U.S. equity indexes eked out gains, showing some resilience in the face of headwinds from mixed earnings reports and economic data. The broader market’s advance was modest after another round of mixed earnings reports. Specifically, PulteGroup Inc was sharply lower after the homebuilder’s results missed analysts’ forecasts, while General Motor’s stronger-than-anticipated results were overshadowed by continued weakness in Europe.
Elsewhere, shares of Facebook rallied after the social-networking site easily exceeded the Street’s quarterly expectations. In other earnings news, Dow member 3M Co, and Dow Chemical Co bested the Street’s earnings forecasts, while Bristol-Myers Squibb Co matched expectations.
On economics front, durable goods orders rose 4.2% in June, its third straight increase, and well above the consensus of 1.7%. The 12-month average of orders rose to its highest level since February 2012, indicating a positive trend. The latest gain was led by transportation, particularly aircraft. On a y/y trend basis, durable goods orders have increased 7.6%, the most since April 2012, while capex orders are up 4.7%. This suggests factory orders are regaining momentum, which bodes well for manufacturing output in the near term.
Meanwhile, initial claims for unemployment insurance rose 7,000 last week to 343,000, slightly above the consensus of 340,000. The figures are usually impacted by seasonal factors this time of the year, such as factory maintenance shutdowns and school closings for the summer.
Finally, Bloomberg’s Consumer Comfort Index rebounded 1.1 points, its fifth gain in the past six weeks, to -27.3, its highest level since January 2008. Sentiment was boosted by rising home and stock values and steady gains in part-time employment. The state of the economy component jumped 4.8 points, the most since September 2008.
The tech-heavy Nasdaq displayed strength throughout the session after Biogen, Facebook, and Qualcomm reported solid quarterly results. The relative strength of Biogen helped the health care sector finish among the leaders, but the outperformance of Facebook and Qualcomm had a limited effect on the technology sector, which ended little changed.
The afternoon rally was fueled by gains in energy, materials, and utilities. The energy sector climbed 0.5% after displaying weakness yesterday. Meanwhile, crude oil added 0.3% to $105.68 per barrel. Elsewhere, the materials sector rose 0.9% amid broad strength. Also of note, the utilities space gained 0.9% after finishing yesterday’s session at the bottom of the leaderboard. Discretionary shares ended near their highs, but home builders registered losses across the board.
Our Trend Tracking Indexes (TTIs0 picked up some pace and ended the day higher with the Domestic TTI reaching a level of +3.49%, while the International TTI settled at +7.32%.
Due to a prior commitment, I will not be able to post this week’s StatSheet until tomorrow morning.
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