Stocks finished mixed on Friday in a light-volume session. The action was in Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL), which soared 16% after beating earnings estimates by 4% thanks to a widening of profit margins — an area of concern for investors latterly — as well as a rise in paid ad clicks. Google created “$65 billion in paper wealth in a single day,” — a record, according to USA Today.
In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 gained 0.1%, the Nasdaq Composite gained 0.9% to notch a fresh all-time high, and the Russell 2000 lost 0.4%.
Technology was the only group in the green, with a rise of 1.8% overall, while energy led the decliners with a 1.1% loss.
There was a batch of economic news to chew on. Housing continues to perk up, with a surge in multi-family units reflecting the tight rental inventory situation: Starts overall rose 9.8%to a 1.2 million annual rate with permits up 7.4%.
On the inflation front, headline consumer price inflation rose 0.3% in June over May, taking the year-over-year rate to 0.1% for the first positive reading of the year. If this continues, it will give the Federal Reserve justification for raising interest rates sooner, rather than later. The team at Capital Economics believes this reinforces the justification for a September rates liftoff.
Greece remained on the backburner as the German parliament voted to approve the new bailout agreement. The participation of the International Monetary Fund remains dependent on the Eurozone creditors agreeing to significant debt relief; something that’s anathema to the hardliners.
For the week ahead, the Q2 earnings season will continue to roll out.
According to FactSet data, the S&P 500’s blended earnings growth rate improved to a -3.7% loss vs. the -4.4% loss last week and the -4.5% decline expected at the end of the quarter. Of the 61 companies that have reported results, 72% have beaten expectations — in line with the five-year average.
Big reporters next week include …
- Monday: International Business Machines Corp. (NYSE:IBM)
- Tuesday: Verizon Communications Inc. (NYSE:VZ) and Apple Inc. (NASDAQ:AAPL)
- Wednesday: Boeing Co (NYSE:BA) and American Express Company (NYSE:AXP)
- Thursday: Amazon.com, Inc. (NASDAQ:AMZN) and Caterpillar Inc. (NYSE:CAT)
Technically, as evidenced by today’s mixed result, breadth remains challenging as fewer and fewer stocks keep the Dow pinned near the 18,000 level.
The eight-month-long lull continues.
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.
