US close: Eurozone reassurance provides shot in the arm

Date: Saturday 28 Jul 2012

US equities ended the week with a bang, as the Dow Jones soared back above the 13,000 mark on a wave of optimism over the future of the Eurozone.

In Europe the French President, François Hollande and the German Chancellor, Angela Merkel, released a joint statement saying they would do “everything” needed to keep the euro project intact.

This follows similar comments from European Central Bank President Mario Draghi and suggest the Eurozone countries are finally prepared to authorise the ECB to begin purchases of Italian and Spanish bonds on the secondary market.

Better than expected gross domestic product (GDP) numbers also boosted sentiment. The initial estimate of US GDP growth in the second quarter came in at an annualised rate of 1.5%, slightly better than the 1.4% consensus forecast.

Health care firms thrive, Facebook fades

The Facebook car crash continues; its first quarterly results, released after the bell on Thursday, contained numbers that came in line with analyst estimates. The earnings per share (EPS) matched at $0.12, while revenues of $1.18bn squeaked by the $1.15bn estimate. The major issue for the experts who follow the company is revenue growth which has remained largely flat over the last two quarters. In fact, Facebook’s growth rate in the second quarter was the slowest since the first quarter of 2011 which was when the company first provided this data.

In screen based trading after the markets had closed on Thursday the stock dived by 10.71%, which was pretty much the size of the fall on Friday when open-outcry trading resumed on Wall Street on Friday.

If many people remain sceptical about the sudden all-pervasiveness of Facebook, the same could once be said of coffee shop chain Starbucks, but the firm is still around, although some of the froth was blown off the share price on Friday after the company reduced forecasts for its fiscal fourth quarter profits. Some pundits suggested that when it comes to the prices Starbucks and other coffee shop chains charge, customers have begun to wake up and smell the coffee.

Amgen led the health-care sector higher after its earnings came in higher than expected, while it was a similar story at Coventry Health Care, which enjoyed a boost from increased membership of government health insurance programmes.

Drugs giant Merck was a picture of health after higher sales of diabetes treatments Januvia and Janumet drove second quarter profits higher than analysts had forecast.

Online travel site Expedia soared after it signalled a 44% increase in its dividend. Strong demand for hotel rooms has led to top line growth at the firm.

Gold miner Newmont Mining lost some of its lustre after second quarter profits disappointed. The mining group's production levels were lower than anticipated in the second quarter while costs rose faster than analysts had foreseen.

Business software firm CA declined after it lowered revenue guidance for the full year following a slow start to its new financial year.

Other markets

While equities returned to favour with a vengeance, no one was much interested in government bonds. The benchmark 10-year Treasury lost a dollar, pushing up the yield by one-tenth of a percentage point to 1.55%.

With Europe's political leaders and policy makers queueing up to pledge wholehearted commitment to the single currency, the dollar fell back sharply against the euro. Towards the end of trading in the afternoon session the euro bought $1.2320, up from around $1.2284 late on Thursday afternoon.

The dollar index, which measures the dollar's value against a trade-weighted basket of currencies, eased to around 82.636 from 82.834 the day before.


S&P 500 - Risers
Alpha Natural Res (ANR) $7.01 +20.12%
Expedia Inc. (EXPE) $54.90 +20.11%
MEMC Electronic Materials (WFR) $1.90 +11.76%
Coventry Health Care Inc. (CVH) $34.07 +10.90%
Tellabs Inc. (TLAB) $3.33 +10.65%
Tenet Hlthcre Corp. (THC) $4.82 +9.55%
Priceline.Com Inc. (PCLN) $683.99 +8.86%
Harman International Industries Inc. (HAR) $40.89 +8.29%
Amazon.Com Inc. (AMZN) $237.32 +7.87%
Gilead Sciences Inc. (GILD) $55.50 +7.39%

S&P 500 - Fallers
Starbucks Corp. (SBUX) $47.47 -9.42%
CA Inc. (CA) $24.42 -7.16%
Cerner Corp. (CERN) $73.71 -5.55%
Newmont Mining Corp. (NEM) $44.53 -3.40%
Principal Financial Group (PFG) $24.98 -2.54%
D. R. Horton Inc. (DHI) $18.39 -2.18%
Whole Foods Market Inc. (WFM) $92.55 -1.65%
Legg Mason Inc. (LM) $24.86 -1.07%
DeVry Inc. (DV) $19.79 -0.75%
McKesson Corp. (MCK) $91.74 -0.56%

Dow Jones I.A - Risers
Merck & Co. Inc. (MRK) $45.10 +4.07%
Caterpillar Inc. (CAT) $86.16 +3.43%
Alcoa Inc. (AA) $8.45 +3.17%
Hewlett-Packard Co. (HPQ) $18.57 +3.08%
JP Morgan Chase & Co. (JPM) $36.89 +3.02%
AT&T Inc. (T) $37.14 +2.31%
Microsoft Corp. (MSFT) $29.75 +2.04%
Intel Corp. (INTC) $26.02 +2.04%
Cisco Systems Inc. (CSCO) $15.69 +2.02%


Dow Jones I.A - Fallers
None

Nasdaq 100 - Risers
Expedia Inc. (EXPE) $54.90 +20.11%
Priceline.Com Inc. (PCLN) $683.99 +8.86%
Amazon.Com Inc. (AMZN) $237.32 +7.87%
Gilead Sciences Inc. (GILD) $55.50 +7.39%
VeriSign Inc. (VRSN) $45.42 +6.54%
Research in Motion Ltd. (RIMM) $7.38 +5.89%
Amgen Inc. (AMGN) $83.92 +5.83%
PACCAR Inc. (PCAR) $40.80 +5.60%
Citrix Systems Inc. (CTXS) $77.81 +4.84%
Celgene Corp. (CELG) $70.60 +4.61%

Nasdaq 100 - Fallers
Starbucks Corp. (SBUX) $47.47 -9.42%
CA Inc. (CA) $24.42 -7.16%
Cerner Corp. (CERN) $73.71 -5.55%
Whole Foods Market Inc. (WFM) $92.55 -1.65%
Lam Research Corp. (LRCX) $34.14 -0.67%
BMC Software Inc. (BMC) $39.76 -0.40%
Seagate Technology Plc (STX) $30.01 -0.17%

JH

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