Closing Market Summary on 29th July, 2011
US markets
US stocks gave back earlier gains to fall for the sixth straight day with investors seeing no immediate compromise on the debt ceiling. A weak GDP report also increased investors’ concern that we could be entering a soft patch in the economy. However, the Chicago PMI came out above 50, suggesting a growing manufacturing sector.
US second quarter GDP rose at an annualized 1.3%, falling below the average analyst estimate of 1.8%. Additionally, growth in the first quarter was revised down to 0.4%.
Boehner released news to the public that there will be a vote at 6:00PM of his bill that could be a first step towards an eventual compromise. Investors are suggesting that a revised plan to increase the debt ceiling is gaining support and that the US will avoid a first-time default on its debt. The stalemate in Washington has taken front seat from earnings season that has, for the most part, been positive. However, companies that have missed analyst expectations and reduced guidance have had their stocks especially punished.
An eventual compromise could be announced as early as this weekend, keeping many investors on the sidelines until then.
| Dow | NASDAQ | S&P 500 | 10 Yr Bond | Oil | Gold |
| -49.08(-0.40%) | 1.96(+0.07%) | -2.20(-0.17%) | 2.8250% | 95.76 | 1624.50 |
ECONOMIC CALENDAR
GDP – 8:30AM
Second quarter GDP growth dropped to a dismal 1.3% annualized gain, followed by a revised 0.4% for the prior quarter. The average analyst estimate gained was 1.9% for the quarter, much higher than the actual 1.3%, suggesting the US economy may already be experiencing a soft-patch.
Chicago PMI – 9:45AM
The Chicago purchaser index remained well above the break even 50 level, at 58.8 this month. A reading above 50 suggests growth in the business sector. However, employment fell more than 7 points to 51.5, although still above the key 50 level.
UPGRADES/DOWNGRADES
- Caris & Company upgraded True Religion (TRLG) to Buy from Above Average
- Oppenheimer downgraded Vistaprint (VPRT) to Perform from Outperform
- RBC Capital downgraded Constant Contact (CTCT) to Sector Perform to Outperform
- Wells Fargo downgraded Motorola Mobility (MMI) to Market Perform from Outperform
- Wedbush downgraded Alere (ALR) to Neutral from Outperform
Earnings
- Amerigroup Corp. (AGP) announced 2Q EPS fell 19% or 99 cents a share, missing the average analyst target. Shares plunged nearly 20%%
- Digital River (DRIV) reported 3Q earnings of 24 cents a share, missing the street. Shares slumped over 15%
- True Religion (TRLG) jumped nearly 14% after the jeans company posted Q2 results of 38 a share, above analysts’ estimates.
- VistaPrint NV (VPRT) slumped more than 30% after the provider of printing services reported full-year earnings of no more than $1.68 a share, far below analyst estimates.
- Zoll Medical Group (ZOLL) jumped more than 24 after the marker of hospital equipment posted yearly guidance above what the street was expecting.
Corporate news
- Allied Healthcare International Inc. gained over 50% after it said it had reached an agreement to be purchased by Saga Group Ltd. For $175 million
- Merck & Co. (MRK) said it will soon announce the first round of job cuts that will total 17,000. The company said it would be the first step towards a long term strategy to “reduce its cost structure” and “continue to invest in long-term growth.” Shares fell 1.75%
- Monster Worldwide Inc. reported earnings that beat analyst projections but shares slumped over investor concern from growing competition and a dismal employment market.
