Closing Market Summary: Nasdaq Ekes Out Another Record CloseThe Nasdaq (+0.1%) eked out another record close on Thursday, its third in a row, while the S&P 500 (unch) and the Dow (-0.1%) settled just short of their unchanged marks. Action was fairly range-bound with the benchmark index staying true to a ten-point range from start to finish.
There were few surprises in the latest policy decisions from the European Central Bank and the Bank of Japan, with both central banks deciding to leave interest rates unchanged. ECB President Mario Draghi said in his post-decision press conference that the economy has continued to expand, but a substantial degree of accommodation is still necessary as underlying inflation remains subdued.
However, Mr. Draghi didn't dispel the notion that the ECB might soon announce a tapering of the bank's asset purchase program, saying simply the ECB is not setting a date for a change to quantitative easing. The euro climbed 1.0% to 1.1627 against the greenback, sending the U.S. Dollar Index (94.09, -0.55) to an 11-month low.
Meanwhile, the BoJ pushed back the expected time frame for hitting its inflation target of 2.0% to "around FY19" from "around FY18", leaving the impression that it won't be changing its ultra-accommodative monetary policy anytime soon. The yen slipped 0.1% to 112.00 against the U.S. dollar.
In the states, Treasuries rallied across the curve following the aforementioned policy decisions. The benchmark 10-yr yield traded as low as 2.24%, but came up a bit in the late afternoon to finish just one basis point below its flat line at 2.26%.
Earnings season was once again the focal point in the stock market on Thursday. Dow components American Express (AXP 85.35, -0.58) and Travelers (TRV 124.57, -1.89) sold off after delivering their quarterly reports, losing 0.7% and 1.5%, respectively. AXP beat top and bottom line estimates, but reported a 33.0% decline in profit for the second quarter. Meanwhile, TRV missed bottom-line estimates.
However, despite the negative performances from AXP and TRV, the influential financial sector (-0.1%) managed to stay in line with the broader market. Similarly, the top-weighted technology space (unch) was able to keep pace despite challenges on the earnings front. Namely, Qualcomm (QCOM 53.97, -2.81) dropped 5.0% after providing disappointing earnings guidance.
The lightly-weighted telecom services group (+1.4%) settled at the top of the leaderboard after T-Mobile US (TMUS 61.12, -0.85) beat top and bottom line estimates in addition to raising its full-year guidance. However, ironically, TMUS was one of the only telecom components to not finish in positive territory, ending the day lower by 1.4%.
Like telecom services, the health care (+0.6%) and utilities (+0.7%) sectors outperformed, but, on the downside, a total of seven spaces finished in the red. The industrial space was one of the weakest performers, dropping 0.6%, as transports weighed, evidenced by the 1.0% decrease in the Dow Jones Transportation Average.
C.H. Robinson (CHRW 65.01, -3.68) paced the DJTA's retreat, dropping 5.4%, after missing bottom-line estimates. Union Pacific (UNP 106.14, -1.70) also underperformed, losing 1.6%, after its better than expected earnings and revenues were overshadowed by projections for flat volume growth in the third quarter.
It's also worth pointing out that Special Counsel Robert Mueller will be considering President Trump's business dealings in his investigation on Russia's involvement in the 2016 U.S. presidential election. The stock market slipped on the initial headline, but reclaimed the slide within 30 minutes.
Reviewing Thursday's economic data, which included the July Philadelphia Fed Index, the weekly Initial Claims Report, and the June Leading Indicators Index:
- The Philadelphia Fed Survey for July declined to 19.5 from an unrevised 27.6 in June while economists polled by had expected a reading of 22.0.
- The key takeaway from the report is that the downturn was led by a sharp drop in new orders, which isn't the best preliminary signal for third quarter economic growth prospects.
- The latest weekly initial jobless claims count totaled 233,000 while the consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 248,000 (from 247,000). As for continuing claims, they rose to 1.977 million from the revised count of 1.949 million (from 1.945 million).
- The report covered the period in which the survey for the July employment report was conducted; accordingly, the key takeaway is that it should feed expectations for another month of strong nonfarm payroll gains.
- The Conference Board's Leading Indicators report for June increased 0.6% (consensus 0.4%) after moving higher by an unrevised 0.3% in May.
Investors will not receive any economic data on Friday.
