Traders-Blog.com

Stocks closed lower in a market hemmed in by concerns over the economy and tensions in the Middle East. However, Exxon Mobil Corp.’s strong earnings results brightened a day in which technology shares tumbled. Investors took a step back near the end of an otherwise strong week on Wall Street.

Today, the Dow Jones industrial average closed down 2.08 to 11,100.43, the broader Standard & Poor’s 500 index closed down 5.20 or 0.4% to 1,263.20, and the tech-heavy Nasdaq composite index closed down 15.99 or 0.8% to 2,054.47.

Market breadth was negative. On the New York Stock Exchange, losers topped winners 9 to 7 on volume of nearly 1.82 billion shares. On the Nasdaq, decliners topped advancers 18 to 11 on volume of almost 2.16 billion shares.

While stocks attempt to crawl out of the hole, the many economic and geopolitical worries make it difficult for investors to get excited about financial markets right now. The slowing economic growth at a time when the Federal Reserve has yet to clearly signal that its cycle of interest-rate hikes is at an end - has been frustrating. Investors fear that further rate increase could slow the economy to a point where it would fall into recession. Additionally, the low trading volume and increased volatility has been a cause for concern. In general, blue-chip, defensive and multinational stocks are doing better than the rest of the market right now.

Amongst economic news, sales of new home sales fell by 3% - more than expected in June, reflecting the ongoing slowdown in the housing market. Additionally, the inventory of unsold homes on the market rose by 0.7% to a record 566,000. Orders of durable goods jumped 3.1% in June, against the expected 2%. Excluding transportation, orders rose a larger than expected 1%. There was a surprise drop in weekly jobless claims as they fell to their lowest level in more than a month in the week ended July 22. Therefore, the signals on the data front are very mixed.

Shares of Microsoft Corp. closed down $0.50 or 2.1% to $23.87. CEO Steve Ballmer told shareholders at its annual meeting that the company needs to embrace an industry-wide shift toward software delivered over the Internet as a service, while continuing to drive advances in technology. The decline gave investors an incentive to back out of other tech stocks as well.

Stock of Exxon Mobil closed down $0.13 to $66.47, despite reporting quarterly earnings that surged 36% to more than $10 billion. The rise is fueled by historically high oil prices and strong refining margins. Exxon earned $10.36 billion, up from a year-ago profit of $7.64 billion. Revenue for the quarter came in at $99.03 billion, up from $88.57 billion a year earlier.

Stock of Bristol-Myers closed down $1.95 or 7.5% to $24.04, as the company stated that it is the target of a criminal antitrust probe by the federal government regarding a patent settlement with a generic competitor. The drug maker also reported quarterly earnings that fell from a year ago yet edged estimates.

Comcast Corp. saw its shares rally more than 4% as the cable-TV giant posted 7% growth in second-quarter profit and as revenue increased on greater demand for broadband, phone and digital video services.

Shares of Aetna Inc. closed down $6.71 or 17% to $33.25 - an 18-month low. The health insurer’s second-quarter profit slipped, hurt by increased competition and higher than expected claims, and the company cut its membership forecast for the year

U.S. light crude oil for September delivery gained 60 cents to settle at $74.54 a barrel on the New York Mercantile Exchange. Concerns over production outages in Nigeria and a sizable decline in U.S. gasoline supplies have taken some of the spotlight off the Israel-Hezbollah conflict.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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