Stocks Gain on Outlook for More Fed Stimulus
NEW YORK (TheStreet) -- U.S. stocks gained Monday as sluggish existing home sales and lower-than-expected earnings from McDonald's (MCD) bolstered the outlook that the Federal Reserve is unlikely to begin curbing its stimulus measures in the near future.
Investors may get a boost this week if Europe's economy shows signs of a recovery, Darrel Cronk, regional chief investment officer for Wells Fargo Private Bank, said in a phone interview from New York. "We'll get a read on Europe's [economic growth] on Wednesday, and I think it will show that Europe is strengthening and coming out of their recession,'' he said.
The National Association of Realtors reported Monday that existing-home sales dropped to a seasonally adjusted annual rate of 5.08 million in June from a downwardly-revised pace of 5.14 million in May but remain well above year-ago levels. Economists, on average, were expecting sales to reach 5.25 million in June.McDonald's (MCD) slid 2.7% to $97.58 after the world's-largest hamburger chain posted second-quarter earnings that missed estimates by two cents at $1.38 a share and revenues that disappointed as well, as a 1% rise in global and U.S. same-store sales were offset by declining results in Europe, Asia Pacific, the Middle East and Africa. Gold producer Newmont Mining (NEM) advanced 5.8% to $30.35 as gold prices surged as the U.S. dollar slipped and China signaled a shift in lending practices. Gold mining stocks are a riskier but sometimes more profitable way to invest in gold. Hasbro (HAS) jumped 3.3% to $46.87 and climbing back from early losses even after the toymaker posted second-quarter earnings that missed expectations by five cents at 29 cents a share and revenues that also disappointed as weakness in its Boys category offset sales momentum for its Girls, Games, and Preschool products. Wall Street was relatively forgiving of the results factoring in the seasonal effects of the second quarter. Gannett (GCI) declined 1.9% to $25.87 after the publisher of USA Today reported quarterly revenue that was in line with Wall Street's target amid a lack of improvement in newspaper advertising sales. Yahoo! (YHOO) tumbled 4.3% to $27.86 after the Internet company announced it would buy back two-thirds of hedge fund Third Point's stake in the Internet giant, spending $1.2 billion to do so. This week, 157 S&P 500 companies are expected to report second quarter earnings, with tech earnings remaining in full force as Apple (AAPL) reports on Tuesday, Facebook (FB) announces on Wednesday, and Amazon (AMZN) releases results on Thursday. Chipmaker Texas Instruments (TXN) and moving streaming company Netflix (NFLX) report after the markets close Monday. Thomson Reuters reports that of the 91 companies in the S&P 500 that have reported earnings to date for the second quarter, 65% have reported earnings above analyst expectations; this is higher than the long-term average of 63% and below the average over the past four quarters of 67%. Meanwhile 49% of companies have reported second quarter revenue above analyst expectations, which is lower than the long-term average of 61% and higher than the average over the past four quarters of 48%. The benchmark 10-year Treasury was rising 4/32, diluting the yield to 2.472%. Japan's stock market rose Monday following Japanese Prime Minister Shinzo Abe's victory in Sunday's upper house elections, which is expected to give him a stronger mandate to push ahead with economic reforms. Follow @atwtse Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>.
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