Stocks Extend Rally On Robust Earnings
4:19 pm Thursday, July 22nd, 2021
- Stocks edged higher on Thursday, as lackluster economic data and mixed corporate earnings sent investors back to growth stocks.
From a data standpoint, weekly initial claims, existing home sales for June, and the Conference Board’s Leading Economic Index (LEI) for June each missed consensus expectations. Jobless claims (419,000) reached the highest level since mid-May, and the LEI increase of 0.7% was the slowest pace since February.
Earnings reports for the most part continued to beat expectations, but there is some commentary that earnings growth will naturally have to slow down in part because the coronavirus still exists. Texas Instruments (TXN 184.95, -9.29, -4.8%) is getting hit after providing conservative Q3 guidance.
The S&P 500 energy (-1.1%) and financials (-1.2%) sectors, which were the biggest winners yesterday, were today’s biggest losers with declines over 1.0%. Bank stocks have felt the pressure of some curve-flattening activity, with the 10-yr yield down four basis points to 1.24%.
The information technology (+0.5%), health care (+0.4%), utilities (+0.3%), and consumer discretionary (+0.2%) sectors trade in positive territory.
Declining issues outpace advancing issues by a 3:1 margin at the NYSE, but the large-cap indices have been heavily supported by Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), and Facebook (FB).
Apple and Microsoft received price-target increases ahead of their earnings reports next week. AAPL was raised to $175 from $165 at Canaccord Genuity. MSFT was raised to a Street-high $378 from $310 at Citigroup.
Union Pacific (UNP), CSX (CSX), AT&T (T), and Dow Inc. (DOW) traded mixed following their earnings reports.
Initial claims for the week ending July 17 increased by 51,000 to 419,000 (consensus 360,000). Continuing claims for the week ending July 10 decreased by 29,000 to 3.236 million, which is the lowest level since March 21, 2020.
