U.S. stock markets are once again trading lower and the decline today is the biggest since June. As reported over the past several days, the improving economic data increases investors concerns regarding the possibility of a reduction of the $85 billion quantitative easing or bond purchases program of the Federal Reserve.
The positive economic data also pushed bond yields to their highest level over the past two years. Based on a report from the Federal Reserve, industrial production for the month of July did not change after experiencing a 0.2% gain in June. According to the report, the total industrial production last month was 1.4% higher than level in a year earlier. The construction sector gained 0.5%, materials up by 0.4%, consumer goods down by -0.5%, final products down 0.3%, and business equipment remained the same. Despite the decline of some of the market segments, each recorded positive gains over the past 12 months.
Meanwhile, the number of jobless claims for benefits for the week ended August 10 declined to 320,000, its lowest level since October 2007 while consumer confidence climbed to its highest level last week. Analysts believe that the U.S. job markets will continue to improve and expects companies to hire additional workers.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
In an interview with Bloomberg, Jim Russell, senior equity strategist at U.S. Bank Wealth Management commented, “With weaker earnings, higher interest rates and geopolitical concerns, risk assets like stocks don’t do well in that type of environment. The jobless claims numbers were sufficiently strong that taper fears are probably front and center in terms of display today.”
- Dow Jones Industrial Average (DJIA)- 15,122 (-1.40%)
- S&P 500- 1,662 (-1.38%)
- NASDAQ- 3,606 (-1.71%)
- Russell 2000- 1,027 (-1.98%)
- EURO STOXX 50 Price EUR- 2,835 (-0.57%)
- FTSE 100 Index- 6,483 (-1.58%)
- Deutsche Borse AG German Stock Index DAX- 8,376 (-0.73%)
Asia Pacific Markets
- Nikkei 225- 13,075 (-2.12%)
- Hong Kong Hang Seng Index- 22, 539 (-0.01%)
- Shanghai Shenzhen CSI 300 Index- 2,321 (-1.17%)
Stocks In Focus
Cisco Systems, Inc. (NASDAQ:CSCO)
The stock price of Cisco Systems, Inc. (NASDAQ:CSCO) declined by more than 7% to as low as $24.28 per share despite reporting strong financial results. Analysts believe that many investors were worried due to the company’s plan to cut 4,000 jobs. Cisco CEO John Chambers explained that the workforce reduction is part of its growth strategy, and it is reallocating its resources to new technologies such as cloud computing and mobility. Cisco reported $0.42 earnings per share on $12.42 billion for the fourth quarter.
Wal-Mart Stores, Inc. (NYSE:WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) declined by more than 2% to as low as $74.03 per share after reporting disappointing earnings results for the second quarter. The retail giant posted $1.24 earnings per share on $116.9 billion revenue. Its EPS was lower than the consensus estimate of $1.25 earnings per share based on data compiled by Bloomberg. Wal-Mart CEo Mike Duke explained that the decline was caused by higher payroll taxes and expenses related its anti-bribery law violations. The retail giant also reduced its guidance for the third quarter and full fiscal 2013.
Kohl’s Corporation (NYSE:KSS)
The stock value of Kohl’s Corporation (NYSE:KSS) climbed by more than 5% to as much as $54.51 per share after the company issued a guidance that was higher than the expectations of Wall Street analysts. Kohl’s chief financial officer, Wes McDonald said that the management of the company is “very pleased” with its initial back-to-school sales.
Estee Lauder Companies Inc (NYSE:EL)
Estee Lauder Companies Inc (NYSE:EL) gained more than 4% and the stock reached as high as $68.82 per share after reporting outstanding fourth quarter financial results. Its profit increased by 84% to $94 million or $0.24 earnings per share compared with its $51.2 million net income or $0.13 earnings per share in the same period last year.