Stocks Continue Post-Earnings Drop

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U.S. equities finished lower again on Wednesday as the market reacted to a batch of poor tech-sector earnings on Tuesday night. The biggie was the iPhone/China sales miss over at Apple (AAPL), which pushed shares down 4.2%. Microsoft (MSFT) lost 3.7% after a big write-down on its Nokia acquisition.

In the end, the Dow Jones Industrial Average lost 0.4%, the S&P 500 lost 0.2%, the Nasdaq Composite lost 0.7%, and the Russell 2000 gained 0.3%.

Financial stocks bucked the trend, rising 0.7% as a group thanks to a run higher by regional names including Keycorp (KEY), up 1.9%. Money center banks were strong as well with Bank of America (BAC) and Citigroup (C) both up 2.1%.

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Commodities keep getting pummeled, with crude oil dropping 3.4% to close at $49.14 per barrel on an unexpected inventory build (the largest in three months). That’s the first sub-$50 close for oil since April. The crude oil drop helped the ProShares UltraShort Crude Oil (SCO) recommended to Edge subscribers gain another 6.9% to bring its month-to-date gain to 42.6%.

Gold fell for a tenth straight session, falling 1.1% to close at $1,091.50 per ounce for the weakest settle since March 2010. Copper fell 1.9% after Goldman Sachs cut its medium and long-term forecasts on the metal.

Among the earnings gainers was Chipotle Mexican (CMG), which gained 7.7% on an earnings per share beat despite softer comp-store sales and higher labor costs.

On the economic front, existing home sales rose 3.2% month-over-month to a 5.5 million seasonally-adjusted annual rate in June. The home sales number was significantly ahead of expectations for a 0.9% gain and marked a new recovery high and the best monthly print since February 2007. Yet lumber futures, which tend to act as a leading indicator for the housing market, have begun to roll over again.

Globally, China and Greece have moved to the backburner somewhat. The Shanghai Composite is up five days in a row. And the Greek parliament is moving ahead on agreeing to its creditors’ latest austerity demands as the European Central Bank ramps up its liquidity support of Greece’s banking system.

After the close, American Express (AXP) dropped 1.5% in after-hours trading after reporting weaker-than-expected quarterly revenue of $8.28 billion vs. the $8.46 billion analysts were expecting. Qualcomm (QCOM) dropped 1.6% after hours, adding to a 1.5% loss during the cash session, after reporting a slight miss on revenue as well as announcing a cost-cutting initiative and a strategic review into a possible separation of the company.

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Technically, breadth remains a challenge for the broad market as the Q2 earnings season has not gone as the optimists had hoped. Yet stocks remain just off of their record highs.

For the past week through Tuesday, this condition has resulted in more than 2% of the stocks on the NYSE Composite reaching a 52-week high, while more than 2% have reached a 52-week low. This split market condition for five days in a row was last seen in January. Before that, according to Jason Goepfert at SentimenTrader, it was last seen in July 2007 and December 2000.

Long story short: The market is looking very toppy here.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/stocks-continue-post-earnings-drop/.

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