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US FINANCIAL MARKET

U.S. Stocks Fluctuate as Microsoft Gain Offsets Sanctions

  • U.S. stocks fluctuated, after the Dow Jones Industrial Average closed at a record yesterday.
  • Microsoft gained 3 % after saying it will eliminate as many as 18,000 jobs.
  • UnitedHealth jumped 2.2 % as earnings topped forecasts.
  • SanDisk dropped 11 % after posting profit margins and sales forecasts that fell short of some analysts’ estimates.
  • The U.S. and European Union said more sanctions against Russia may follow after the most punitive sanctions so far over the unrest in Ukraine.
  • The U.S. Housing starts fell 9.3 % to an 893,000 annualized rate from a 985,000 pace in May that was weaker than initially estimated.
  • The Federal Reserve Bank of Philadelphia’s factory index increased to 23.9 in July. Readings greater than zero signal growth.

Microsoft Eliminating 18,000 Jobs as Nadella Streamlines

  • The restructuring, amounting to about 14 % of its workforce, includes 12,500 Nokia factory and professional positions.
  • The reductions will result in a pretax charge of $1.1 billion to $1.6 billion.
  • Microsoft will also shift the Nokia X, which uses Google’s Android, to the Windows Phone operating system in order to broaden its products in the cheaper smartphone category.

EBay Reports Second Quarter Results

  • Revenue increased 13% to $4.4 billion.
  • Earnings increased 9 % to $676 million.
  • PayPal net total payment volume grew 29% with Merchant Services volume up 35% and on-eBay volume up 13%.
  • PayPal’s revenue grew to $1.9 billion.
  • PayPal gained 4.0 million new active registered accounts to end the quarter at 152 million, up 15%.

PPG Reports Record Second Quarter Net Sales and Earnings

  • Second quarter net sales was $4.1 billion, up 5 % versus prior year, slightly below estimate.
  • Net income was $393 million, slightly above estimate.

Grainger Reports Results for the 2014 Second Quarter

  • Sales increased 5 % to $2.5 billion.
  • Operating earnings decreased 3 % to $341 million.
  • Both numbers were below average estimate.
  • The company’s gross profit margin for the quarter decreased 0.9 percentage point versus the prior year to 43.1 %.

Morgan Stanley profit more than doubles, beating estimates

  • Net income rose to $1.86 billion from $803 million.
  • Revenue rose 1 % to $8.61 billion.

Philip Morris Earnings Top Estimates on European Sales

  • The world’s largest publicly traded tobacco company’s net income fell 13 % to $1.85 billion from $2.12 billion a year earlier.
  • Revenue fell 1.5 % to $7.8 billion. That exceeded analysts’ $7.53 billion average estimate.

Danaher Reports Record Second Quarter 2014 Results

  • Net earnings increased 9% to $676.4 million, missed average estimate.
  • Revenues increased 5% to $5 billion, which also missed average estimate.

Yum Brands Profit Trails Some Estimates on Pizza Hut

  • Net income rose 19 % to $334 million from $281 million a year earlier.
  • Revenue gained 10 % to $3.2 billion, missing the $3.24 billion average estimate.

Boeing Buoyed at Show with $46 Billion in Day-Three Sales

  • Boeing escaped Airbus’s shadow on the third day of the Farnborough Air Show as an agreement to sell new 777X jets to Qatar Airways drove a $46 billion haul of orders and options.
  • The agreement nudged Boeing ahead of Airbus in announced sales at the biggest aviation expo, with about $63 billion to the European planemaker’s $61 billion.

 

US ECONOMY & POLITICS

Construction of New U.S. Homes Declines on Plunge in South

  • Housing starts fell 9.3 % to an 893,000 annualized rate from a 985,000 pace in May.
  • Construction slumped 29.6 % in the South to a 375,000 pace.
  • Construction of single-family houses declined 9 % to a 575,000 rate.
  • Work on multifamily homes, such as apartment buildings, fell 9.9 % to a 318,000 rate.
  • The average rate for a 30-year fixed mortgage was 4.15 in the week ended July 10.
  • The median selling price of a new home sold in May increased 6.9 % to $282,000.
  • Building permits decreased 4.2 % in June to a 963,000 annualized rate.

Jobless Claims in U.S. Unexpectedly Decreased Last Week

  • Jobless claims declined by 3,000 to 302,000 in the week ended July 12.
  • The four-week average of jobless claims declined to 309,000, the lowest since June 2007.
  • The number of people continuing to receive jobless benefits dropped by 79,000 to 2.51 million in the week ended July 5, the fewest since June 2007.

The July Philly Fed manufacturing index was stronger than expected, on solid composition

  • The Philly Fed manufacturing index rose to 23.9 in July from +17.8 in June.

Fed seen likely to raise rates in 2nd quarter of 2015: Reuters poll

  • The Fed will likely raise its target for the overnight lending rate, known as the Fed funds rate, to 0.25 % between April and June next year, according to the median forecast of 71 analysts polled in the past week.
  • Economists now see the Fed funds rate ending next year at 0.75 %.
  • Most thought the first hike would come in the third quarter of 2015 but that rates would end the year at 1.0 %.

 

EUROPE & WORLD

Reserves Break $3 Trillion Mark in Emerging Markets

  • Developing nations from Colombia to South Korea have accumulated so many dollars through intervening to curb currency gains that their foreign reserves now exceed $3 trillion for the first time.
  • Nations are filling up with dollars while they can, before a boost in U.S. interest rates reduces the yield advantage their assets enjoy.
  • China isn’t included in Bloomberg’s aggregate figures because its $3.99 trillion of reserves are larger than all its peers combined.

China Faces Second Corporate Bond Default Amid World’s Biggest Debt

  • Huatong Road & Bridge, based in the northern province of Shanxi, said it may miss a 400 million yuan ($64.5 million) note payment due July 23.
  • Companies in China are facing tougher operating conditions as growth looks set to cool to 7.4 % this year, the slowest in more than two decades.

 

TODAY in HISTORY

  • Spain ceded Florida to the United States (1821)
  • Spain surrendered to the United States at Santiago, Cuba, ending the Spanish-American War (1898)
  • The British royal family changed its name from the House of Saxe-Coburg-Gotha to Windsor amid anti-German sentiment during World War I (1917)
  • President Harry Truman, Soviet leader Joseph Stalin and British Prime Minister Winston Churchill meet at the opening of the Potsdam Conference (1945)
  • Disneyland opened in Anaheim, CA (1955)
  • The last Russian Czar Nicholas II was buried 80 years after he and his family were executed by the Bolsheviks (1998)

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg.

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