better than expected revenue. Cobalt International Energy (CIE) missed Q2 EPS estimates by two cents. Anadarko (APC) beat Q2 EPS estimates by eight cents with a miss on the revenue line. Dow components – Chevron (CVX) up 0.18%, Exxon Mobil (XOM) down 0.58%.
Energy Select Sector SPDR (XLE) was trading at $69.86 at 3:30 PM on Tuesday, down 0.80% on the day – up 1.06% year-to-date.
Materials
U.S. Steel (X) beat Q2 EPS estimates by 21 cents with better than expected revenue. Archer Daniels Midland (ADM) missed Q2 EPS estimates by 23 cents with better than expected revenue. Eastman Chemical (EMN) beat Q2 earnings estimates on the bottom line but missed at the top on a decline in total revenue. The company reaffirmed its FY12 forecast. Dow Chemical (DOW) has been downgraded to Hold from Buy at Argus. Dow Components – Alcoa (AA) down 0.12%, DuPont (DD) down 0.06%.
The Materials Select Sector SPDR (XLB) was trading at $34.95 at 3:30 PM on Tuesday, down 0.37% on the day – up 4.33% year-to-date.
Industrials
Ford (F) retirees are receiving letters from the automaker outlining lump-sum pension buyout offers. The company wants former employees to take deals to help it close the $15.4 billion gap in its pension liability. Tyco (TYC) reported that their FQ3 net profit fell 33% to $242 million partly hurt by separation costs of $61 million and the strong dollar. The company’s plan to split itself into three companies remains on track to be completed by the end of September. Cummins (CMI) rebounded 2.8% pre-market as earnings were not as bad as feared by the companies weak guidance reported on July 10. North American construction demand offsetted lower sales to China, Brazil, and N.A. energy markets. Goodyear Tire & Rubber’s (GT) reported tire sales declined 1.9% year over year to 15.4 million. TRW Automotive (TRW) beat Q2 EPS estimates by eighteen cents with better than expected revenue. Foster Wheeler (FWLT) missed Q2 EPS estimates by ten cents with a miss on the revenue line. Dow components – Boeing Co (BA) down 0.88%, Caterpillar (CAT) down 0.81%, General Electric (GE) down 0.10%, 3M Company (MMM) down 0.12%, United Technologies (UTX) down 0.53%.
The Industrial Select Sector SPDR (XLI) was trading at $35.92 at 3:30 PM on Tuesday, up 0.03% on the day – up 6.43% year-to-date.
Consumer Discretionary
British regulators are showing resistance to a planned deal between InterContinental Hotels Group (IHG) and online travel sites Expedia (EXPE) and Booking.com because it infringes competition law. The companies have three months to respond before making a final decision on the viability of the deal. Discovery Communications (DISCA) beat Q2 EPS estimates by six cents with revenue up 7% year over year. Coach’s (COH) reported that their Q2 comparable US store sales rose just 1.7%, far below the Q1 mark of 6.7% and below consensus estimates The luxury retailer sees a muted consumer environment in North America for FY13. Dow Components – Disney (DIS) down 1.24%, Home Depot down 1.65%, McDonalds (MCD) up 0.09%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $43.69 at 3:30 PM on Tuesday, down 0.95% on the day – up 11.97% year-to-date.
Consumer Staples
Anheuser-Busch InBev’s (BUD) reported revenue below consensus as US results were a drag, with volume down 1.8% and marketing costs, which increased due to the launches of Bud Light Platinum and Bud Light Lime Lime-A-Rita. Dow components – Kraft (KFT) up 0.25%, Coca Cola (KO) down 0.43%, Procter & Gamble (PG) down 0.75%, Wal-Mart (WMT) down 0.35%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $35.73 at 3:30 PM on Tuesday, down 0.17% on the day – up 9.97% year-to-date.
Health Care
Pfizer (PFE) topped expectations with Q2 earnings of 62 cents per share on revenue of $15.1 billion. Geron (GERN) beat Q2 EPS estimates by a penny, as revenue declined 71.9% year over year. DENTSPLY International (XRAY) beat Q2 EPS estimates by a nickel with better than expected revenue. Humana (HUM) missed Q2 EPS estimates Monday after the close and shares declined 11.9% in after market trading. Dow Components – Johnson & Johnson (JNJ) down 0.11%, Merck (MRK) up 0.12%, Pfizer (PFE) up 3.10%.
The Health Care Select Sector SPDR (XLV) was trading at $38.51 at 3:30 PM on Tuesday, down 0.31% on the day – up 11.01% year-to-date.
Financial
Deutsche Bank’s (DB) reported Q2 net profit that was half the year ago level as revenue slid 6%. Earnings were hurt by a 63% plunge in pretax profit at its investment banking unit, where trading income and issuing securities fell amid the eurozone debt crisis. UBS (UBS) will start legal proceedings against Nasdaq OMX Group (NDAQ) after the bank’s Q2 results were hurt by Facebook’s botched IPO. Having recently settled with U.S. merchants over tariffs, Visa (V) is being probed by the EU, where competition regulators have charged that Visa’s cross-border credit-card fees and domestic charges in eight countries was hurting bank competition, inflating costs for merchants, and ultimately increasing consumer prices. Hudson City Bancorp (HCBK) – Guggenheim has upgraded HCBK to Buy from Neutral expecting earnings to bottom in the third quarter. Dow Components – American Express (AXP) down 1.37%, Bank of America (BAC) down 0.34%, JP Morgan Chase (JPM) down 0.30%, Travelers (TRV) down 1.04%.
The Financial Select Sector SPDR (XLF) was trading at $14.68 at 3:30 PM on Tuesday, down 0.34% on the day – up 12.92% year-to-date.
Information Technology
Seagate’s (STX) reported that their FQ4 net profit jumped to a record $1.01 billion from $119 million a year ago as revenue increased 57% to $4.48 billion. Revenue missed expectations and Seagate warned that FQ1 revenue would fall 11% to $4 billion due to slowing PC sales and its rivals’ faster-than-expected recovery from the Thai floods. Seagate shares declined 7.5% premarket. Vishay Intertechnology (VSH) missed Q2 EPS estimates by two cents with a miss on the revenue line. Facebook (FB) is trading at new post-IPO lows, but has been upgraded to Market Perform from Underperform by Sanford Bernstein with a price target trimmed by $2 to $23. Dow Components – Cisco Systems (CSCO) up 0.74%, Hewlett-Packard (HPQ) down 0.36%, IBM (IBM) down 0.03%, Intel Corp (INTC) flat, Microsoft (MSFT) down 0.72%.
The Technology Select Sector SPDR (XLK) was trading at $29.33 at 3:30 PM on Tuesday, up 0.51% on the day – up 15.25% year-to-date.
Telecommunication Services
Sprint (S) – Encouraged by iPhone customer retention, Atlantic Equities upgraded the stock to Overweight from Neutral raising its price target to $6 from $2.60. Dow Components – AT&T (T) up 1.46%, Verizon (VZ) up 0.86%.
The NASDAQ Telecommunications Index (IXTC) was trading at $178.69 at 3:30 PM on Tuesday, up 0.48% on the day – down 9.26% year-to-date.
Utilities
Public Service Enterprise Group (PEG) missed Q2 EPS estimates by two cents. Entergy (ETR) beat Q2 EPS estimates by a penny with a miss on the revenue line. Exelon (EXC) – The nuclear power play has been initiated with an Equal-Weight rating at Morgan Stanley. Dominion Resources (D) down 0.77%, Edison International (EIX) down 1.05%, First Energy (FE) down 0.92%, PG&E Corp (PCG) down 0.49%, Southern Company (SO) down 0.24%.
The Utilities Select Sector SPDR (XLU) was trading at $37.98 at 3:30 PM on Tuesday, down 0.65% on the day – up 5.56% year-to-date.
STOCKS: CVX, XOM, BP, VLO, MPC, CEI, APC, AA, DD, X, ADM, EMN, DOW, BA, CAT, GE, MMM, UTX, F, TYC, CMI, GT, TRW, FWLT, DIS, HD, MCD, IHG, EXPE, DISCA, COH, KFT, KO, PG, WMT, BUD, JNJ, MRK, PFE, GERN, XRAY, HUM, AXP, BAC, JPM, TRV, DB, UBS, NDAQ, V, HCBK, CSCO, HPQ, IBM, INTC, MSFT, STX, VSH, FB, T, VZ, S, D, EIX, FE, PCG, SO, PEG, ETR, EXC
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