David Moenning's Daily State of the Markets: 07/17
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Lonely At the Top
Good morning. Yesterday's headlines suggested that the big news of the day was the Dow's first official flirtation with the 14,000 level. And although the bulls couldn't find the last 11 points needed to breach the latest nice round number, they will take the fresh all-time high close as a consolation prize.
However, if you are thinking that the new record close for the Dow meant green screens all around again yesterday; you were sorely mistaken as all the other major indices finished in the red.
Just about everybody knows that the bulls rarely surpass any major milestone on the first try. They usually get close and then are rebuffed a few times; that's just the way the game is played. This game of knocking on the door and then regrouping continues until our heroes in horns can find the momentum to break through.
So, once the Dow got within spitting distance of 14,000 yesterday morning, the bears, as expected, started to hit the sell button. And while the venerable Dow managed to hold on to a decent gain on the day, the rest of the indices sank into negative territory.
However, the hesitancy on the part of the major indices is probably to be expected at this point. After all, stocks enjoyed a rather explosive rally to new highs over the past week and with earnings starting to roll in and both the PPI and CPI data scheduled to be released this week, a break in the action was probably warranted.
Turning to this morning, we've seen some big earnings reports from the likes of Merrill Lynch, who beat the estimates handsomely as well as Johnson & Johnson, Coca Cola, US Bancorp, and Wells Fargo.
But we can't spend all of our time poring over the earnings reports because we've got some pretty big economic numbers to review as well. The government reported that the Producer Price Index actually fell by -0.2% in June, which was below the expectations for an increase of +0.1%. When you strip out food and energy the Core rate was actually a bit hotter than expected at +0.3% versus a consensus of +0.2%. And on a year-over-year basis, the Core rate increased by +1.8%, which remains in the Fed's comfort zone.
Running through the rest of the pre-game indicators, the foreign markets are mostly lower this morning as traders in Europe are fretting over inflation and interest rates. Gold futures are moving down by $2.20 to $664.10. In the oil pits, crude futures are moving up again with the latest quote up $0.55 at $74.70. Interest rates are moving up this morning with the yield on the 10-year currently trading at 5.07%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing toward a flat open. The Dow futures are currently ahead by about 7 points; the S&P's are lower by a fraction, while the NASDAQ looks to be almost 2 points above fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Novellus (NASDAQ: NVLS) - Reported $0.45 vs. $0.43
Today's Earnings Before the Bell:
Johnson & Johnson (NYSE: JNJ) - Reported $1.05 vs. $1.00
Coca Cola (NYSE: KO) - Reported $0.85 vs. $0.82
Merrill Lynch (NYSE: MER) - Reported $2.24 vs. $2.02
State Street (NYSE: STT) - Reported $1.07 vs. $1.01
US Bancorp (NYSE: USB) - Reported $0.65 vs. $0.67
Wells Fargo (NYSE: WFC) - Reported $0.67 vs. $0.67
Forest Labs (NYSE: FRX) - Reported $0.83 vs. $0.77
News, Upgrades/Downgrades/Brokerage Research:*
Rohm & Haas (NYSE: ROH) - Upgraded at Citi
BEA Systems (NASDAQ: BEAS) - Upgraded at Credit Suisse
American Express (NYSE: AXP) - Upgraded at Goldman Sachs
Lear Corp (NYSE: LEA) - Upgraded at JP Morgan
Verisign (NASDAQ: VRSN) - Downgraded at Morgan Stanley
Sandisk (NASDAQ: SNDK) - Target increased at Oppenheimer
TJX Companies (NYSE: TJX) - Target increased at UBS
AMR Corp (NYSE: AMR) - Upgraded at UBS
Delta Air Lines (NYSE: DAL) - Upgraded at UBS
UAL Corp (NASDAQ: UAUA) - Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: MER, GS, LEA
Note: All earnings reports compared to Reuter's consensus estimates
** For More of David Moenning's Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM's programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Good morning. Yesterday's headlines suggested that the big news of the day was the Dow's first official flirtation with the 14,000 level. And although the bulls couldn't find the last 11 points needed to breach the latest nice round number, they will take the fresh all-time high close as a consolation prize.
However, if you are thinking that the new record close for the Dow meant green screens all around again yesterday; you were sorely mistaken as all the other major indices finished in the red.
Just about everybody knows that the bulls rarely surpass any major milestone on the first try. They usually get close and then are rebuffed a few times; that's just the way the game is played. This game of knocking on the door and then regrouping continues until our heroes in horns can find the momentum to break through.
So, once the Dow got within spitting distance of 14,000 yesterday morning, the bears, as expected, started to hit the sell button. And while the venerable Dow managed to hold on to a decent gain on the day, the rest of the indices sank into negative territory.
However, the hesitancy on the part of the major indices is probably to be expected at this point. After all, stocks enjoyed a rather explosive rally to new highs over the past week and with earnings starting to roll in and both the PPI and CPI data scheduled to be released this week, a break in the action was probably warranted.
Turning to this morning, we've seen some big earnings reports from the likes of Merrill Lynch, who beat the estimates handsomely as well as Johnson & Johnson, Coca Cola, US Bancorp, and Wells Fargo.
But we can't spend all of our time poring over the earnings reports because we've got some pretty big economic numbers to review as well. The government reported that the Producer Price Index actually fell by -0.2% in June, which was below the expectations for an increase of +0.1%. When you strip out food and energy the Core rate was actually a bit hotter than expected at +0.3% versus a consensus of +0.2%. And on a year-over-year basis, the Core rate increased by +1.8%, which remains in the Fed's comfort zone.
Running through the rest of the pre-game indicators, the foreign markets are mostly lower this morning as traders in Europe are fretting over inflation and interest rates. Gold futures are moving down by $2.20 to $664.10. In the oil pits, crude futures are moving up again with the latest quote up $0.55 at $74.70. Interest rates are moving up this morning with the yield on the 10-year currently trading at 5.07%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing toward a flat open. The Dow futures are currently ahead by about 7 points; the S&P's are lower by a fraction, while the NASDAQ looks to be almost 2 points above fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Novellus (NASDAQ: NVLS) - Reported $0.45 vs. $0.43
Today's Earnings Before the Bell:
Johnson & Johnson (NYSE: JNJ) - Reported $1.05 vs. $1.00
Coca Cola (NYSE: KO) - Reported $0.85 vs. $0.82
Merrill Lynch (NYSE: MER) - Reported $2.24 vs. $2.02
State Street (NYSE: STT) - Reported $1.07 vs. $1.01
US Bancorp (NYSE: USB) - Reported $0.65 vs. $0.67
Wells Fargo (NYSE: WFC) - Reported $0.67 vs. $0.67
Forest Labs (NYSE: FRX) - Reported $0.83 vs. $0.77
News, Upgrades/Downgrades/Brokerage Research:*
Rohm & Haas (NYSE: ROH) - Upgraded at Citi
BEA Systems (NASDAQ: BEAS) - Upgraded at Credit Suisse
American Express (NYSE: AXP) - Upgraded at Goldman Sachs
Lear Corp (NYSE: LEA) - Upgraded at JP Morgan
Verisign (NASDAQ: VRSN) - Downgraded at Morgan Stanley
Sandisk (NASDAQ: SNDK) - Target increased at Oppenheimer
TJX Companies (NYSE: TJX) - Target increased at UBS
AMR Corp (NYSE: AMR) - Upgraded at UBS
Delta Air Lines (NYSE: DAL) - Upgraded at UBS
UAL Corp (NASDAQ: UAUA) - Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: MER, GS, LEA
Note: All earnings reports compared to Reuter's consensus estimates
** For More of David Moenning's Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM's programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
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