Market briefing --- Matt (slow)
NYSE --- Deb (fast)
G.E. --- Su (fast)
welcome to “world financial report.” i’m matt nesto. let’s give you those closing numbers. it was a wrap of a weekly trend of declines and deb kostroun joins us from the big board with a wrap of the session.
>> this week it was a shortened trading week with a holiday on monday, the july 4th holiday observance on monday. so a four-day trading week. next week, we’ll be runnering to work with 71 companies of the s&p 500 reporting their earnings, likely to provide a lot of direction for the market as we’ve been in a trading range for some time. the market , at least in friday’s session, flirting around that 10,200 area and closing just above it in the dow jones industrial average. one of the things that did help the market on friday, g.e. releasing its earnings, the biggest gainer in the s&p 500. second-quarter earnings a penny better than analysts’ estimates. we also saw technology performing well and remember, what we’ve been seeing in technology, as the market over this past week, when it goes lower, semiconductors tend to lead it lower and when the market goes higher, semiconductors lead it higher but we’ve heard a lot of news over the past week about intel, many analysts weighing in on intel and will they meet their third-quarter numbers. next week we’ll be hearing intel’s numbers for the second quarter. looking at other technology stocks, we did see unisys hitting a 52-week low after saying their second-quarter results coming in below their forecast. unisys at a 52-week low. also, other stocks we were looking at today, t.x.u. this is―shares of t.x.u., the largest power generator in texas, lower all day today. however, they did―they were lower mainly after a dallas tv station playing tapes of t.x.u. traders talking about taking advantage of a nearby municipal utility when they needed to buy power from time of the t.x.u. so utility stocks under water all day. back to you.
>> appreciate it. a record u.s. demand and concern about supply disruptions in asiaia, africa and the middle east combibed to push oil prices higher. inventories fell to a two-month low. a rocky―iraqi and nigerian oil shipments disrupted, and a tax dispute threatened to curb russian output. those nations account for almost 1/5 of u.s. oil imports. today, the price of crude oil was down about 1% in new york trade, significantly below $40 a barrel, however. some analysts say crude oil prices may fall next week, as well. we want to point that out, on rising output from opec. moving on to general electric’s higher-than-forecast earnings. the world’s largest company by market value says demand for plastics and engine parts and loans fueled the biggest percentage sales gain in almost four years. net income rose to 3.92 billion dollars from 3.79 a year ago. per share, 38 cents. g.e.’s chairman and c.e.o., jeff immelt, calling this the best economy he’s seen in years. su keenan looks at how the rosy outlook is affecting the stock.
>> lifting the full-year outlook. and general electric’s outlook often viewed as a barometer for the economy because of its diverse and global business. it is the world’s biggest maker of jet engine, power plant turbines and medical imaging equipment and leader in the credit card and aircraft leasing businesses. philadelphia trust company’s chief investment officer says when g.e. speaks, you listen. you can see healthcare earnings were up more than 30%. john waterman, chief investment officer with rittenhouse asset management.
>> what we’re hearing from g.e. is a lot of confidence in the business and in the economy. so that makes us feel good about owning the stock and about the outlook for the next 12 to 18 months.
>> steve hoedt, national city corporation’s analyst,, says the recovery in some of the weaker business units is key.
>> the numbers shows the economy has gained a bit of strength. i would also point to, within the company’s finance division, you can see the utilization rates for leased products they have that are economically sensitive also were very high in the quarter and that’s another good sign.
>> this is a week when stocks can use a good sign. the standard & poor’s 500 index fell for a fourth straight week, pressured by a series of companies saying earnings will be less than expected. shares of chipmaker conexant plunged as did shares of veritas veritas, both companies cutting forecasts. david sowerby with loomis sayles says g.e. confirms his view that second-quarter corporate earnings will be 28% higher than year ago levels.
>> corporate free cash flow is as strong as i’ve seen it since arguably 30 years or longer. top-line revenue growth up 11% to 12% compared to year-ago levels. there will also be weaklings in the group but this earnings environment, seven straight quarters of double-digit earnings growth, is arguably as good as i’ve seen since the mid 1960’s.
>> g.e. shares rose 1.5% today.
>> want to see cool g.e. graphics.
>> sure.%
>> i put stuff together on g.e. it’s an interesting company to look at and a lot of people loockeds at this company as an industrial but the fact remains that the company is doing more than half of its sales as a financial right now. you take a look at this first chart i’ve put together, i’ve compared it to industrial production for the heck of it. look at the correlation between the indexes rising, a 10-year chart. the white line is the industrial production index and you can see the two rising in tandem, pretty much until the year 2000 and pretty much falling in tandem. what you don’t see, though, is the recovery as much, the industrial production index back to just above its previous high. g.e. not even close to recovering from its all-time high.% so then, the second graphic that we looked at is more correlated to financials and this one really caught my eye. it’s the five-year comparison of g.e., which is the white line here, and the 10-year treasury yield. look at the overlap over a five-year period between g.e. and 10-year treasury yields, just something to talk about this weekend over cocktails. interesting and unusual. last but not least, technical analysis, courtesy of the bloomberg terminal. you see that red circle up top, that was that two-year high that we hit just at the beginning of the year. you can see that the stock struggled to get there and bounced back. also, one other thing i want to look at in terms of relative strength, if you were to look at the stock over the past year, overbought once, we’ll consider this one although it’s technically three overbought signals, and three times overbought but oversold only twice in the past year, most recently in march during this dip in the price right here. right now, we stand kind of in the middle. so the market really―or that relative strength index not giving you a clear buy or sell% -indication. that is the wrap, my way, on g.e. a mistrial in the case of michael rigas. we’ll go to the courthouse for a full report on that up next.
