The NASDAQ Composite Index opened the trading session lower on Friday, July 24th, down 6.5 points or 0.31%. Lagging pessimism from Greece’s debt crisis hung over the market, as did an underwhelming earnings report from Apple Inc. (NASDAQ/AAPL). America’s technology exchange fell by 1.39% during the week, including a 0.49% fall on Thursday.
Despite an attempted pivot away from economic headwinds last week, investors will have to pay attention to macroeconomic factors. Two key indicators being released today will give a strong indication of future growth. Meanwhile, Amazon is getting a huge bump in its share price today, lifting its market cap past Wal-Mart’s.
There is a lot of actionable news today, so expect investors to respond with quite a bit of movement. Commodities continue to slide, with oil down to $48.87 a barrel and gold at $1,082.10.
Top Market News Today
Manufacturing Data and Home Sales
Two economic reports coming out today are the Purchasing Managers’ Index (PMI) and the New Homes Sales report. Both indicators offer an insight into the near-term state of the economy. The PMI is assembled through a survey of 600 purchasing managers to gauge their expectations on the economy.
The metric gives investors a direct window into the thinking of on-the-ground business managers as they grapple with market demand, suppliers, inventory turnover, prices, and employment. It is calculated with a base of 50; where over 50 is an expansion and anything below is contraction.
The 53.8 in May and 53.6 in June showed a pattern of growth, but one that is decelerating. Analysts are especially worried since the last three reports have fallen short of expectations. The data for July reveals a PMI score of 53.8, well below the post-crisis average of 54.3. (Source: Markit, July 24, 2015.)
New homes sales data will also affect trading, seeing as it decreased 6.8%. The general consensus among economists polled by MarketWatch.com suggested the number will be 550,000, up from 546,000 in June. (Source: MarketWatch, July 24, 2015.) In reality, the number came in at 482,000. (Source: U.S. Census, July 24, 2015.)
Stocks on the Move
Amazon.com Inc. (NASDAQ/AMZN)
The Seattle-based online retailer stunned investors by posting $92.0 million in profit, reflecting a 20% sales bump. The company had a long history of 20% revenue growth until quarterly expansion fell to 15% last year. Amazon.com Inc. (NASDAQ/AMZN) lost $126 million last year, but their continued investment in more profitable segment lines has paid off. The company has pushed hard for registrations of Amazon Prime, the firm’s premium service.
Amazon Web Services remains the big winner within the company, with a 407.8% increase in profits from the same period last year. Shares of Amazon are up 16.34% in early trading hours. (Source: MarketWatch, July 24, 2015.)
Xerox Corporation (NYSE/XRX)
Document management firm, Xerox Corporation (NYSE/XRX) registered weak earnings this past quarter, down to $12.0 million from $266 million in the same quarter last year. The company’s profits were deeply affected by a $145 million restructuring expense as management tries to execute a turnaround. Xerox also announced that share repurchases would increase from $300 million to $1.2 billion. (Source: MarketWatch, July 24, 2015.)
The company is aiming to dispose non-core assets as part of a streamlining kick aimed at delivering more value to shareholders. The stock was largely unmoved in pre-market trading but actually rose two percent after the opening bell. Investors seem confident that aggressive restructuring in the short term means Xerox’s upper management is playing the long game.