Monday, July 16, 2007

The Dow Stands Alone

Another Monday meant another record close for the Dow Jones Industrials, but, while the blue chip index climbed closer to the 14,000 mark, all other major US equity indices were lower.

With earnings season going full tilt, investors took on a cautious tenor against the backdrop of spiraling energy prices and a general weariness caused alternately by the spectacular gains of recent days and the mid-summer doldrums.

Dow 13,950.98 +43.73; NASDAQ 2,697.33 -9.67; S&P 500 1,549.52 -2.98; NYSE Composite 10,188.18 -32.49

Volume was very light and all of the indices traded in extremely narrow ranges.

Declining issues beat advancers by a 2-1 margin. The gap between new highs and new lows continued to narrow, 478-193. This is indicative of a consolidating phase and sluggish overall trade. Expect to see some pullback unless corporate profits roll in very positively.

Reporting on Monday were Mattel (MAT), in line; Novellus (NVLS), beat estimates by .02; Sun Bancorp (SNBC), 0.22 vs. 0.17 EPS a year ago; and W.W. Grainger (GWW) beat estimates by .02, 1.19 per share.

A number of heavyweights are on tap for tomorrow, with expected EPS:

  • CSX Corporation (CSX) 0.64

  • Forest Laboratories (FRX) 0.77

  • Intel Corporation (INTC) 0.19

  • Johnson & Johnson (JNJ) 1.00

  • Merrill Lynch (MER) 2.02

  • Coca-Cola Company (KO) 0.82

  • Wells Fargo & Company (WFC) 0.67

  • Yahoo, Inc. (YHOO) 0.11

Of particular interest are Merrill Lynch, Yahoo and Coca-Cola. Merrill will be in focus because of its position in the financial services industry, which has done extremely well over the past 3 years. Coca-Cola is a top-performing blue chip which is expected to report strong numbers regarding sales in emerging markets. Yahoo has already warned investors that they will not meet their numbers. Investors are hoping that they don't miss too badly.

Oil rose another 22 cents to $74.15. Gold and silver were marginally lower.

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