(XLE) Stock Market News for July 18, 2011 – Market News

On Friday, markets ended with modest gains as encouraging earnings reports from Google and Citigroup helped the indices resist downside pressure from concerns over the US debt situation and European bank stress tests. However, gains made on Friday were not large enough to negate the impact of losses incurred earlier as the markets closed in the negative zone for the week.

The Dow Jones Industrial Average (DJIA) gained 0.3% to end at 12,479.73. The Standard & Poor 500 (S&P 500) was up 0.6% and closed the day at 1,316.14. The Nasdaq Composite Index inched up to 2,789.80, after gaining 1.0%. The fear-gauge CBOE Volatility Index (VIX) closed lower 6.1% at 19.53. Consolidated volumes continued to be tight, clocking in at 7.12 billion shares on the New York Stock Exchange, the American Stock Exchange and Nasdaq, compared with last year’s daily average of 8.47 billion. On the NYSE, for every 3 stocks that gained, a couple declined. For the week, the Dow, S&P 500 and the Nasdaq were down 1.4%, 2.1% and 2.5%, respectively.

Earnings reports came to the rescue of investors who had been weighed down by concerns both on the domestic and international front. Investors had their eye fixed on the two bellwethers, Google Inc. (NASDAQ:GOOG) and Citigroup, Inc. (NYSE:C) to deliver the necessary momentum to the indices. Google, in particular, drove the broader markets upwards, soaring 13.0% after posting robust results. Google’s second-quarter earnings of $7.68 clearly exceeded estimates of $6.79. At $9.02 billion, gross revenues soared 5.3% sequentially and 32.3% year over year. A drop in provisions for credit losses helped Citigroup post strong results. The second quarter 2011 earnings per share figure of $1.09 easily outpaced estimates of $0.96. However, the company’s stock declined 1.6%.

During the day, some amount of optimism had fizzled out after 90 European banks were subjected to stress tests by the European Banking Authority (EBA). As the results came in, the markets regained some momentum as the EBA reported only eight of the 90 banks had failed these tests. The stress tests were conducted to determine if the banks could survive an extended recessionary period and 15 banks were expected to fail.

In the domestic space, major banks like Bank of America Corporation (NYSE:BAC), Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), PNC Financial Services Group Inc. and UBS AG (NYSE:UBS) shed 0.7%, 0.4%, 0.9%, 0.8% and 1.1%, respectively.

However, the US debt situation remains the bigger issue and investors are praying for a favorable resolution as soon as possible. On Thursday, Moody’s Investors Services had put the US’ AAA rating under review for a possible downgrade, citing “the rising possibility” that Congress will fail to pass the debt ceiling by August 2. If Congress does not raise its $14.3 trillion debt ceiling by August 2, the Treasury Department may fail to pay at least 40% of its bills. President Barack Obama held a news conference in the White House regarding the issue and said: “We have enough time to do a big deal … we know how we can create a package that solves the deficit and debt”.

As for economic reports, the University of Michigan reported that consumer sentiment had unexpectedly fallen to 63.8 in June. This is the index’s lowest reading since March and is significantly lower than economists’ projection of a reading of 71.4. Consumer discretionary stocks were dragged lower following the report and stocks like Costco Wholesale Corporation (NASDAQ:COST), Dollar Tree, Inc. (NASDAQ:DLTR), Dollar General Corporation, Gordmans Stores, Inc. and Big Lots Inc. declined 0.6%, 0.1%, 0.5%, 0.1% and 0.7%, respectively.

Separately, the U.S. Department of Labor reported that the U.S. Consumer Price Index has declined by 0.2% in June, and the core rate has increased 0.3%. Economists had predicted the CPI index would shed 0.1%.

The energy and the technology sector provided a big boost for the broader markets. The Energy Select Sector SPDR (XLE) fund was up 2.7% and the S&P 500 ENERGY SECTOR INDEX, RTH (GSPE) gained 1.9%. Among the gainers were Chevron Corp. (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Suncor Energy Inc. (NYSE:SU) and Hess Corporation and they were up 1.5%, 0.8%, 0.8%, 0.7% and 3.3%, respectively.

The technology sector also posted strong gains and the Technology Select Sector SPDR (XLK) fund was up 1.1%. Bellwethers like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO) and International Business Machines Corp. (NYSE:IBM) gained 2.0%, 1.2%, 1.0% and 0.8%, respectively.

APPLE INC (AAPL): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

CISCO SYSTEMS (CSCO): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

DOLLAR TREE INC (DLTR): Free Stock Analysis Report

GOOGLE INC-CL A (GOOG): Free Stock Analysis Report

INTL BUS MACH (IBM): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

UBS AG (UBS): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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