The longest rally in the Standard & Poor’s 500 Index (SPY) since January came to a halt today in the wake of a mixed bag of economic and earnings news. Tomorrow’s looming semi-annual testimony on Capitol Hill by Federal Reserve Chairman Ben Bernanke may also have contributed to a bit of caution on the Street. The market’s pullback came a day after both the Dow and the S&P 500 ended at record closing highs for the third consecutive session.
Goldman Sachs Group (GS) and Dow member Johnson & Johnson posted better-than-expected results but fellow Dow component Coca-Cola fell short on its revenue figure as a result of lower-than-anticipated volumes. GS gets the gold so far for the biggest beat among the big banks while Dow member Johnson & Johnson posted earnings of $1.48 a share when estimates were for $1.39. Revenue was $17.9 billion beating expectations of $17.7 billion.
Cyclical sectors underperformed with energy and materials leading to the downside. The energy space shed 0.6% while crude oil slipped 0.5% to $105.78 per barrel. Elsewhere, discretionary shares suffered from broad weakness as homebuilders and retailers lagged. Defensively-oriented sectors finished in mixed fashion. Telecom services outperformed with a gain of 0.6% while health care and utilities each lost 0.5%. For its part, the consumer staples sector ended in-line with the broader market. Today market activities were also influenced by economic releases, such as the following.
Consumer prices came in slightly hotter than expected. The Consumer Price Index rose 0.5% in June, above the consensus of 0.4%. On a y/y basis, CPI has increased 1.8%, while core CPI is up 1.6%, the slowest pace since May 2011. Consumers’ purchasing power was unchanged last month, as a 0.4% gain in nominal average hourly earnings was offset by the CPI increase.
Elsewhere, industrial production rose 0.3% in June, its first increase in three months, and above the consensus of 0.2%. And finally, homebuilder sentiment improved to its highest level in over seven years.
Our Trend Tracking Indexes (TTIs) pulled back slightly and cosed the day as follows:
Domestic TTI: +3.09%
International TTI: +6.44%
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