U.S. stocks ended mixed with the Dow industrials and the S&P 500 staying close to record intraday highs in a tight trading range, as the unexpected contraction in regional manufacturing activity and the plethora of divergent earnings reports left traders on the fence. SPY fell, halting a streak of four straight gains.
Overseas, investors increased speculation that the Chinese government will deploy economic stimulus measures to combat a slowing economy. Stocks in Asia finished broadly higher, while European equity markets finished to the downside.
Shortly after the opening bell, the Dow Jones industrial average climbed to an intraday record high of 15,604.22, while the S&P 500 reached an all-time intraday high of 1,698.78. The Dow outperformed the broader market thanks to United Technologies and DuPont, along with Texas Instruments, posting stronger-than-expected profits. The Materials sector finished the day in the lead. It was closely followed by yesterday’s biggest laggard, energy.
Elsewhere, utilities and telecom services settled with respective gains of 0.3% and 0.4% while the remaining sectors ended in the red. Financials spent most of the day in negative territory with major banks displayed little change and insurer Travelers fell 3.8% despite beating on earnings. Biotech and tech shares weighed on the S&P 500 and the Nasdaq, with biotech falling 1.8 percent a day after hitting an all-time high. The benchmark equity gauge erased earlier gains of as much as 0.2 percent today after the Richmond Fed’s gauge of manufacturing in the mid-Atlantic region unexpectedly fell in July.
The Richmond Fed manufacturing activity index plunged 18 points to -11 in July, indicating factory activity contracted sharply. New orders and backlogs shrank, suggesting weak future demand. Even so, manufacturers remain optimistic about their six-month prospects.
The service sector revenues index also fell 18 points, the most in a year, to -6, led by the retail sector. A steep decline in shopper traffic and weaker big-ticket demand weighed on sales. Retailers expect demand to shrink over the next six months.
Our Trend Tracking Indexes (TTIs) retreated slightly but remain comfortably entrenched on the bullish side of their respective trend lines with the Domestic TTI closing at +3.45% while the International TTI slipped to +7.11%.
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