Stocks End Week Higher Despite China's Selloff

Strategic Insights -

US stocks ended the week on a higher note despite a major selloff in China's stock market, driven by corporate earnings reports and mergers and acquisitions in the healthcare space. The Federal Reserve kept benchmark interest rates unchanged, citing expanding economic activity and improving labor market conditions. Meanwhile, major oil and gas companies reported weaker-than-expected quarterly profits due to plummeting crude prices.

Key Takeaways:

  • US GDP was estimated to have grown at a 2.3% annualized rate in the second quarter, missing expectations of 2.7% growth.
  • The government upwardly revised its estimate of first-quarter GDP growth to 0.6% from a prior estimate of 0.2% contraction.
  • The employment cost index grew only 0.2% in the second quarter, versus expectations for an increase of 0.6%.
  • Durable goods orders advanced 3.4% in June, exceeding expectations for a 3.2% increase.
  • The University of Michigan consumer confidence index fell to 93.1 in July, below the expected 94.
  • The Federal Reserve maintained benchmark interest rates between 0% and 0.25%, citing expanding economic activity and improving labor market conditions.
  • Major oil and gas companies, including ExxonMobil and Chevron, reported weaker-than-expected quarterly profits due to plummeting crude prices.
  • Facebook, Twitter, and LinkedIn reported mixed quarterly earnings, with their shares experiencing significant price swings.
  • Shares of Teva jumped after the company dropped its pursuit of Mylan, opting instead to acquire Allergan's global generic pharmaceuticals business for $40.5B.
  • Micron and Intel advanced after announcing "3D XPoint" memory technology, claimed to be up to 1,000 times faster than NAND memory.

Statistics:

  • US GDP growth rate: 2.3% (annualized) in the second quarter.
  • Expected US GDP growth rate: 2.7% in the second quarter.
  • Revised first-quarter GDP growth rate: 0.6%.
  • Employment cost index growth rate: 0.2% in the second quarter.
  • Expected employment cost index growth rate: 0.6% in the second quarter.
  • Durable goods orders: 3.4% increase in June.
  • Expected durable goods orders: 3.2% increase in June.
  • University of Michigan consumer confidence index: 93.1 in July.
  • Expected University of Michigan consumer confidence index: 94 in July.
  • Federal Reserve benchmark interest rate range: 0%-0.25%.
  • ExxonMobil quarterly profit: weaker-than-expected.
  • Chevron quarterly profit: weaker-than-expected.
  • Teva acquisition price: $40.5B.
  • Micron and Intel "3D XPoint" memory technology speed: up to 1,000 times faster than NAND memory.

Sources:

  • TheFlyOnTheWall.com
  • COMTEX
  • University of Michigan
  • Federal Reserve
  • ExxonMobil
  • Chevron
  • Facebook
  • Twitter
  • LinkedIn
  • Teva
  • Micron
  • Intel