Financial News 7/22/12 – 7/28/12

Economy

-Manufacturing in China continued to slow in July, but the pace of the contraction has cooled providing for some optimism.  7/24

-Housing prices rose in the second quarter compared to the second quarter in 2011 for the first time since 2007, providing further support that housing is turning a corner. 7/24

-Business activity in July in the euro zone contracted for the 6th straight month. 7/25

-Fed officials are moving closer to taking action as the U.S. economy continues to sag.  7/25

-Newly built homes saw their sales level plummet 8.4% in June.  While sales are improving over the previous year the recovery has been rocky.  7/26

-The U.K.’s GDP contracted by 0.7% in the second quarter, a rate much higher than expected and it further cast a light on austerity measures and their effect on countries.  7/26

-Capital goods excluding defense items fell 1.4% in June.  The proxy for business spending shows that’s businesses are holding back and it is hurting economic growth. 7/27

-U.S. GDP growth slowed significantly from the first quarter to an annual rate of 1.5% as consumers and businesses cut back on spending.  However, the number was slightly ahead of expectations.  7/28

Corporate

-McDonalds saw its earnings fall 4.5% over the most recent quarter on higher costs and increased advertising.  7/24

-Chinese state owned firm Cnooc Ltd. agreed to purchase Canada’s Nexen Inc., one of the largest energy producers in the country for $15.1 billion.  7/24

-UPS reported meager earnings growth of 2.2% in the second quarter and lowered its earnings forecast for the remainder of the year.  7/25

-Netflix moved back into the black in the second quarter, but its subscriber base growth was lackluster and the company forecasted a loss in the 4th quarter.  7/25

-Apple missed earnings expectations for only the second time in the last 39 quarters.  Sales of the iPhone dipped from the first quarter as consumers held off on purchases on the expectation of a new phone later this year.  In addition the beaten European economy hurt sales.  7/25

-Online gaming company, Zynga, sank to a second quarter loss and the company lowered its earnings outlook for the remainder of the year.  7/26

-Samsung electronics profit rocketed up 48% in the second quarter driven be increasing smartphone sales.  7/27

-Exxon set a record for quarterly profit earning $15.9 billion, however it was driven by several one time items and excluding those their profit missed estimates.  Weakness in its natural gas business also cast a shadow over earnings.  7/27

-Amazon’s profit plummeted 96% due to heavy spending.  Its revenue rose 29%, but both numbers were below estimates.  7/27

-Facebook’s first quarterly earnings report as a public company disappointed as revenue growth shrank and expenses mounted.  7/27

Regulatory

-Several groups of traders around the world are under regulatory scrutiny for alleging working together to alter the Libor rate.  7/24

Market

-Moody’s lowered its outlook to negative for Germany citing the tremendous cost of a Euro zone breakup and the hefty costs to continue to keep it together. 7/23

-European markets sank on the news of the weaker Germany outlook and the rising costs for Spain to borrower in the capital markets.  Greece sank 7.1%, Germany fell 3.2%, and Portugal dropped 3.4%.  Italy and Spain both moved to ban short selling; Spain for 3 months and Italy only on financial stocks for the next week.  Europe as a whole fell 2.5%.  In the U.S. the Dow dropped 0.8% and the S&P 500 fell 0.9%.  On the flip side U.S treasury yields dropped to new lows with the 10 year yield down to 1.435%. 7/24

-Markets tumbled again on fears that the European debt crisis is starting to hurt U.S. corporations.  The Dow fell 0.8%, the S&P 500 dropped 0.9%, and Europe dropped 0.5%.  The 10 year U.S. Treasury yield hit another record low dropping to 1.404%. 7/25

-Mario Draghi, head of the ECB said the organization would do everything in its power to preserve the euro, spurring hopes that new stimulus measures from the central bank are on the way.  7/27

-After the comments by the head of the ECB world markets rallied.  The Dow shot up 1.7%, the S&P gained 1.6%, Europe jumped 2.5% and Japan rose 0.9%.  7/27

-Markets shot higher on Friday as investors continue to take comfort in the ECB’s comments and the weakness in U.S. GDP growth drove thoughts the Fed will once again intervene to try to stimulate growth in the economy.  The Dow passed the 13,000 mark for the first time since May gaining 1.5%.  For the week it rose 2.0%.  The S&P 500 rose 1.9% and gained 1.7% for the week.  Europe and Japan ended the week up 0.6% and down 1.2%, respectively.  Treasury’s fell on the possibility of more stimulus.  The 10 year U.S. Treasury yield rose to 1.553%.  7/28

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