US close: S&P 500 higher for third week, traders eye earnings growth

Wall Street finished on a mixed note, amid lighter than usual trading volumes, on Friday as investors digested stronger than expected economic data and mixed quarterly earnings figures from several of the nation´s largest lenders.

The Dow Jones Industrials tacked on 0.05% or 10.14 points to reach a fourth consecutive record high while the Nasdaq Composite drifted 0.09% or 4.47 points lower to end at 5,029.59.

In parallel, the S&P 500 finished down by 0.09% or 2.01 points at 2,161.74, but was nevertheless higher for a third straight week.

To take note of, some observers were wary of the current valuations on the S&P 500, which at 20 times reported earnings are at their richest since 2009.

Analysts canvassed by Bloomberg were projecting a 5.8% decline in earnings for the S&P 500´s component firms in the second quarter of 2016.

Relatively upbeat economic data

A raft of domestic economic data came in well ahead of economists´ forecasts overall, with the latest tally on retail sales volumes carrying the most weight with traders, although more up-to-date readings on regional manufacturing conditions around New York and nation-wide consumer confidence slipped.

Retail sales volumes in the States rose more than expected in June, according to data from the Commerce Department. Sales increased 0.6% from the previous month versus expectations of a 0.1% gain. On the year, retail sales rose 2.7%.

US inflation remained unchanged in June at an annualised 1.0%, missing forecasts for 1.1% growth. On a month-on-month comparison, CPI rose at the same rate in June as the previous month by 0.2%, missing forecasts for a 0.3% gain.

However, excluding food and energy, inflation rose 2.3% year-on-year in June, compared to estimates for the consumer price index to remain unchanged at 2.2%. Core CPI on a month-on-month basis increased 0.2% in June, in line with estimates and unchanged from May.

Dennis de Jong, managing director at UFX.com, said: “Last week’s US non-farm payroll data shocked the market by coming in much better than expected, and the trick was repeated by today’s retail sales figures.

“Fed Chair Janet Yellen will be delighted to see the retail sector remain buoyant, as it was feared by some observers that consumers might keep their wallets close to their chests amid significant global uncertainty.”

US industrial production rose 0.6% in June following a 0.3% decline in May, beating analysts’ expectations of 0.3% growth amid strong auto and utility production. Manufacturing output was up 0.4% month-on-month, mostly due to an increase in motor vehicle assemblies, exceeding forecasts for a 0.3% increase.

The Empire Manufacturing index –a reading of New York-area manufacturing conditions - was less positive, falling to 0.55 in July from 6.01 in May.

The University of Michigan consumer confidence index also dropped, falling to 89.5 in July from 93.5 the previous month.
Analysts had expected no change.

Acting as a backdrop, China’s gross domestic product growth of 6.7% was better than the 6.6% analysts had been expected and was in line with the previous quarter’s growth. The government is targeting an annual GDP between 6.5% and 7% for this year.

Nonetheless, some economists emphasised the weakness which was still evident in private investment in Asia´s largest economy.

Banks put in mixed performance

On the corporate front, Citigroup shares gained after the lender reported second quarter results that exceeded forecasts.

Wells Fargo & Co. shares slid as it reported a drop in second-quarter profit, although the bank´s earnings per share were in line with expectations.

US Bancorp was also under the cost despite posting an increase in second quarter profit as both loans and deposits rose.

PNC Financial Services Group shares dipped as it reported a fall in second quarter earnings.

Travel and leisure stocks were under the cosh after a terror attack in Nice that has left at least 84 people dead. A truck was driven into crowds celebrating Bastille Day in Nice, in what President Francois Hollande called an attack of "an undeniable terrorist nature". Shares in International Consolidated Airlines, TUI and easyJet fell on the news.

Shares in Delta Air Lines, American Airlines Group, United Continental Holdings Inc. and Southwest Airlines Co. slumped.

The worst performing industrial groups were: Recreational services (-1.70%), Business support (-0.91%) and Travel (-0.86%).

The KBW index of bank shares edged down by 0.08% to 67.22 points.

Oil prices rebounded, with some market commentary referencing the latest Chinese economic data.

West Texas Intermediate crude oil futures finished the day higher by 0.97% to $46.40 per barrel alongside gains for Brent of 0.99% to $40.09 per barrel in ICE trading.

Yields on the benchmark 10-year US Treasury note ended the day up by two basis points to 1.55%, after hitting an intra-session high of 1.59%, as reports of a military coup in Turkey sparked a haven bid from traders.

S&P 500 - Risers
Westrock Company (WRK) $42.51 +5.72%
International Paper Co. (IP) $45.47 +3.22%
Biogen Inc (BIIB) $260.30 +2.94%
Hershey Foods Corp. (HSY) $110.66 +2.38%
Regeneron Pharmaceuticals Inc. (REGN) $373.81 +2.34%
Vertex Pharmaceuticals Inc. (VRTX) $90.21 +2.34%
H&R Block Inc. (HRB) $24.27 +1.97%
Alcoa Inc. (AA) $10.92 +1.96%
United States Steel Corp. (X) $21.68 +1.88%
Mosaic Company (MOS) $28.69 +1.81%

S&P 500 - Fallers
CBS Corp. (CBS) $55.85 -3.61%
Chipotle Mexican Grill Inc. (CMG) $404.86 -3.14%
Wells Fargo & Co. (WFC) $47.71 -2.51%
Discovery Communications Inc. Class A (DISCA) $25.06 -2.49%
Delta Airlines Inc. (DAL) $39.98 -2.44%
Tiffany & Co. (TIF) $61.30 -2.37%
Marathon Petroleum Corporation (MPC) $36.55 -2.25%
GameStop Corp. (GME) $27.99 -2.20%
Paypal Holdings Inc (PYPL) $39.09 -2.18%
Carnival Corp. (CCL) $45.32 -2.16%

Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $80.70 +0.80%
General Electric Co. (GE) $32.88 +0.77%
Boeing Co. (BA) $132.39 +0.64%
E.I. du Pont de Nemours and Co. (DD) $67.16 +0.45%
Unitedhealth Group Inc. (UNH) $141.33 +0.35%
United Technologies Corp. (UTX) $105.50 +0.34%
Chevron Corp. (CVX) $107.03 +0.31%
3M Co. (MMM) $181.40 +0.28%
American Express Co. (AXP) $63.78 +0.27%
Visa Inc. (V) $78.30 +0.20%

Dow Jones I.A - Fallers
Nike Inc. (NKE) $57.87 -1.06%
Goldman Sachs Group Inc. (GS) $161.64 -0.55%
Pfizer Inc. (PFE) $36.77 -0.41%
Intel Corp. (INTC) $35.07 -0.37%
International Business Machines Corp. (IBM) $159.78 -0.31%
McDonald's Corp. (MCD) $123.61 -0.26%
Walt Disney Co. (DIS) $99.80 -0.17%
Johnson & Johnson (JNJ) $123.00 -0.15%
Coca-Cola Co. (KO) $45.63 -0.13%
Travelers Company Inc. (TRV) $118.64 -0.08%

Nasdaq 100 - Risers
Biomarin Pharmaceutical Inc. (BMRN) $92.08 +3.43%
Biogen Inc (BIIB) $260.30 +2.94%
Regeneron Pharmaceuticals Inc. (REGN) $373.81 +2.34%
Vertex Pharmaceuticals Inc. (VRTX) $90.21 +2.34%
Incyte Corp. (INCY) $83.83 +2.06%
Celgene Corp. (CELG) $102.85 +1.41%
Gilead Sciences Inc. (GILD) $86.67 +1.32%
Illumina Inc. (ILMN) $148.71 +1.01%
eBay Inc. (EBAY) $26.34 +1.00%
Liberty Media Corporation - Series C (LMCK) $20.03 +0.96%

Nasdaq 100 - Fallers
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $41.19 -3.69%
Discovery Communications Inc. Class A (DISCA) $25.06 -2.49%
Cognizant Technology Solutions Corp. (CTSH) $57.76 -2.00%
Charter Communications Inc. (CHTR) $234.98 -1.73%
Discovery Communications Inc. Class C (DISCK) $24.33 -1.58%
Walgreens Boots Alliance, Inc. (WBA) $82.51 -1.52%
O'Reilly Automotive Inc. (ORLY) $273.63 -1.45%
Dish Network Corp. (DISH) $52.18 -1.38%
Bed Bath & Beyond Inc. (BBBY) $44.37 -1.29%
Baidu Inc. (BIDU) $162.74 -1.28%