The Nasdaq drifted to a new record on Thursday, July 20, while the S&P 500 and Dow Jones Industrial Average declined slightly.
The Nasdaq added 0.08% to finish at a new high of 6,390, its third record close in a row. The Dow declined by 0.12% and the S&P 500 dropped by the slimmest of margins, just 0.01%
Unilever PLC (UL) gains led stocks in the non-cyclical consumer goods sector higher. Other names on the rise included Procter & Gamble Co. (PG) , Anheuser Busch InBev NV (BUD) , PepsiCo Inc. (PEP) , British American Tobacco PLC (BTI) and Reynolds American Inc. (RAI) .
Unilever posted solid earnings for the first six months of the year and said it sees margin improvement and accelerating growth into the second half of 2017. Unilever said earnings per share rose 14.4% from the same period last year to €1.13 for the six months ended in June, well ahead of the FactSet consensus of €0.84 a share. Sales for the period rose 5.5% to €27.7 billion ($31.9 billion). Underlying sales growth for the second quarter rose 3%, the company said, to €14.4 billion, just shy of the company-supplied consensus of 3.2%.
Dow component Home Depot Inc. (HD) dropped 4%, while Lowe's Cos. (LOW) fell 5% after Sears Holdings Corp. (SHLD) sealed a deal to sell Kenmore appliances through Amazon.com Inc. (AMZN) . Both home-improvement retailers sell appliances. Some of the products sold through Amazon will integrate with Amazon's Alexa, its artificial intelligence that powers a number of its electronics.
Materials stocks were the largest losers Thursday with a disappointing quarterly performance from Sherwin-Williams Co. (SHW) leading the sector lower. The paint and coating company earned an adjusted $3.80 a share over the quarter, far less than an anticipated $4.56. The company also offered third-quarter earnings guidance of $3.70 to $4.10 a share, which includes a $1.10 a share charge tied to its acquisition of Valspar. Guidance was below consensus of $4.96.
Other materials stocks that were lower include BHP Billiton PLC (BHP) , Dow Chemical Co. (DOW) , Rio Tinto PLC (RIO) , and Vale SA (VALE) . The Materials Select Sector SPDR ETF (XLB) was down by 0.8%.
Qualcomm Inc. (QCOM) was also weighing on markets after the chip giant issued a downbeat forecast for its fiscal fourth quarter, largely because of its ongoing legal dispute with Apple Inc. (AAPL) . For the fourth quarter, Qualcomm said it expects to report sales of between $5.4 billion and $6.2 billion, compared to Wall Street's projected $5.5 billion. Qualcomm forecast GAAP earnings of between 55 cents and 65 cents a share.
Qualcomm's licensing business continues to be impacted by its legal battle with Apple. The QTL licensing segment saw its sales fall quarter over quarter to $1.17 billion, which was below analysts' estimates of $1.47 billion.
Qualcomm has been ensnared in a legal dispute with Apple since January, when the tech giant sued the chipmaker for $1 billion, claiming that it collected royalties for technologies it wasn't involved with, including Touch ID and cameras. Apple has said it will withhold future royalty payments until the dispute is resolved, forcing Qualcomm to slash its revenue forecast for the third quarter.
The company said its guidance assumes no royalty payments on 3G/4G device sales from either Apple or another unnamed major licensee it is at odds with.
In other positive earnings Wednesday, T-Mobile U.S. Inc. (TMUS) reported a jump in quarterly earnings. Second-quarter profit surged to 67 cents a share from 25 cents a year earlier and came in far higher than consensus of 38 cents. Revenue of $10.21 billion flew past estimates of $9.81 billion. The telecom added 1.3 million customers over the three-month period. T-Mobile said the subscriber additions in the quarter marked the 17th consecutive quarter it added more than 1 million customers.
American Express Co. (AXP) beat earnings and sales estimates over its second quarter. The credit card company earned $1.47 a share over its recent quarter, lower than $2.10 a year earlier but above estimates of $1.43. Revenue rose by 1% to $8.3 billion and exceeded forecasts of $8.19 billion.
Union Pacific Corp. (UNP) reported a better-than-expected quarter. The railroad company earned $1.45 a share over its recent quarter, 6 cents higher than estimates. Revenue increased just over 10% to $5.25 billion, beating consensus by $60 million.
Other earnings of note include Alcoa Corp. (AA) , Kinder Morgan (KMI) , Steel Dynamics (STLD) , United Rentals (URI) , Travelers Cos. (TRV) , Snap-On Inc. (SNA) , Sherwin-Williams (SHW) , Phillip Morris (PM) , KeyCorp (KEY) , Dover Corp. (DOV) , Blackstone (BX) , BB&T Corp. (BBT) , Bank of New York-Mellon (BK) , and Abbott Labs (ABT) .
Even with recent highs, trading on Wall Street has been relatively muted with investors more in wait-and-see mode than a bullish mindset, said Robert Pavlik, chief market strategist at Boston Private, in a note.
"Strange as it may sound the action in the market feels as though we're nowhere near an all-time high," said Pavlik. "Overall volume is down and most investors apparently are acting as though they're more cautious than anything else... I believe the quietness of the market is a reflection of investor's concerns with the lack of progress coming out of D.C. on everything from healthcare to taxes."
The European Central Bank opted to leave interest rates unchanged at its Thursday meeting, meeting economists' expectations. The central bank also repeated that it would continue to buy 60 billion euros in government bonds through to December or longer "if necessary."
ECB President Mario Draghi was vague on when the central bank could change its quantitative-easing plans. At a press conference following the meeting, Draghi said the ECB has to "look at the path of inflation" to ascertain whether it is moving toward the central bank's target. Draghi also said the ECB would discuss changes to monetary policy in "autumn."
"This is a well-choreographed attempt by Mr. Draghi to make sure that financial markets don't get ahead of themselves after his more hawkish comments of late," said Aberdeen Asset Management senior investment manager Patrick O'Donnell. "We probably won't hear anything significant out of the ECB until September, which is plenty of time for investors to digest Mr Draghi's caveat laden hawkishness."
Jobless claims saw a large drop in mid-July, according to the latest reading from the Labor Department. The number of new claims for unemployment benefits in the U.S. fell by 15,000 to 233,000 in the past week. The less volatile, four-week claims average declined by 2,250 to 243,750.
Business conditions in the Philadelphia weakened more than expected in July. The Philadelphia Fed Business Outlook fell to 19.5 in July, far weaker than an expected reading of 24. The index sat at 27.6 in June.
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When: Tuesday, July 25, 6:30 p.m. to 9 p.m.
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