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US FINANCIAL MARKET

U.S. Stocks Fluctuate After Selloff amid Jobs, ISM Report

  • S&P 500 posts worst day since April yesterday. The indexes was down 2 percent, finishing the month negative.
  • LinkedIn jumped 11 percent after projecting revenue that beat analysts’ estimates.
  • Procter & Gamble increased 3.6 percent as the world’s largest consumer-products maker reported profit that topped estimates amid cost reductions.
  • Employers in the U.S. added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.
  • The jobless rate climbed to 6.2 percent from 6.1 percent in June as more people entered the labor force. Wages and hours were unchanged from June.
  • Manufacturing expanded in July at the fastest pace in more than three years, showing U.S. factories will help power the economy after a second-quarter rebound.
  • The Thomson Reuters/University of Michigan’s final sentiment index for July fell to 81.8 from 82.5 in June, matched estimates.
  • Equities have been weighed down this week by global turmoil as Argentina missed a deadline to pay $539 million in interest.
  • In addition, Portugal’s Banco Espirito Santo said it needs to raise capital after a first-half loss, and companies from Adidas to Lufthansa said unrest in Russia and Ukraine dimmed prospects for growth.
  • The S&P 500, which is up 4.7 percent this year, has gone without a 10 percent correction since 2011.
  • Some 76 percent of the 373 companies that have released results this season have beaten analysts’ estimates for profit, while 65 percent have exceeded sales projections.

Tesla Model S Sales Matched Estimates on China Shipments

  • Unit sales rose to a best-ever 7,579, matching the average of nine analysts’ predictions.
  • Tesla said it will deliver more than 35,000 cars this year and reach a run rate of 100,000 a year by the end of 2015.
  • Tesla’s gross margin was 27.7 percent, more than double compared to other auto manufacturers.
  • Revenue nearly doubled to $769.3 million.
  • The company plans to deliver about 7,800 cars in the third quarter.

LinkedIn revenue rises 47 percent

  • LinkedIn gave a third-quarter sales forecast that topped estimates.
  • Membership increased to 313 million in the latest quarter, up 32 percent from a year earlier.
  • Revenue rose to $533.9 million in the quarter from $363.7 million a year earlier.
  • The company posted a net loss of $1.0 million, compared with a net profit of $3.7 million a year earlier.

P&G Profit Tops Estimates on Cost Reductions, Razor Sales

  • Profit rose 37 percent to $2.58 billion in the quarter.
  • The world’s largest consumer-products maker said sales declined 1 percent to $20.2 billion.
  • Organic sales rose 1 percent in P&G’s largest business, fabric care and home care, which sells products such as Febreze air freshener and Duracell batteries.
  • Organic sales rose 3 percent in the baby, feminine and family care business, which includes brands like Always, Bounty and Charmin.

Chevron second-quarter profit tops estimates on higher oil, gas prices

  • Chevron said net income rose to $5.67 billion in the second quarter from $5.37 billion in the year-ago period.
  • Production fell 1.4 percent to 2.5 million barrels of oil equivalent per day (boe/d).

Auto sales growth slowed in July

  • Ford reported a gain of 10 percent to 212,236 vehicles, slightly beating the analysts’ average estimate of 9 percent. Ford also said its sales were its highest in July in eight years.
  • General Motors said July sales were up 9 percent at 256,160, missing expectations of 11 percent.
  • Chrysler sales rose 20 percent to 167,667 vehicles in July, its best posting for that month since 2005.
  • Hyundai’s U.S. July sales rose 1.5 percent to 67,011 vehicles, an all-time record for that month.
  • Average transaction prices in July remained firm, averaging $32,556 per vehicle.
  • Auto sales dropped to a low of 10.4 million vehicles in 2009 and have risen steadily since, reaching 15.6 million last year.
  • They are on a pace for about 16.4 million this year, in part because of easier credit and loans of up to 84 months.

US ECONOMY & POLITICS

Payrolls in U.S. Rose 209,000 in July, Unemployment at 6.2%

  • Employers in the U.S. added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.
  • The jobless rate climbed to 6.2 percent as more people entered the labor force.
  • The 209,000 advance followed a 298,000 gain in June that was stronger than previously reported.
  • Revisions to prior reports added a total of 15,000 jobs to overall payrolls in the previous two months.
  • Today’s employment report also showed average hourly earnings were unchanged at $24.45 in July. They were up 2 percent over the past 12 months.
  • The average work week for all employees held at 34.5 hours.
  • The so-called participation rate, which indicates the share of working-age people in the labor force, increased to 62.9 percent from 62.8 percent a month earlier, which matched the lowest since March 1978.
  • Today’s report showed the underemployment rate — which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking — rose to 12.2 percent from 12.1 percent.
  • Employment at private service providers increased 140,000 in July, the smallest gain in six months.
  • At the same time, goods producers took on workers at a faster rate.
  • Construction companies added 22,000 workers and factory employment climbed 28,000 last month, led by a 14,600 gain in payrolls at auto plants that was the biggest since April 2013.

Manufacturing in U.S. Expands at Fastest Pace in Three Years

  • The Institute for Supply Management’s (ISM) index increased to 57.1, the highest since April 2011, from 55.3 a month earlier.
  • Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 56.
  • Orders and production expanded last month at the fastest pace of the year as factories responded to increased purchases of automobiles and business equipment.
  • The ISM’s gauge of new orders climbed to 63.4 last month after 58.9 in June.
  • An index of production rose to 61.2 from 60 the prior month.
  • The group’s factory employment measure jumped in July to 58.2, the highest since June 2011, from 52.8, while the index of orders waiting to be filled increased to 49.5 from 48.
  • The report also showed gauges of factory inventories contracted in July and customer stockpiles shrank at a faster pace from a month earlier.

Second Quarter GDP

  • The figures follow a report this week that showed the economy expanded at a 4 percent annualized pace in the second quarter.
  • Purchases of durable goods, including autos, furniture and appliances, jumped at a 14 percent pace, the fastest since the third quarter of 2009. Automobiles remain a bright spot for consumer spending and for factory production. Cars and light trucks sold at a 16.9 million pace in June.
  • Corporate investment rebounded as well from April through June. Business spending on equipment rose at a 7 percent rate after declining 1 percent in the first quarter.

Consumer sentiment dips in July

  • The Thomson Reuters/University of Michigan’s consumer sentiment index came in at 81.8, a touch below the 82.0 estimate and down from the final June reading of 82.5.
  • The survey’s barometer of current economic conditions rose to 97.4 from 96.6, compared with a forecast of 97.1.
  • The survey’s gauge of consumer expectations fell for a third straight month, to 71.8 from 73.5.
  • The survey’s one-year inflation expectation edged up to 3.3 percent from 3.1 percent.

U.S. consumer spending rises, inflation pressures muted

  • U.S. consumer spending rose for a fifth straight month in June, but a moderation in price increases suggested the Federal Reserve will not raise interest rates anytime soon.
  • Consumer spending increased 0.4 percent after rising by an upwardly revised 0.3 percent in May.
  • Spending accounts for more than two-thirds of U.S. economic activity.
  • When adjusted for inflation, consumer spending increased 0.2 percent after edging up 0.1 percent the prior month.
  • Consumer spending in the second quarter increased at a 2.5 percent pace and the rise in June augurs well for an acceleration in spending in the third quarter.
  • Spending is being supported by steady gains in income, which rose 0.4 percent in June, thanks to an improving labor market.
  • The personal consumption expenditures (PCE) price index rose 1.6 percent. It had increased 1.7 percent in May.
  • Excluding food and energy, prices edged up 0.1 percent after gaining 0.2 percent the prior month. The so-called core PCE price index is the Federal Reserve’s preferred inflation measure.
  • It increased 1.5 percent from a year ago, still below the Fed’s 2 percent target.

California Farms Sink Wells as Record Drought Escalates

  • With 82 percent of California now experiencing extreme drought after three years of record low rainfall, reservoirs are 45 percent below normal and declining.

EUROPE & WORLD

France’s Iliad challenges Sprint for control of T-Mobile

  • French telecommunications company Iliad has made a surprise offer for T-Mobile US.
  • Iliad bid $15 billion in cash for 56.6 percent of T-Mobile US at $33 per share.
  • Its offer for the fourth-largest U.S. carrier values all of T-Mobile at $36.20 per share, a premium of 42 percent to the pre-announcement share price.
  • That is less than the roughly $40 per share Sprint agreed to pay.

China PMIs jump to multi-month highs in July, add to view economy is steadying

  • The official Purchasing Managers’ Index (PMI) issued by the government climbed to a 27-month high of 51.7 in July, beating forecasts for 51.4.
  • A separate PMI published by HSBC/Markit also rose to 51.7, its best performance in 18 months.

Argentine markets fall post-default, New York hearing on Friday

  • Argentina’s bond and stock markets and peso currency dropped on Thursday after Latin America’s No. 3 economy defaulted for the second time in 12 years.
  • The default came after Argentina failed to strike a deal with lead holdout investors NML Capital.
  • The government maintains it has not defaulted because it made a required interest payment on one of its bonds due 2033, but U.S. District Judge Thomas Griesa in Manhattan blocked that deposit in June, saying it violated his ruling.

TODAY in HISTORY

  • Colorado became the 38th state in the United States (1876)
  • Adolf Hitler presided over the opening of the Berlin Olympic Games (1936)
  • President Truman signed the congressional acts that established the Atomic Energy Commission and the Fulbright Scholarship program (1946)
  • MTV made its debut at 12:01 AM. The first video shown was Video Killed the Radio Star by the Buggles (1981)

 

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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