Stocks Continue Record Run, Fed Holds Steady

Charles Schwab: On the Market

Posted: 7/26/2017 4:15 PM ET

Stocks Continue Record Run, Fed Holds Steady

U.S. equities finished higher, tacking onto record highs, amid another string of mostly upbeat earnings reports, and after the Fed expectedly held steady in its monetary policy. Treasury yields fell following the Fed's decision and the U.S. dollar reversed to the downside, while crude oil prices added to recent gains in the wake of another bullish government oil inventory report. Gold finished higher.

The Dow Jones Industrial Average (DJIA) advanced 98 points (0.5%) to 21,711, the S&P 500 Index was nearly a point higher at 2,478, and the Nasdaq Composite increased 11 points (0.2%) to 6,423. In moderate volume, 826 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.86 to $48.75 per barrel and wholesale gasoline was $0.02 higher at $1.59 per gallon. Elsewhere, the Bloomberg gold spot price increased $10.80 to $1,262.61 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 93.50.

Dow member Boeing Co. (BA $233) reported Q2 earnings-per-share (EPS) of $2.89, or $2.55 ex-items, versus the $2.30 FactSet estimate, as revenues declined 8.1% year-over-year (y/y) to $22.7 billion, below the forecasted $23.0 billion. BA boosted its full-year profit outlook. Shares rallied.

AT&T Inc. (T $38) achieved Q2 EPS of $0.63, or $0.79 ex-items, versus the projected $0.73, though revenues declined 1.7% y/y to $39.8 billion, roughly in line with forecasts, due to declines in legacy wireline services and consumer mobility. However, the company's wireless subscriber additions trounced expectations. The company reaffirmed its full-year guidance. Shares of T gained solid ground.

Dow component Coca-Cola Co. (KO $46) posted Q2 profits of $0.32 per share, or $0.59 ex-items, compared to the expected $0.57, with revenues declining 16.0% y/y to $9.7 billion, roughly in line with forecasts. The company's organic revenue growth came in a bit shy of forecasts due to misses for Latin America and Asia, which met stronger-than-expected results in Europe, Middle East & Africa and North America. KO raised its full-year EPS guidance. Shares nudged higher.

Ford Motor Co. (F $11) announced Q2 EPS of $0.51, or $0.56 ex-items, versus the forecasted $0.43, as automotive revenues rose 0.3% y/y to $37.1 billion, below the expected $37.3 billion. Profits were lower than expected in North America and Europe. F issued full-year profit guidance that came in above expectations. Shares were lower.

Express Scripts Holding Co. (ESRX $63) reported Q2 earnings of $1.37 per share, or $1.73 ex-items, versus the projected $1.71, as revenues increased 0.5% y/y to $25.4 billion, below the expected $25.5 billion. The company issued Q3 EPS guidance with a midpoint above estimates, while raising its full-year profit outlook. Shares were nicely higher.

Advanced Micro Devices Inc. (AMD $15) posted a Q2 net loss of $0.02 per share, or profits of $0.02 per share ex-items, versus the breakeven forecast, as revenues rose 18.4% y/y to $1.2 billion, roughly in line with estimates. The chipmaker raised its full-year revenue guidance. AMD gained solid ground.

Fed stands pat, new home sales tick higher

As widely expected, the Federal Open Market Committee (FOMC) made no change to its monetary policy stance following its two-day meeting, noting in its accompanying policy statement that "near-term risks to the economic outlook appear roughly balanced," and that "household spending and business fixed investment have continued to expand." In its unanimous decision, the Committee provided little direction of any change to its current outlook for future rate increases, which beforehand showed that members have penciled-in one additional rate hike this year. However, Chairwoman Janet Yellen's dovish tone in her testimony before Congress earlier this month has many market participants hedging their bets on the future path of rate increases. Regarding winding down its balance sheet, the Committee only noted that it would commence such "relatively soon." No updated economic projections or post-meeting press conference by Chairwoman Janet Yellen were provided after the decision.

As noted in the latest Schwab Market Perspective: Are Danger Signs Rising…or Will the Bull Run Continue?, economic uncertainty has confounded the Fed, which may raise the risk of a policy mistake and/or bouts of market volatility, while putting the potential for another rate hike this year into greater doubt. We're sticking with our forecast for one more hike this year along with the start of a gradual reduction in their balance sheet, believing the latter could come before the former. The long running bull market continues to show remarkable resiliency and we expect that to continue. However, Yellen also bolstered the doves' case by noting that it is becoming more apparent that the "normal" level of interest rates may be below what it had been historically. Read the entire perspective, as well as Schwab's Chief Investment Strategist Liz Ann Sonders' insight into the Fed's decision in her article, Fed Keeps It on the QT, on the Markets & Economy page at www.schwab.com.

New home sales (chart) rose 0.8% month-over-month (m/m) in June to an annual rate of 610,000, below the Bloomberg forecast calling for 615,000 units, and compared to the downwardly revised 605,000 unit pace in May. The median home price decreased 3.4% y/y to $310,800. New home inventory ticked higher to 5.4 months of supply at the current sales pace. Sales jumped m/m in the West and Midwest but were flat in the Northeast and down in the South. Y/Y, sales are sharply higher in the Northeast and West, while down solidly in the Midwest and slightly higher in the South. New home sales are based on contract signings instead of closings.

The MBA Mortgage Application Index ticked 0.4% higher last week, following the previous week's 6.3% jump. The modest increase came as a 3.4% rise in the Refinance Index was met with a 2.2% decline for the Purchase Index. The average 30-year mortgage rate declined 5 basis points (bps) to 4.17%.

Treasuries turned higher following the Fed decision, as yields on the 2-year and 10-year notes fell 5 bps to 1.36% and 2.29%, respectively, while the 30-year bond rate lost 3 bps to 2.89%. Schwab's Chief Fixed Income Strategist Kathy Jones notes in her Bond Market Mid-Year Outlook: Redefining the Borders of 'Lower for Longer' in the second half of 2017, we expect 10-year Treasury yields to remain in a 2% to 2.5% range, consistent with the eight-year "lower for longer" theme in the bond market. Read more on the Fixed Income page at www.schwab.com, where Kathy also discusses, Dollar Decline: Time to Shift to International Bonds? Maybe Not, on the Markets & Economy page. Follow Kathy on Twitter: @kathyjones.

Tomorrow's economic calendar will be fairly busy, beginning with weekly initial jobless claims, forecasted to increase to a level of 240,000 from the prior week's 233,000, followed by the June preliminary durable goods orders report, with economists anticipating a 3.7% m/m rise following the surprising 0.8% decline in May, while ex-transportation, orders are expected to have increased 0.4% m/m, and orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, are seen to have gained 0.3% m/m. Preliminary wholesale inventories for June are also on tap, with forecasts calling for a 0.3% increase, and the advance goods trade balance is expected to show that the deficit shrank in June to $65.5 billion. Rounding out the day will be the July Kansas City Fed Manufacturing Index, expected to remain at June's 11 level, with a reading above zero indicating expansion in activity.

Europe and Asia higher ahead of Fed decision

European equities finished higher, with the euro dipping from a recent rally that has been fueled by expectations the European Central Bank is close to starting to talk about tapering its stimulus measures. The markets awaited today's monetary policy decision in the U.S., while digesting a plethora of earnings reports that have been mostly better than expected. The British pound ticked higher, while the U.K. reported the preliminary look at Q2 GDP growth, showing growth slowed to a 1.7% y/y pace, from the 2.0% expansion posted in Q1. Bond yields in the region mostly nudged lower after a recent rebound. For analysis of the global markets, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, latest article, An important benefit to global investors is back after 20 years on the Markets & Economy page at www.schwab.com. Follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia finished mostly higher following the upbeat earnings and economic data in the U.S., bolstered by the energy sector as crude oil prices continue to run, while the markets awaited today's Fed monetary policy decision. Japanese equities rose, as the yen lost some ground, and stocks in mainland China and Hong Kong ticked higher, while Australia's markets were sharply higher. Meanwhile, Indian listings also gained ground, notching a new all-time high, but securities in South Korea gave up early gains and finished lower. For more insight into emerging markets, Schwab's Jeffrey Kleintop CFA, offers his article, The Long Period of Underperformance for Emerging Market Stocks May Finally Be Over on the International Investing page at www.schwab.com, where you can also find his 2017 Mid-year Global Market Outlook: Broader Growth, Narrower Risks.

Tomorrow's economic calendar from abroad will include trade data from Australia, GDP from South Korea, housing prices from the U.K., consumer sentiment from Germany, and employment data from Spain.

Stocks Grab Gains

Charles Schwab: On the Market

Posted: 6/7/2017 4:15 PM ET

Stocks Grab Gains

U.S. equities avoided a third-straight session of losses as a mild advance was led by the financial sector which likely received a boost from a modest rebound in Treasury yields. In domestic economic news, weekly mortgage applications rose, but the afternoon release of consumer credit showed borrowing increased well below forecasts. Additional caution may have been exercised ahead of tomorrow's U.K. election and monetary policy decision from the European Central Bank. The U.S. dollar was nearly unchanged, gold was lower and crude oil prices tumbled following a government inventory report.

The Dow Jones Industrial Average (DJIA) increased 37 points (0.2%) to 21,174, the S&P 500 Index gained 4 points (0.2%) to 2,433, and the Nasdaq Composite added 22 points (0.4%) to 6,297. In moderate volume, 883 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil dropped $2.47 to $45.72 per barrel and wholesale gasoline was $0.06 lower at $1.49 per gallon. Elsewhere, the Bloomberg gold spot price decreased $7.42 to $1,286.97 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 96.68.

Dave & Buster's Entertainment Inc. (PLAY $73) reported Q1 earnings-per-share (EPS) of $0.98, or $0.87 ex-items, versus the $0.81 FactSet estimate, with revenues rising 16.1% year-over-year (y/y) to $304 million, slightly above the projected $300 million. Q1 same-store sales rose 2.2% y/y, below the forecasted 2.7% gain. The company raised its full-year EPS outlook but its guidance for revenue for the year had a midpoint that was a bit shy of estimates. Shares finished higher.

Navistar International Corp. (NAV $30) posted a fiscal Q2 loss of $0.86 per share, compared to the estimated $0.08 per share shortfall, as revenues declined 5.0% y/y to $2.1 billion, roughly in line with expectations. The truck and engine maker's North American sales topped forecasts. NAV reiterated its full-year guidance as it expects a stronger second half, driven by backlog and improving industry conditions. Shares traded lower.

Consumer credit misses forecasts and weekly mortgage applications rise

Consumer credit, released in the final hour of trading, showed consumer borrowing advanced by $8.2 billion during April, well short of the $15.0 billion forecast of economists polled by Bloomberg, while March's figure was adjusted higher to an increase of $19.5 billion from the originally reported $16.4 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, climbed by $6.7 billion, while revolving debt, which includes credit cards, increased by $1.5 billion.

The MBA Mortgage Application Index increased 7.1% last week, following the previous week's 3.4% decline. The rise came as a 3.4% gain in the Refinance Index was met with a 10.0% jump for the Purchase Index. The average 30-year mortgage rate decreased 3 basis points (bps) to 4.14%.

Treasuries dipped, with the yield on the 2-year note ticking 1 bp higher to 1.31%, while the yields on the 10-year note and the 30-year bond rose 3 bps to 2.18% and 2.84%, respectively.

Treasury yields have come under pressure as of late amid heightened political uncertainty and mixed economic data, headlined by last week's softer-than-expected May nonfarm payroll report, which caused some uncertainty regarding the pace of further Fed rate hikes after next week's highly-expected increase. Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, Turn Down For What: Why is Job Growth Slowing?, last Friday’s weak jobs report raised alarm bells about slowing job growth, but perhaps it's natural at this stage in the cycle. Read more on the Markets & Economy page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.

Meanwhile, the likelihood that the Fed could begin the process of shrinking its large balance sheet later this year has fostered uncertainty, as discussed by Schwab's Chief Fixed Income Strategist, Kathy Jones in her article, Will the Fed Reduce Its Balance Sheet? What Bond Investors Should Know on the Fixed Income page at www.schwab.com. Follow Kathy on Twitter: @kathyjones. Liz Ann Sonders also addresses this in her commentary, Gimme Three Steps … and a Stumble? on the Markets & Economy page, pointing out that reducing the gargantuan balance sheet is a form of tightening and the transition from quantitative easing (QE) to quantitative tightening (QT) begs the question whether we are heading into another period of heightened volatility.

However, the stock markets have taken this in stride, revisiting record high territory, and we discuss this in our article, Stocks and Bonds Rally: Can Both Be Right?. The two major asset classes appear to be pitted against one another in a tug-of-war over where the economy is headed. Many investors can't reconcile the diverging market action with a common view of the economy, and the situation could raise concerns about the fallout from a potentially messy divorce. Read more on the Insights & Ideas page at www.schwab.com.

Europe gives up early gains, Asia mixed as global events loom

European equities gave up early gains and finished lower, ahead of tomorrow's monetary policy decision by the European Central Bank (ECB), which Bloomberg reported could deliver a reduction in the central bank's inflation outlook in the wake of the recent drop in energy prices. The euro came under pressure in choppy trading ahead of the ECB's decision. Energy issues moved lower as crude oil prices tumbled in the wake of an unexpected jump in U.S. oil inventories. However, technology issues continued to move higher and eased Spanish banking sector concerns helped the financial sector, along with some stability in bond yields after recent pressure. Political uncertainty remained elevated on both sides of the pond, ahead of tomorrow's U.K. election and U.S. testimony of fired FBI Director Comey. Recent polls continue to show a narrowing of the race in the U.K., fostering some uncertainty as Brexit negotiations roll on and votes loom in Germany and Italy later this year.

For commentary on the political front check out Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, and Vice President of Trading and Derivatives, Randy Frederick's video, Political Risk: How Should Investors Respond? on the Insights & Ideas page at www.schwab.com, where you can also find our article, Brexit Begins: What's Next for the U.K?. Moreover, for a look at the global economic front, see Jeff's video, What's the Current State of the Global Economy? on the Insights & Ideas page at www.schwab.com. In economic news, German factory orders fell more than expected. The British pound ticked higher versus the greenback and bond yields in the region moved mostly to the upside.

Stocks in Asia finished mixed following the back-to-back declines in the U.S. and as the global markets tread cautiously ahead of this week's U.K. election and monetary policy meeting by the ECB, while eyeing the looming testimony by fired FBI Director Comey in the U.S. As political uncertainty remains elevated, geopolitical uneasiness continues in the wake of the cut ties with Qatar by several Middle East nations. As such, Schwab's Jeffrey Kleintop, CFA, offers his articles, Missiles and Markets: An investor guide to geopolitical risks on the Markets & Economy page at www.schwab.com, as well as, Top Five Trade Issues Investors Should Be Watching on the International Investing page. Japanese equities finished nearly unchanged, with the yen paring yesterday's jump, while Australian securities also finished little changed on the heels of the nation's Q1 GDP report, which showed growth slowed to a 1.7% y/y pace, from the 2.4% expansion posted in Q4, but slightly above estimates of a 1.6% increase. Indian shares advanced ahead of the Reserve Bank of India's monetary policy decision, which after the close it kept its policy stance unchanged as expected but lowered its inflation outlook. South Korean equities declined and stocks trading in Hong Kong dipped, despite eased Chinese liquidity concerns and some upbeat foreign investment figures, which helped lift mainland Chinese shares, along with optimism regarding the inclusion of its stocks to the MSCI.

The international economic docket for tomorrow will be headlined by Japan as the island nation releases Q1 GDP, trade data and bank lending figures. Additional releases will include the trade balance from Australia, the current account from France, 1Q GDP from the Eurozone and the aforementioned monetary policy decision from the European Central Bank.

Stocks Unable to Hold Gains Following Tax-Reform Outline

Charles Schwab: On the Market

Posted: 4/26/2017 4:15 PM ET

Stocks Unable to Hold Gains Following Tax-Reform Outline

U.S. stocks relinquished mild morning gains to finish mostly flat as investors digested the Trump administration's afternoon release of a rough framework regarding its tax-reform plan. Treasuries were higher, the U.S. dollar gained ground, crude oil prices were mixed and gold was little changed. A light economic docket showed that weekly mortgage applications rose, though the domestic calendar will heat up tomorrow. Equity news consisted mostly of quarterly corporate reports as earnings season continues to roll on.

The Dow Jones Industrial Average (DJIA) lost 21 points (0.1%) to 20,975, the S&P 500 Index decreased 1 point to 2,387, and the Nasdaq Composite was nearly unchanged at 6,025. In moderately-heavy volume, 963 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.06 higher to $49.62 per barrel and wholesale gasoline was $0.04 lower at $1.59 per gallon. Elsewhere, the Bloomberg gold spot price inched $4.91 higher to $1,269.04 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.2% higher at 98.94.

Dow member Boeing Co. (BA $182) reported 1Q earnings-per-share (EPS) of $2.34, or $2.01 ex-items, versus the $1.91 FactSet estimate, as revenues declined 7.0% year-over-year (y/y) to $21.0 billion, compared to the projected $21.3 billion. BA raised its EPS outlook and reaffirmed its revenue forecast for the full year. Shares traded lower on the revenue shortfall.

Dow component Procter & Gamble Co. (PG $88) posted fiscal 3Q earnings of $0.93 per share, or $0.96 ex-items, versus the projected $0.94. However, shares were lower as revenues decreased 1.0% y/y to $15.6 billion, compared to the forecasted $15.7 billion. PG maintained its full-year EPS outlook and increased its guidance for adjusted free cash flow productivity.

Dow member United Technologies Corp. (UTX $118) announced 1Q EPS of $1.73, or $1.48 ex-items, compared to the expected $1.39, with revenues rising 3.0% y/y to $13.8 billion, topping the estimated $13.5 billion. UTX reaffirmed its full-year EPS and revenue guidance that had midpoints below the Street's estimates. UTX traded higher.

Twitter Inc. (TWTR $16) posted a 1Q loss of $0.09 per share, or a profit of $0.11 per share ex-items, compared to the estimated $0.02, as revenues declined 8.0% y/y to $548 million, exceeding the expected $517 million. Active monthly average users also bested expectations and shares rallied.

PepsiCo Inc. (PEP $113) reported 1Q profits of $0.91 per share, or $0.94 ex-items, versus the projected $0.92, as revenues increased 1.6% y/y to $12.1 billion, topping the expected $12.0 billion. PEP reaffirmed its full-year EPS guidance. PEP traded lower as organic growth and margins missed slightly and its Frito-Lay volume decline appears to be surprising analysts.

U.S. Steel Corp. (X $23) announced a 1Q loss of $1.03 per share, or a shortfall of $0.83 per share ex-items, compared to the forecasted profit of $0.35, as revenues rose 16.4% y/y to $2.7 billion, below the estimated $3.0 billion. The company issued full-year earnings guidance that severely missed forecasts. The company said operating challenges at its flat-rolled facilities prevented it from benefitting from improved market conditions. Shares fell sharply.

Mortgage applications rise

The MBA Mortgage Application Index increased 2.7% last week, following the previous week's 1.8% decline. The rise came as a 7.2% jump for the Refinance Index more than offset a 1.0% decrease for the Purchase Index. The average 30-year mortgage rate declined 2 basis points (bps) to 4.20%.

Treasuries finished higher, with the yield on the 2-year note ticking 1 bp lower to 1.27%, while the yields on the 10-year note and the 30-year bond dipped 3 bps to 2.30% and 2.96%. Bond yields had rebounded recently following eased European political risk concerns after the French Presidential election and as earnings season has remained favorable. For analysis of the bond markets, see Schwab's Chief Fixed Income Strategist, Kathy Jones' article, Three Reasons to Own Bonds When the Fed is Raising Interest Rates on the Markets & Economy page at www.schwab.com. Follow Kathy on Twitter: @kathyjones. Also, Schwab's Vice President of Trading and Derivatives, Randy Frederick and Senior Fixed Income Research Analyst, Collin Martin, CFA, offer the video What's Driving the Ongoing Drop in Long-Term Bond Yields? on the Insights & Ideas page at www.schwab.com. Follow Randy on Twitter: @randyafrederick.

The markets awaited today's initial announcement regarding President Trump's tax-reform plans, which lacked complete details but is aimed at reducing the corporate tax rate to 15.0% and trimming the number of individual tax brackets to three from seven, with the top rate expected to be 35%. Amid this backdrop, political uncertainty remains elevated as discussed by Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend in his latest article, Congress Facing Possible Government Shutdown—Again, on the Insights & Ideas page at www.schwab.com.

Tomorrow, we will get a good look at some "hard" economic data in the form of the preliminary March durable goods orders report, expected to show demand for manufacturing continues to gain steam and rise 1.3% month-over-month, on the heels of the prior months' growth of 1.8% and 2.4%, respectively. However, after stripping out the more volatile components, growth is expected to be a bit more modest. Excluding transportation, orders are projected to increase 0.4%, after gains of 0.5% and 0.3% to begin the year, while the gauge of business investment, nondefense capital goods orders excluding aircraft, are expected to grow 0.5% after February's 0.1% dip and January's 0.2% gain.

Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, ½ Full: Seeing Through a Weak Q1 economic surprises have faltered to the neutral level and hard data has been stubbornly weak relative to soft (confidence/survey-based) data, but leading indicators are not flashing any meaningful warning about growth. Read more on the www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.

Additional reports expected tomorrow include the advanced goods trade balance, forecasted to show that the deficit widened to $65.2 billion in March from $64.8 billion the month prior and pending home sales, expected to have decreased 1.0% m/m in March. The preliminary wholesale inventories report for March will be released and is anticipated to have increased 0.2% m/m, along with weekly initial jobless claims, expected to have ticked slightly higher to a level of 245,000 from the 244,000 the week prior. Rounding out the day we'll receive the Kansas City Fed Manufacturing Index, projected to have moved lower to 17 for April from 20 in March, though a reading above zero indicates expansion in activity.

Europe and Asia add to recent gains

European stocks slightly added to the recent rally that has come courtesy of a plethora of upbeat global earnings reports and eased political risk uneasiness. However gains may have been limited ahead of today's expected details of U.S. President Trump's tax-reform plans and tomorrow's monetary policy decision from the European Central Bank, which will likely be eyed to see if the aforementioned improved global landscape will have any impact on its policy stance. Political concerns have cooled as the French Presidential election over the weekend suggested pro-Europe, mainstream candidate Emmanuel Macron is poised to defeat anti-EU Marine Le Pen in the final vote on May 7th. For analysis of the European political front, which includes a recently approved U.K. vote and a German election later this year, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, and Vice President of Trading and Derivatives, Randy Frederick's videos, "Brexit" Underway: How Can Investors Prep Now That Article 50 Has Been Triggered? and Why Should the French Presidential Election Be Important to Investors? on the Insights & Ideas page at www.schwab.com. Also, check out Director of International Research, Michelle Gibley's CFA, article, Europe Votes: Could More Countries Reject the EU? on the International Investing page at www.schwab.com. The euro was lower and the British pound dipped versus the U.S. dollar, while bond yields in the region finished mixed.

Stocks in Asia finished higher for a second-session, with the rally in the global markets continuing on a plethora of upbeat earnings reports, which joined eased European political risk concerns in the wake of the weekend's French Presidential election. Japanese equities posted a fourth-straight solid gain, with the yen continuing to slide on the eased concerns and earnings optimism, while tomorrow's monetary policy decision from the Bank of Japan appeared to have little impact on conviction. Stocks trading in mainland China and Hong Kong overcame lingering regulatory crackdown uneasiness to gain ground. Australian securities returned to action following yesterday's holiday to move to the upside, while a report showed the nation's consumer price inflation came in mostly cooler than expected. Equities in South Korea and India traded higher. Stocks shrugged off lingering geopolitical concerns aimed at North Korea, and Schwab's Jeffrey Kleintop, CFA, offers timely commentary in his article, Missiles and Markets: An investor guide to geopolitical risks on the Markets & Economy page at www.schwab.com, while he also delivers a look at the global landscape in his article, Top Five Trade Issues Investors Should Be Watching on the International Investing page at www.schwab.com.

In addition to the aforementioned monetary policy decisions from the European Central Bank and the Bank of Japan, tomorrow's international economic docket will yield industrial profits from China, import and export price data from Australia, CPI from Germany and consumer confidence from Italy and the Eurozone.

Equities Disagree on Direction Despite Deluge of Data

Charles Schwab: On the Market

Posted: 10/26/2016 4:15 PM ET

Equities Disagree on Direction Despite Deluge of Data

U.S. stocks finished mixed as upbeat results from Boeing lent some support to the divergent Dow, while a read on services sector activity growth accelerated more than expected. Crude oil prices finished lower after a brief spike following a bullish government oil inventory report. In other developments, corporate earnings results continued to roll in and new home sales missed expectations for September. Treasury yields advanced, gold was lower and the U.S. dollar was nearly unchanged.

The Dow Jones Industrial Average (DJIA) increased 30 points (0.2%) to 18,199, the S&P 500 Index was 4 points (0.2%) lower at 2,139 and the Nasdaq Composite lost 33 points (0.6%) to 5,250. In moderate volume, 866 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil decreased $0.78 to $49.18 per barrel, wholesale gasoline ticked $0.02 lower to $1.47 per gallon and the Bloomberg gold spot price shaved $7.23 to $1,266.64 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was mostly flat at 98.70.

Dow member Apple Inc. (AAPL $116) reported fiscal 4Q earnings-per-share (EPS) of $1.67, one penny ahead of the FactSet estimate, as revenues declined 8.9% year-over-year (y/y) to $46.9 billion, compared to the expected $47.0 billion. Apple's 2016 revenues declined 7.7% y/y to $215.6 billion, the first annual sales decline since 2001. Shipments of iPhones and iPads both exceeded forecasts, while Mac shipments missed estimates. AAPL issued 1Q revenue guidance that topped forecasts, while its gross margin outlook came in a bit shy of expectations. Shares traded lower on the margin guidance and as analysts suggested that the company was not yet able to fully capitalize on Samsung Electronics Co. Ltd's (SSNLF $1,250) decision earlier this month to halt production and sales of its Galaxy Note 7 smartphone due to its batteries overheating and catching fire.

Dow component Boeing Co. (BA $146) posted 3Q EPS ex-items of $2.81, north of the projected $2.61, with revenues decreasing 8.0% y/y to $23.9 billion, exceeding the expected $23.6 billion. BA raised its full-year earnings and revenue guidance. Shares moved nicely higher.

Dow member Coca-Cola Co. (KO $42) announced 3Q profits of $0.49 per share, one cent north of estimates, with revenues declining 7.0% y/y to $10.6 billion, versus the forecasted $10.5 billion. KO noted that the U.S., Japan and Western Europe delivered standout performances. The company reaffirmed its full-year organic revenue guidance, while its EPS outlook had a midpoint that was slightly below expectations. KO traded slightly lower.

Comcast Corp. (CMCSA $63) reported 3Q EPS ex-items of $0.92, one penny above expectations, as revenues increased 14.2% y/y to $21.3 billion, compared to the forecasted $21.2 billion. Shares finished solidly lower.

New home sales miss forecasts, growth in services sector activity jumps

New home sales (chart) rose 3.1% month-over-month (m/m) in September to an annual rate of 593,000, but below the Bloomberg forecast of 600,000 units. The median home price increased 1.9% y/y to $313,500. The supply of new home inventory dipped to 4.8 months at the current sales pace. Sales surged in the Northeast m/m, and rose solidly in the South and Midwest, while sales in the West dropped. Compared to last year, sales in all regions were sharply higher. New home sales are based on contract signings instead of closings. For a look at investing in the real estate sector, see Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, article, Real Estate Sector: Marketperform, at www.schwab.com/marketinsight and follow Schwab on Twitter: @schwabresearch.

The preliminary Markit U.S. Services PMI Index for October rose to 54.8 from September's reading of 52.3, compared to forecasts of a modest rise to 52.5, with a reading above 50 indicating expansion. Markit said new order volumes rose at the quickest rate seen so far in 2016, while service providers reported the strongest business optimism since August 2015. The release is independent and differs from the Institute for Supply Management's (ISM) report, as it has less historic value and its index components are weighted differently.

The MBA Mortgage Application Index decreased 4.1% last week, after rising 0.6% in the previous week. The decline came as the Refinance Index dropped 2.3% and the Purchase Index fell 6.9%. The average 30-year mortgage rate decreased 2 basis points (bps) to 3.71%.

The advance goods trade deficit unexpectedly shrank to $56.1 billion in September, from the downwardly revised $59.2 billion in August, versus projections calling for the deficit to widen to $60.5 billion.

Treasuries were lower, with the yield on the 2-year note increasing 2 bps to 0.87%, the yield on the 10-year note gaining 3 bps to 1.78% and the 30-year bond rate advancing 4 bps to 2.54%. Schwab's Chief Fixed Income Strategist, Kathy Jones discusses the interest rate environment in her latest article, Are Bond Yields About to Rise?, at www.schwab.com/onbonds and follow Kathy on Twitter: @kathyjones.

Tomorrow, the U.S. economic calendar will begin with a look at manufacturing demand with the September durable goods orders report, projected to show no change m/m, while the ex-transportation component is forecasted to rise 0.2% m/m and nondefense capital goods orders excluding aircraft—a gauge of business spending—is expected to dip 0.1% after August's solid 0.9% gain. Also prior to the open, we will receive weekly initial jobless claims, anticipated to decrease by 5,000 to a level of 255,000. Once trading commences the docket will deliver pending home sales, expected to have risen 1.0% m/m in September, and the Kansas City Fed Manufacturing Index, forecasted to decline to 3 during October from the 6 registered the month prior, though a reading above zero denotes expansion in manufacturing activity.

Schwab's Chief Investment Strategist Liz Ann Sonders notes in her latest article, Vertigo: Effect of Spiking Healthcare Costs on Consumers, households remain in relatively good shape, with wages and incomes rising and debt levels/debt servicing costs low. But this upward pressure on inflation bears watching. Read more at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

With political uncertainty festering as the November election looms, Schwab's Vice President, Legislative and Regulatory Affairs, Michael T. Townsend offers his latest article, Final Clinton-Trump Debate Sets Up a Sprint to the Finish Line, as part of our election 2016 commentary at www.schwab.com/insights/category/election-2016, where you can also find timely analysis of The Stock Market and Election Cycles. Be sure to follow Schwab on Twitter: @schwabresearch.

Europe and Asia mostly lower

European equities finished lower, with basic materials issues leading the way, along with energy issues as crude oil prices continued to see pressure following a short-lived recovery on some bullish U.S. government oil inventory data. Sentiment was hampered by some lackluster earnings results on both sides of the pond. Results from the financial sector in the region were mixed, while German consumer confidence unexpectedly dipped for November. Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers timely analysis of the global economic picture in his article, World Tour: An Around The World Look At the Economic Landscape at www.schwab.com/oninternational and follow Jeff on Twitter: @jeffreykleintop. The global markets continued to grapple with uncertainty toward the monetary policy and political fronts. The euro and British pound moved higher versus the U.S. dollar, while bond yields in the region gained ground.

Stocks in Asia finished mostly to the downside as the global markets grapple with ramped up earnings season, with a plethora of mixed reports yesterday leading the U.S. markets lower, while the continued pressure on crude oil prices hampered the energy sector. Equities trading in mainland China and Hong Kong decreased with energy issues seeing pressure, while Indian stocks traded lower amid concerns about loan-loss provisions in the banking sector. South Korean securities decreased as local reports of travel agencies in China being told to reduce the number of tourists visiting South Korea weighed on the market, per CNBC. Australian equities fell on the weakness in oil & gas issues and as a hotter-than-expected read on the nation's consumer price inflation hamstrung sentiment.

However, Japanese stocks bucked the trend amid some upbeat earnings results as the nation's reporting season gears up to overshadow some recent strength in the yen. For analysis of earnings and the stock markets, Schwab's Jeffrey Kleintop, CFA, offers an outlook for the stock markets and earnings growth in his latest article, Three Reasons Stocks May Avoid Another Lost Decade, at www.schwab.com/marketinsight.

Tomorrow's international economic calendar will yield industrial profits from China and trade data from Australia. Reports from across the pond will include advance 3Q GDP and the Index of Services from the U.K. and consumer confidence and wage data from Italy.

Oil and Housing Reports Pressure Stocks

Charles Schwab: On the Market

Posted: 8/24/2016 4:15 PM ET

Oil and Housing Reports Pressure Stocks

U.S. equities finished lower in the wake of a disappointing existing home sales report, some lackluster earnings, and a tumble in crude oil prices on the heels of a bearish government inventory report. Moreover, an amount of caution continued as the global markets await Friday's speech from Federal Reserve Chairwoman Janet Yellen. Treasuries were flat and gold was lower, while the U.S. dollar inched higher.

The Dow Jones Industrial Average (DJIA) declined 64 points (0.4%) to 18,483, the S&P 500 Index fell 11 points (0.5%) to 2,176, and the Nasdaq Composite decreased 42 points (0.8%) to 5,218. In moderate volume, 745 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil tumbled $1.33 to $46.77 per barrel, wholesale gasoline lost $0.01 to $1.41 per gallon and the Bloomberg gold spot price declined $11.81 to $1,325.75 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 94.78.

Intuit Inc. (INTU $110) reported fiscal 4Q earnings-per-share (EPS) of $0.08, compared to the FactSet estimate of a $0.02 per share loss, with revenues rising 8.0% year-over-year (y/y) to $754 million, above the projected $733 million. The business and financial software maker issued 1Q guidance that came in below expectations and a mixed current year outlook. Shares were solidly lower.

La-Z-Boy Inc. (LZB $27) posted fiscal 1Q profits of $0.28 per share, one penny below estimates, with revenues roughly flat y/y to $341 million, missing the forecasted $358 million. Shares of LZB fell sharply.

Express Inc. (EXPR $12) announced 2Q EPS of $0.13, south of the projected $0.17, as revenues decreased 6.0% y/y to $505 million, versus the expected $521 million. 2Q same-store sales fell 8.0% y/y, versus the forecasted 4.6% decline. EXPR issued softer-than-expected 3Q guidance, while lowering its full-year outlook. Shares tumbled over 25%.

Existing home sales snap a four-month string of gains

Existing-home sales in July declined month-over-month (m/m) for the first time since February, decreasing 3.2% to a 5.39 million annual rate compared to the Bloomberg forecast of a 5.51 million pace. June's figure was unrevised at a 5.57 million annual rate—the highest since February 2007. Compared to last year, sales were 1.6% lower, the first y/y decline since November 2015. The median existing-home price was up 5.3% y/y at $244,100. Housing supply came in at a 4.7-month pace at the current sales rate. Sales were lower in all regions except for in the West as single-family and condominium and co-op sales both fell. National Association of Realtors (NAR) Chief Economist Lawrence Yun said severely restrained inventory and the tightening grip it's putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month.

As noted in the Schwab Market Perspective: The Calm Before the…., the latest batch of U.S. economic data doesn’t appear to presage an imminent recession, which would typically lead to a bear market. Consumer confidence has firmed, with the labor market continuing to improve, housing looking good, and wages finally starting to rise. Additionally, we’ve seen both revolving consumer credit and bank loans increase, indicating consumers may be more comfortable taking on debt. Read the whole perspective at www.schwab.com/marketinsight, where you can also find more on investing in the housing sector, courtesy of Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, latest Schwab Sector Views: There's a New Sector Coming. Follow Schwab on Twitter: @schwabresearch.

The MBA Mortgage Application Index declined 2.1% last week, after falling 4.0% in the previous week. The decrease came as a 3.2% drop for the Refinance Index was accompanied by a 0.3% dip for the Purchase Index. The average 30-year mortgage rate rose 3 basis points (bps) to 3.67%.

Treasuries were little changed, as the yields on the 2-year and 10-year notes were flat at 0.76% and 1.55%, respectively, while the 30-year bond rate ticked 1 bp higher to 2.23%. For analysis on the fixed income markets see the video from Schwab's Managing Director of Trading and Derivatives, Randy Frederick and Fixed Income Director Collin Martin, CFA, titled Tempered Expectations for Bond Returns: Why Hold Bonds? Also, for commentary on the recent record highs for the stock market, see the video from Schwab's Chief Investment Strategist, Liz Ann Sonders and Randy Frederick, titled Long-Running Bull Finally Attracting Believers? See both videos at www.schwab.com/insights and follow Liz Ann and Randy on Twitter: @lizannsonders and @randyafrederick.

Tomorrow, the headlining event on the U.S. economic calendar will likely be the release of the preliminary durable goods orders report, projected to rebound 3.4% m/m in July, after June's 3.9% drop. Excluding transportation, orders are anticipated to rise 0.4%, after declining by the same amount in the month prior. Orders for non-defense capital goods excluding aircraft—a proxy for business spending—are expected to tick 0.2% higher on the heels of June's 0.4% increase. As noted in the Schwab Market Perspective, it will be difficult to get the U.S. economy rolling without an improvement in productivity. A contributing factor to weak productivity is undoubtedly ongoing tepid capital spending. Additionally, industrial production has been relatively weak, but there is some hope as gains have been posted in the past two months. Read more at www.schwab.com/marketinsight.

As well, weekly initial jobless claims will be released, forecasted to move higher to a level of 265,000 from the prior week's 262,000, as well as the Kansas City Fed Manufacturing Index, with economists expecting the measure of activity to rise from July's level of -6 to -2 for August, with a reading below zero denoting contraction in activity.

Europe mostly higher, Asia mixed amid caution ahead of Fed Chair speech

European equities moved mostly to the upside, with financials leading the way, though the global markets continue to tread lightly ahead of Friday's speech from Federal Reserve Chairwoman Janet Yellen at the Central Bank's annual monetary policy gathering in Jackson Hole, Wyoming. The euro traded lower versus the U.S. dollar to lend some support, while bond yields in the region ticked higher. In economic news, Germany's 2Q GDP growth was unrevised as expected at a 0.4% quarter-over-quarter pace, after expanding 0.7% in 1Q. However, the U.K. markets lagged behind amid some weakness in basic materials stocks, while the British pound continued its recent rally to a three-week high versus the greenback on the heels of a report that showed consumer credit rose by the fastest pace in almost a decade, per Bloomberg. The upbeat report was the latest in a string of data to suggest the U.K. economy is seeing a limited impact from the late-June vote to leave the European Union, known as Brexit. For commentary on the potential impact of the Brexit vote, see the Schwab Center for Financial Research's article, Brexit: What Investors Should Know, at www.schwab.com/marketinsight. Gains were limited by some weakness in oil & gas issues as crude oil prices saw pressure on the heels of two bearish oil inventory reports.

Stocks in Asia finished mixed with volume subdued amid some caution ahead of Friday's key speech from U.S. Fed Chair Yellen, while economic data in the region remained on the lighter side. Japanese equities rose, aided by some modest weakness in the yen, while mainland Chinese markets dipped and those in Hong Kong fell markedly, with banking stocks seeing pressure following a recent run. Strength in resource-related issues, along with technology and financial stocks helped Australian stocks tick higher, while securities in India gained modest ground, and South Korean equities declined. Amid the lull in volatility in the global markets, now might be a good time for investors to assess portfolio asset allocations, and Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers Three Reasons Why Now is Not the Time to Retreat from Global Diversification, complemented by his latest article, Your portfolio may be less diversified than you think. Read both articles at www.schwab.com/oninternational and be sure to follow Jeff on Twitter: @jeffreykleintop.

Tomorrow's international economic calendar will have a few reports for investors to chew on, including inflation data out of Japan, sentiment reports from France, GDP from Spain, and Germany's Ifo Business Climate Survey.

Schwab Center for Financial Research - Market Analysis Group

Divided Fed Ups Ante on Uncertainty

Charles Schwab: On the Market

Posted: 8/17/2016 4:15 PM ET

Divided Fed Ups Ante on Uncertainty

U.S. equities were able to recover from early losses to finish near the flat line, after the Fed's afternoon release of its July meeting minutes showed a split Committee with regards to the timing of a rate increase. Treasuries rose following the report, while crude oil prices were able to finish higher after the government's oil report showed an unexpected drop in inventories. Earnings results from the retail sector continued to fill the economic docket, while gold and the U.S. dollar were nearly unchanged.

The Dow Jones Industrial Average (DJIA) increased 22 points (0.1%) to 18,574, the S&P 500 Index gained 4 points (0.2%) to 2,182 and the Nasdaq Composite added nearly 2 points to close at 5,229. In moderate volume, 777 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil inched $0.21 higher to $46.79 per barrel, wholesale gasoline added $0.03 to $1.45 per gallon and the Bloomberg gold spot price ticked $0.21 higher to $1,346.56 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 94.79.

Target Corp. (TGT $71) reported 2Q earnings-per-share (EPS) ex-items of $1.23, above the $1.13 FactSet estimate, as revenues dropped 7.2% year-over-year (y/y) to $16.2 billion, roughly in line with forecasts. 2Q same-store sales declined 1.1% y/y, versus the projected 0.7% decrease. TGT issued softer-than-expected 3Q EPS guidance and lowered its full-year profit and same-store sales outlooks. Shares were solidly lower.

Lowe's Companies Inc. (LOW $77) posted 2Q profits ex-items of $1.37 per share, compared to the expected $1.42, with revenues growing 5.3% y/y to $18.3 billion, below the forecasted $18.4 billion. Quarterly same-store sales increased 2.0% y/y, compared to the projected 4.2% gain. LOW lowered its full-year EPS outlook and announced stronger-than-expected revenue guidance, while reaffirming its same-store sales forecast. Shares finished noticeably lower.

Urban Outfitters Inc. (URBN $36) announced 2Q earnings of $0.66 per share, topping the expected $0.55, as revenues rose 3.0% y/y to $891 million, versus the estimated $886 million. Same-store sales increased 1.0% y/y, compared to the projected flat reading. Shares were nicely higher.

Shares of Cree Inc. (CREE $23) were sharply lower after the LED lighting company issued softer-than-expected 1Q guidance after its fiscal 4Q EPS ex-items of $0.19 came in a penny shy of expectations.

Fed minutes show split Fed

The Federal Open Market Committee's (FOMC) July meeting minutes, released in afternoon action, showed a somewhat divided Fed, with two members of the Committee wanting a rate hike sooner. Most members noted uncertainty in the aftermath of Brexit, while also being unsure of the inflation outlook, needing more confidence in the pace of price increases. However, the overriding consensus was that the Committee saw little risk in a sharp increase in inflation, and that it was prudent to accumulate more data before taking any further steps to remove policy accommodation. With uncertainty regarding Fed policy festering to cause some volatility outside the stock markets, Schwab's Chief Investment Strategist, Liz Ann Sonders notes in her latest commentary, With a Little Help From My Friends: On Africa, Economy and Earnings we continue to believe a rate hike is on the table for this year. The combination of Fed policy uncertainty and the contentious election season could mean the recent lull in volatility will not persist into the fall. Read more at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

The MBA Mortgage Application Index fell 4.0% last week, after rising 7.1% in the previous week. The fall came as a 4.2% decrease for the Refinance Index was accompanied by a 3.9% decline for the Purchase Index. The average 30-year mortgage rate dipped 1 basis point (bp) to 3.64%.

Treasuries moved higher following the Fed minutes, as the yield on the 2-year note fell 2 bps to 0.74%, while the yields on the 10-year note and the 30-year bond declined 3 bps to 1.55% and 2.26%, respectively. For analysis on the fixed income markets see the video from Schwab's Managing Director of Trading and Derivatives, Randy Frederick and Collin Martin, CFA, titled  Tempered Expectations for Bond Returns: Why Hold Bonds?, at www.schwab.com/insights. Also, Schwab's Chief Fixed Income Strategist, Kathy Jones addresses in her latest article, What Does Strong Job Growth Mean for Bond Investors?, at www.schwab.com/marketinsight. Follow Randy, Kathy and Schwab on Twitter: @randyafrederick, @kathyjones and @schwabresearch.

Tomorrow's economic calendar will begin with weekly initial jobless claims, forecasted to tick lower to 265,000 from the prior week's 266,000, followed by the Philly Fed Manufacturing Index, with economists expecting the gauge of activity to move back into expansion territory, as denoted by a reading above zero, by posting a level of 2.0 for August, following July's -2.9 figure. Rounding out the day will be July's Index of Leading Economic Indicators, expected to match June's 0.3% rise.

Europe lower, Asia mixed ahead of Fed report

European equities moved lower, with technology stocks leading the way along with a pullback in the mining sector, while caution likely prevailed as the global markets eyed today's release of the July policy meeting minutes in the U.S. The euro dipped versus the U.S. dollar after yesterday's rally, and bond yields in the region were mostly lower. The British pound lost some ground compared to the greenback, despite an unexpected drop in July jobless claims. The pound advanced yesterday following a hotter-than-expected rise in consumer price inflation, with data out of the nation post the vote in late June to leave the European Union, known as a Brexit, being highly scrutinized for implications of the economic impact of the Brexit vote. Reads on U.K. retail sales and public sector net borrowing are due out later this week. For more on the potential impact of the Brexit vote, read Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, latest Schwab Sector Views: Brexit's Impact on Sectors, Part Two at www.schwab.com/marketinsight.

Stocks in Asia finished mixed amid some likely caution ahead of today's release of the U.S. FOMC's July meeting minutes, amid the backdrop of heightened Fed policy uncertainty, which has contributed to volatility in the currency and bond markets. Amid the elevated uncertainty in the markets, Schwab's Chief Global Investment Strategist, Jeffrey Kleintop, CFA, offers Three Reasons Why Now is Not the Time to Retreat from Global Diversification at www.schwab.com/oninternational and be sure to follow Jeff on Twitter: @jeffreykleintop. Japanese equities rose, trimming yesterday's loss, with the yen giving back some of its rally that has come courtesy of the Fed policy uncertainty and lingering disappointment regarding monetary policy actions from the Bank of Japan. Moreover, yesterday's extension of the rebound in crude oil prices boosted the global energy sector, which helped Australia's markets eke out a slight gain. Mainland Chinese securities finished flat and those trading in Hong Kong declined slightly, following the approval of the long-planned stock-trading link between Hong Kong and Shenzhen, which expectations of have bolstered the Chinese markets. Per Bloomberg, this is another step toward opening China's $6.5 trillion equity market to international investors, and may start in about four months. Elsewhere, stocks in both India and South Korea moved to the downside.

Items on tomorrow's international economic calendar include: trade figures from Japan, employment data from Australia and France, the aforementioned retail sales out of the U.K., and CPI from the Eurozone.

Stocks Slide on Crude Pressure

Charles Schwab: On the Market

Posted: 8/10/2016 4:15 PM ET

Stocks Slide on Crude Pressure

Domestic stocks closed the regular trading session lower amid some mixed earnings results and as crude prices declined, despite a pullback for the U.S. dollar, on the heels of a report that showed a surprising rise in oil inventories. Treasuries managed gains, while domestic data revealed slightly fewer-than-expected job openings for June and a rise in weekly mortgage applications. Gold managed a mild move higher.

The Dow Jones Industrial Average (DJIA) declined 37 points (0.2%) to 18,496, the S&P 500 Index lost 6 points (0.3%) to 2,176 and the Nasdaq Composite fell 21 points (0.4%) to 5,205. In moderate volume, 749 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil lost $1.06 to $41.71 per barrel, wholesale gasoline was $0.05 lower at $1.30 per gallon and the Bloomberg gold spot price rose $5.72 to $1,346.45 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% lower at 95.63.

Dow member Walt Disney Co. (DIS $98) reported fiscal 3Q earnings-per-share (EPS) of $1.62, one penny above the FactSet estimate, as revenues rose 9.0% year-over-year (y/y) to $14.3 billion, compared to the expected $14.2 billion. Revenues at the company's parks and resorts and studio segments topped forecasts, while its media and networks division sales came in just shy of forecasts. DIS announced that it is acquiring a 33% stake in technology services and video streaming company, BAMTech, for $1.0 billion, while also reporting that it will launch a new ESPN-branded multi-sport direct-to-consumer service. Shares finished higher.

Michael Kors Holdings Ltd. (KORS $49) posted fiscal 1Q EPS ex-items of $0.88, topping the expected $0.74, as revenues increased 0.2% y/y to $988 million, versus the forecasted $952 million. 1Q same-store sales fell 7.4% y/y, compared to the projected 4.8% drop. KORS issued softer-than-expected 2Q guidance, while reaffirming its full-year earnings outlook. Shares closed lower.

Ralph Lauren Corp. (RL $103) announced fiscal 1Q profits ex-items of $1.06 per share, north of the estimated $0.89, as revenues declined 4.0% y/y to $1.6 billion, versus the forecasted $1.5 billion. 1Q same-store sales dropped 6.0% y/y, compared to the expected 4.8% decrease. RL maintained its full-year guidance and shares rallied.

Yelp Inc. (YELP $37) jumped after reporting 2Q EPS of $0.01, versus the $0.07 per share loss that was expected, as revenues rose 30.0% y/y to $173 million, versus the forecasted $170 million. YELP raised its full-year guidance.

For more on the global earnings landscape, see Schwab's Chief Global Investment Strategist, Jeffrey Kleintop's, CFA, article, Earnings estimates are rebounding: what it means for stocks, at www.schwab.com/marketinsight, and be sure to follow Jeff on Twitter: @jeffreykleintop.

Job openings and mortgage applications rise

The Labor Department's Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, showed 5.62 million jobs were available to be filled in June, up from May's 5.51 million level, and versus the Bloomberg forecast of 5.68 million. The hiring rate ricked higher to 3.6% from 3.5%, while the separation rate dipped to 3.4% from May's 3.5% pace.

The MBA Mortgage Application Index gained 7.1% last week, after falling 3.5% in the previous week. The increase came as a 9.6% rise for the Refinance Index was accompanied by a 2.6% gain for the Purchase Index. The average 30-year mortgage rate dipped 2 basis points (bps) to 3.65%.

Treasuries were higher, with the yield on the 2-year note declining 3 bps to 0.68%, while the yields on the 10-year note and the 30-year bond decreased 4 bps to 1.51% and 2.23%, respectively. For more on the bond markets, see Schwab's Chief Fixed Income Strategist, Kathy Jones' article, With a Whimper Instead of a Bang: Is the Great Bond Bull Market Over?, at www.schwab.com/marketinsight. Follow Kathy on Twitter: @kathyjones. Also, for analysis of portfolio management in volatile times in the market, see our latest article, Does Your Risk Tolerance Change Over Time?, at www.schwab.com/insights and follow Schwab on Twitter: @schwabresearch.

Tomorrow, the U.S. economic calendar will bring the release of the Import Price Index, forecasted to have declined 0.4% m/m during July, after registering a 0.2% increase in June. We will also receive weekly initial jobless claims, expected to have decreased to a level of 265,000 from the previous report's 269,000.

Europe lower on oil, earnings and BoE hiccup, Asia mixed

European equities finished mostly lower amid the backdrop of global monetary policy divergence and uncertainty, with oil & gas issues seeing some pressure as crude oil prices lost ground for a second session. Moreover, a plethora of earnings data weighed on the markets, along with some strength in the euro. The British pound gave up early gains and finished little changed versus the U.S. dollar. The pound saw a brief bounce on the heels of yesterday's failed bond buying operation by the Bank of England (BoE), which came up short of hitting its target for bond purchases. The BoE surprisingly boosted its asset purchases and cut its benchmark interest rate following its monetary policy meeting last week aimed at bolstering the economy in the wake of the late-June vote by the U.K. to leave the European Union (EU), known as a Brexit. For more on the potential impact of the Brexit vote, read Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, latest Schwab Sector Views: Brexit's Impact on Sectors, Part Two at www.schwab.com/marketinsight. And for commentary on how the recent Zika pandemic may or may not affect the markets, see the latest article from Schwab's Jeffrey Kleintop, CFA, Does Zika pose an Olympic-sized threat to stocks?, at www.schwab.com/oninternational. French industrial and manufacturing production figures showed unexpected month-over-month declines in June. Bond yields in the region lost ground.

Stocks in Asia finished mixed ahead of tomorrow's national holiday in Japan and as traders await a plethora of Chinese economic reports. Japanese equities declined in light trading ahead of the holiday and as the yen showed some strength to offset a stronger-than-expected increase in the nation's key machine orders for June, which is used as a gauge of capital spending. Mainland Chinese issues were lower, while stocks trading in Hong Kong were higher ahead of this week's flood of economic data, including tomorrow night's releases of industrial production and retail sales reports, which will be followed by lending figures for last month. Schwab's Jeffrey Kleintop, CFA, discusses China data in his article, Trust but Verify: Five Independent Indicators of China's Economy. Also, Schwab's Director of International Research, Michelle Gibley, CFA, offers 5 Reasons China Won't Crash the Global Economy in 2016. Read both articles at www.schwab.com/oninternational. Securities in India fell and South Korean listings finished flat, while weakness in oil & gas issues on yesterday's dip in crude oil prices outweighed some strength in the healthcare sector to drag Australian equities lower.

The international economic docket for tomorrow will be light, offering inflation expectations from Australia and the CPI from France and Italy, while Italy will also report trade data.