U.S. stocks and exchange traded funds (ETFs) followed overseas markets by opening in positive territory this morning as investors looked to ignite a new rally on new unemployment data and quarterly earnings reports.
The Labor Department reported that new claims for unemployment insurance increased by 25,000 to a seasonally adjusted 584,000, higher than the 570,000 expected by analysts. But on a positive note, the same report indicated that the number of Americans receiving unemployment benefits fell to 6.2 million from 6.23 million last week. Analysts anticipated an increase to 6.3 million.
As for earnings reports, they were lead by the world’s largest publicly traded oil company, Exxon Mobil (XOM), which witnessed a 66% drop in profits. The company reported second-quarter earnings of $0.81/share and fell short of Wall Street’s expectation of $1.02/share. Despite this news, the Energy Select SPDR (XLE) gained 1.2% in morning trading; XOM is 22.9%.
- Colgate-Palmolive (CL) stated that its cost-cutting measures overshadowed a weaker U.S. dollar and consumer spending sentiment and reported an increase in its quarterly earnings. The toothpaste maker reported profits of $1.07/share beating analysts’ expectations of $1.05/share.
- Electronics company Motorola (MOT) impressed both itself and Wall Street when it reported earnings of $0.01/share. This profit was primarily driven by scaling back on costs and slashing of jobs.
- Chemical giant Dow Chemical (DOW) kept the ball rolling by reporting quarterly earnings of $0.05/share and beating Wall Street’s expectations of a loss of $0.08/share.
- Although enrollment fell at health insurer Cigna Corp. (CI), the Philadelphia-based company reported an increase in earnings of 60% on a more favorable interest rate, or $1.58/share as compared to the $0.96/share forecast by analysts.
In other news, bond prices fell as investors moved out of safer investments and into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71% from 3.67% late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18% from 0.17% late Wednesday. The iShares Lehman 7-10 Yr Treasury (IEF) was down 0.1% in morning trading.
On a separate note, health care continues to remain a hot topic as many are wary about how the government will overhaul an industry that constitutes such a big part of the economy. Many are concerned that a costly overhaul of the industry will result in poor quality and fewer choices. The bill has to make it past the House of Representatives’ Energy and Commerce Committee first, then will be re-drafted and, if approved, sent to the President for signature later on in the year.
Overall, all three major U.S. indices are trading up with the S&P 500 leading the pact gaining 1.8%, followed by the Nasdaq which is up 1.7% and the Dow Jones Industrial Average up 1.5%.
For more stories on energy, visit our energy category.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.