News at a Glance
Quarterly Cheer: Equities surge on earnings, cheaper oil.
Strong Numbers: JPM, UTX beat the Street.
Housing Surprise: June starts, permits top consensus.
Crude Dives Again: Oil falls $4+ to under $130 a barrel.
The Lowdown
The rally stretched into its second day with authority on Thursday.
Stocks ended sharply higher on strong second-quarter results from large-caps and another sharp drop in the price of oil. The Dow Jones Industrial Average finished up 207 points at 11447. The Nasdaq picked up 27 at 2312, and the S&P 500 climbed 15 to 1260.
The enthusiasm extended a dramatic turnaround for the markets. On Tuesday, the Dow closed at 10963, its lowest point in nearly two years. Since then, the blue-chip index has gained 484 points, or 4.4%.
Financials continued their bullish streak after JPMorgan Chase (JPM) took more heat off the struggling sector. The firm posted a smaller-than-expected drop in Q2 earnings. The bank's results came a day after Wells Fargo (WFC) lifted the sector with surprising results.
Other Dow components reporting earnings surprises included Coca-Cola (KO), which was buoyed by strong international sales, and United Technologies (UTX), which was buoyed by strong international sales. (If you are sensing a trend, it is not your imagination.)
Weakness in materials held the gains in check. Miners and metal producers headed south.
Energy stocks also declined as oil prices continued to pull back. By 4 p.m., crude traded down $4.62 cents at $129.98 a barrel.
The housing sector got some mixed news. Housing starts and building permits each rose last month by more than economists had expected, however the data were largely a statistical artifact, the result of a change in building codes regarding apartment construction in New York City. Single-family home construction fell 5.3% for the month.
World markets were higher after Tuesday's domestic rally. In Asia, Japan's Nikkei climbed 1.0%, while Hong Kong's Hang Seng picked up 2.4%. In Europe, London and Paris finished up more than 2.6%, and Frankfurt picked up 1.9%.
Corporate News
JPMorgan Chase (JPM) saw its second-quarter earnings cut in half this year, but the firm still outperformed analysts' bearish expectations. The bank earned $2.00 billion, or 54 cents a share, down from $4.23 billion, or $1.20 a share, in the year-ago period. Analysts had been looking for a profit of 44 cents a share. JPMorgan was hit by one-time costs related to the acquisition of Bear Steans and $3.5 billion loan loss provisions, however record earnings in the firm's commercial banking unit lifted the bottom line.
Coca-Cola (KO) posted a 23% drop in second-quarter earnings after taking a one-time charge related to a write-down at its bottler. Coke earned $1.42 billion, or 61 cents a share, down from $1.85 billion, or 80 cents a share, in the year-ago period, however excluding one-time charges, the beverage company earned $1.01 a share. That was good enough to top Street estimates of 96 cents a share. The benefited from volume growth abroad and a weakened dollar.
Merrill Lynch (MER) will sell its 20% stake in Bloomberg back to the company for roughly $4.5 billion, Reuters reported, citing an anonymous source. However, Merrill will hang on to its 49.8% stake in BlackRock (BLK). An announcement was expected when the firm releases second-quarter earnings data on Thursday. Sales of non-core assets could help Merrill cover some its losses tied to bad loans.
EBay (EBAY) reported second-quarter earnings that topped analysts' estimates, but traders were more focused on the firm's anemic guidance for the current quarter. EBay expects to post Q3 earnings of 39 cents to 41 cents a share on revenue of $2.10 billion to $2.15 billion. Analysts had predicted earnings of 41 cents a share on revenue of $2.17 billion. The online auctioneer also made a management change: Lorrie Norrington will take over for Rajiv Dutta as the President of eBay Marketplaces. Dutta is retiring from the company.
Nokia (NOK) posted second-quarter results just a hair shy of estimates, but strong Q2 sales and a bullish outlook for the third-quarter helped ease concerns that the handset industry would be hobbled by the global economic slowdown. In the last quarter, Nokia sold 122 million phones, well above analysts' projections of 120 million, Reuters reported.
The Economy
Housing starts rose to an annual rate of 1,066,000 units in June, up from a revised rate of 977,000 in May, the Commerce Department said. Building permits, a leading indicator for the housing market, climbed to annual rate of 1,091,000 last month, up from a revised annual rate of 978,000 in May. Economists had expected housing starts to come in at an annual rate of 960,000 for June and building permits to come in at an annual rate of 965,000. REPORT
Initial jobless claims rose to 366,000 last week, up from 348,000 in the prior week, the Labor Department said. Economists had expected the number of people seeking unemployment benefits for the first time to come in at 380,000. REPORT
The Philadephia Federal Reserve's diffusion index of current business activity inched forward to a July reading of -16.3, up from a June reading of -17.1. Economists had predicted a reading of -15.0. REPORT
ReadMe
The Wall Street Journal on the Treasury's rescue package: For different reasons, Democrats and Republicans could make the mortgage bailout's passage through Congress a pretty rough ride. STORY
Money on the housing sector: Here are a few tips for knowing a housing rebound when you see one. STORY
Slate on slang: What is the business catchphrase of the year and why? STORY
WatchMe
Forbes on energy: James Balanced, manager of the Golden Rainbow Fund, says oil futures may continue to fall but sees opportunities in natural gas. VIDEO
CNBC on energy: Joshua Tanja, head of research at UBS Securities Indonesia, presents the case for coal. VIDEO
American Originals: Budweiser: The special explores how Bud's strategy has helped maintain its status as one of the country's most popular beers. CNBC, 9 p.m.
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