Tech Stocks Weak, New Home Sales Fall; World Markets Ease

Bikram Pandey
25 Jul, 2012
New York City

U.S. stocks turned negative in a choppy session. Technology stocks were weak after a decline in Apple and Netflix. New home sales dropped at 8.4% annual rate in June. Outlook in Europe darkened after UK reported deeper than expected economic decline.

[R]4:00 PM New York – U.S. stocks turned negative in a choppy session. Technology stocks were weak after a decline in Apple and Netflix. New home sales dropped at 8.4% annual rate in June. Outlook in Europe darkened after UK reported deeper than expected economic decline.[/R]

U.S. indexes traded sideways after a batch of positive earnings from Boeing and Caterpillar and tech stocks declined after Apple Inc missed outsized expectations.

World markets were cautious after the debt crisis in the euro zone deepened and outlook for German construction sector darkened and UK said economy contracted at the fastest pace in the June quarter. Greece and Spain were in focus after yields on Italian and Spanish bonds surged to a new high.

In the earnings news, Boeing second quarter revenue surge 21% and net rose 3% and backlog was valued at $302 billion. Caterpillar net jumped 67% and lifted fiscal outlook and ConocoPhillips second quarter net declined 33% on spin-off and weak oil prices.

Ford second quarter net plunged 57% and RadioShack plunged 30% after it eliminated its dividend and reported its widest loss since 1996.

Apple Inc declined 3% after it reported increase in sales and earnings but fell short of expectations laid out by few analysts. Apple said sales increased 22.6% to $35 billion though the growth rate declined from 59% in the previous quarter and net income rose 20.7% to $8.8 billion and the growth fell from 94%.

Apple missed earnings expectations only second time in the last 39 quarters.

ACE second quarter net tumbled 44.8% and Bristol-Myers declined 28% on patent expiration. Eli Lilly second quarter tumbled 23% and lifted fiscal guidance. General Dynamics net fall and revised lower outlook.

The European indexes traded higher and German business confidence fell more than estimated in July. The UK economy contracted in the second quarter by 0.7%, larger than expected and raised questions about the effectiveness of the austerity program.

Hong Kong based Cheung Kong led consortium agreed to buy UK based MGN Gas Networks for $1 billion.

Stocks in Tokyo traded lower and the Nikkei index fell to its lowest in the year. The index is down 1.1% in the year so far on the worries that a new round of economic stimulus in the U.S. may strengthen the yen. Tech stocks declined after Apple earnings were below expectations.

Australian indexes declined as China was added to the list of worries in the euro zone. The dollar eased and resources linked companies traded lower. The latest data on the June quarter inflation showed a decline in core inflation.

Commodities, Bonds and Currencies

The yield on 10-year bond traded lower to 1.41% and on 30-year bond decreased to 2.47%.

The U.S. dollar inched lower to $1.215 to a euro and decreased against the Japanese yen to 78.19 yen.

Immediate delivery futures of Texas crude oil increased 27 cents to $88.77 a barrel and Brent crude added 86 to $104.25, futures of natural gas fell 0.13 cents to $3.06 per mbtu and gasoline price decreased 4.48 cents to 278.05 cents a gallon.

In metals trading, copper increased 4.15 cents to $3.39 per pound, gold gained $30.70 at $1,611.50 per ounce and silver added 61 cent to $27.40.