All three major U.S. indexes closed down during today’s session for the third straight day as profit taking and fear of stimulus tapering has been evident. The Dow Jones Industrial Average dropped by nearly 100 points before regaining some of its early session losses to close at 15,470.67, down 48.07 points. The S&P 500 and the NASDAQ also regained some of its early morning losses to both close down by about 1/3%. The S&P 500 should find support at 1,650 levels, with any break through this level we could see a much more dramatic pullback than what’s expected.
With two Fed Presidents scheduled to speak today we knew that once again that the day’s trading would be largely focused on the stimulus program. Philadelphia Fed President Charles Plosser ended up cancelling his speech while Cleveland Fed President Sandra Pianalto reiterated what most of the Fed members have been saying for the past month. Pianalto failed to give any time frame, but did say she would be ready to scale back the bond-buying program if the labor market continues to improve.
On the economic front we saw the number of mortgage applications increase by 0.7% after having fallen in four of the past five weeks. With increasing interest rates worries have emerged that higher costs could take some of the strength out of the housing market’s recovery. Fixed 30-year mortgage rates rose again last week to average 4.61 percent, and have now risen over 1% since early May 2013.
U.S. consumer debit numbers for June was also reported today coming in at a less than expected $13.8 billion raising the total to $2.8 trillion. Non-revolving credit, which includes loans for cars and college tuition, rose by $16.5 billion. Revolving facilities, which mostly measure credit card use, declined by $2.7 billion, the most since June 2012.
Tesla continued its unbelievable year after reporting a surprising second-quarter operating profit causing the stock trade above $152.00 a share in after-market trading. Analysts had expected the company to report a loss excluding items of 17 cents a share on $383 million in revenue. These numbers were easily beat coming in at a profit of 5 cents on revenue of $405 million. The carmaker said it had increased its rate of production 25 percent to 500 cars a week and that it had surpassed its expected sales of 4,500 vehicles for the second quarter by 650.
As we begin to come to the end of second quarter earnings season we will see 248 companies releasing their earnings tomorrow. Of the 248, 138 have seen an increase in insider ownership with the likes Chiquita Brands International Inc, Coeur d’Alene Mines Corporation, Allscripts Healthcare Solutions, Inc., and NVIDIA Corporation seeing very strong growth in insider ownership over the past 6 months. On the opposite side of the spectrum we will see 75 companies have seen a drop in insider ownership over the past 6- months including Beam Inc, AMC Networks Inc, Plug Power Inc, and Monster Beverage Corporation.