Traders take profits on disappointing economic news with the Dow (
DJI) fighting for its fifth consecutive gain. The focus Wednesday has been on the durable goods orders release, as well as another round of earnings reports. Durable goods orders in June were disappointing, resulting in a decline in futures. This news offset positive earnings results from Comcast (
CMCSA), Sprint Nextel (
S) and ConocoPhillips (
COP). Overseas markets are mixed with traders taking profits in Europe, but indices in Asia seeing strong gains.
Durable goods orders fell 1.0 percent in June when expectations were for a gain of 1.0 percent. Transportation was the weakest component, but orders still fell 0.6 percent when transportation is excluded. Nondefense capital goods orders excluding aircraft did rise 0.6 percent, which shows continued strength in business spending. On a year on year basis, durable goods orders are up 15.9 percent. This report does show that there was some weakness in activity in the second quarter. We will know more Friday when the first release of second quarter GDP is released.
Sprint Nextel shares are up sharply Wednesday following the company’s earnings release. The company saw a wider loss in the quarter and fell slightly short on revenues. However, Sprint noted that it lost fewer monthly contract customers in the second quarter. The company lost 228,000 monthly bill paying subscribers in the quarter, but this was much better than expectations for a loss of 355,000. Sprint Nextel shares are up more than three percent on the news, trying to break through the $5 level.
Oil giant COP beat earnings estimates by 19-cents a share and announced plans to sell part of its stake in Lukoil. COP will sell a 20 percent stake back to Lukoil for $3.44 billion. COP shares are up one percent trading near $55. The stock is in the midst of a rally, but the daily chart shows the 50-day moving average crossing below the 200-day moving average.
Comcast reported that earnings fell 8.6 percent in the second quarter, though results were a bit higher than expected. The company continues to fight for regulatory approval to buy a controlling stake in NBC Universal from General Electric (
GE). CMCSA shares are lower in early trading with traders concerned about the economy, especially the housing sector and the jobs market. The stock is lower in morning trading at a price near $19.20.
Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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