Weekly Review | Jul 21 to Jul 28

Approved for release July 28, 2014

Market Indices

Index Jul 21, 2014 Jul 28, 2014 Change Percent
DJIA 17095.11 16960.57 -134.54 -0.79
Nasdaq 4421.20 4449.56 28.36 +0.64
S&P500 1976.93 1978.34 1.41 +0.07
Russell 2000 1146.39 1144.72 -1.67 -0.15
Russell 1000 913.62 916.38 2.76 +0.3

Equity Review

U.S. stocks fell last week, causing the Dow’s biggest loss in six weeks.  The Dow Jones dropped 0.8% for the week ended June 25, closing at 16,960.57.  The S&P 500 finished up 0.4%, at 1,978.34.  E-Trade reported that it swung to a second-quarter profit, beating Wall Street’s estimates.  For the quarter ended June 30, the company posted net income of $69 million, or $0.24 per share.  Analysts had expected $0.23 per share.  Management said the firm saw continued growth in the brokerage business, even as trading activity moderated industry wide.  Facebook also reported second quarter earnings that beat estimates, thanks to its robust mobile ad business.  The social media network said it has 1.5 million active advertisers, up from 1 million last June.  COO Sheryl Sandberg said, “Strong performance across the board shows personalized marketing at scale is working.  Instagram is also seeing great results in advertising but is still taking it really slow.”  Earnings were $0.42 per share, beating the $0.32 estimate.  Facebook founder and CEO Mark Zuckerberg said, “We had a good quarter.  Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world. “  Caterpillar reported quarterly earnings that beat Wall Street’s expectations but fell short on revenue.  The company posted earnings per share of $1.69, compared with $1.45 a share in the year earlier period, and revenue of $14.15 billion.  Analysts had expected the machinery giant to report earnings of $.152 a share on $14.47 billion of revenue.  The company said mining is still very slow, but the mining business is up for the first time since 2012. 

Economic Indicators

Jobless Claims (4 wk avg)
2.34 Jul 19, 2014 302,000
Jul 12, 2014 309,250
Monthly Job Gains
June 2012 288,000
May 2012 224,000
ISM Manufacturing Index
-0.18 June 2012 55.3
May 2012 55.4
ISM NonManufacturing Index
-0.53 June 2012 56.0
May 2012 56.3

Economic Review

Last week the number of unemployment claims fell by 19,000 to 284,000.  This is the lowest level since February, 2006 and indicates that companies have slowed down on layoffs.  The forecast was 310,000 for the week ended July 19.  Continuing claims fell by 8,000 to a seasonally adjusted 2.5 million and is the lowest level since June 2007.  The Labor Department reported that the consumer price index climbed 0.3% in June.  The gasoline index rose 3.3% and accounted for two-thirds of the increase.  Excluding food and energy prices, core prices were up 0.1%.  Economists had expected a 0.3% rise in overall CPI and a 0.2% rise in the core.  Existing home sales rose for the third straight month.  The National Association of Realtors said sales were up 2.6% in June to 5.04 million.  Economists believe that conditions are becoming more balanced, inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country.  Freddie Mac reported that the 30-year fixed rate mortgage averaged 4.13% in the week ending July 24, which was unchanged for the week, but just below the low of the year.  The 30-year rate hit a 2014 low of 4.12% in the week ending July 3.  The Federal Reserve is meeting next week and is expected to take another step toward ending its bond buying program.  After the program ends in October, the Fed has said it will wait a “considerable period” before raising rates.  Some analysts say the combination of strong jobs growth and higher inflation will force the central bank to increase interest rates by March, 2015. 

U.S. Bonds

Two Year Note 0.496

Ten Year Note 2.472

30 Year Bond 3.237

Currencies & Commodities

Euro 1.3436

Pound 1.6996

Yen 101.80

Canadian Dollar 1.0811

Crude Oil 101.23

Gold, Aug 1305.7

Economic Calendar

Monday

PMI Services Flash 60.0

Pending Home Sales Index 0.3 %

Tuesday

Consumer Confidence 85.5

Wednesday

Real GDP 3.1 %

GDP Price Index 2.0 %

Thursday

Employment Cost Index 0.5 %

Business Barometer Index 63.2

Friday

Domestic Vehicle Sales 13.2 M

Total Vehicle Sales 16.7 M

Personal Income 0.4 %

Consumer Spending 0.4 %

PCE Price Index 0.2 %

Core PCE Price Index 0.1 %

Construction Spending 0.5 %

*Actual consensus values reported.

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