Earnings Outlook Drives S&P 500 Index Up 1.6%

Bikram Pandey
19 Jul, 2011
New York City

U.S. indexes closed higher after earnings dominated market sentiment. IBM quarterly net increased 8% and Coca-Cola net rose 18%. Bank of America swung to a net loss on higher loan losses. Market sentiment was bolstered after June home starts soared 15% to annual rate of 629,000.

[R]4:40 PM New York – U.S. indexes closed higher after earnings dominated market sentiment. IBM quarterly net increased 8% and Coca-Cola net rose 18%. Bank of America swung to a net loss on higher loan losses. Market sentiment was bolstered after June home starts soared 15% to annual rate of 629,000.[/R]

U.S. indexes gained after housing starts rose 14.6% to annual rate of 629,00 homes in June and better than expected earnings at IBM, Coca-Cola, Wells Fargo and Harley Davidson.

Banks were on the decline after Bank of American swung to a quarterly loss on higher than expected loan losses and Goldman Sachs reported lower than expected earnings.

Bank of America reported second quarter net loss of $8.8 billion but Wells Fargo second quarter net income increased 29% to $3.9 billion. Goldman Sachs second quarter net income soared 132% to $1 billion after trading revenues dropped 63%. IBM second quarter net income increased 8% to $3.7 billion.

Cisco agreed to sell Mexican set-top box factory to Foxconn and planned job cuts of as much as 6,500.

News Corp rose 6% to $15.84 after an independent board director Thomas Perkins said that the board is in “full support” of the current chief executive Rupert Murdoch and is not looking for a leadership change.

European indexes rallied from a seven-month low on better-than-estimated earnings. An emergency summit of euro area leaders is scheduled for Thursday in Brussels to finalize a bailout package for Greece. Spain successfully sold €4.45 billion in bond auction.

Construction output in the euro area slowed in May. German economic sentiment fell more-than-anticipated in July. Greek jobless rate declined to 15.8% in April. Portuguese PPI eased in June.

The UK indexes traded higher on upbeat global earnings. News Corp. chief executive Rupert Murdoch and Deputy COO James Murdoch faced direct questioning from members of parliament about the methods of payment for prior phone-hacking related incidences. Irish factory gate prices fell in June.

Stocks in Tokyo declined below its 200-day average as global economic worries resurfaced. Industrials and automakers were among the leading decliners. Banks fell more than 2% on the worries that the debt contagion may widen in the euro-zone.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield decreased 2.89% and 30-year U.S. bond traded down to 4.20%.

The U.S. dollar decreased at $1.413 to one euro and rose against the Japanese yen to 79.19 yen.

Immediate delivery futures of Texas crude oil increased $1.70 to $97.63 a barrel and futures of natural gas decreased 0.02 cents to $4.52 per mbtu and gasoline price rose 2.02 cents to 311.76 cents a gallon.

In metals trading, copper increased 6.25 cents to $4.46 per pound, gold fell $13.20 to $1,589.20 per ounce and silver decreased $0.84 to $39.50.