Reuters.com - U.S. stocks flat before Bernanke, Fed minutes - Thu July 20, 2006 10:05 AM ET

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U.S. stocks flat before Bernanke, Fed minutes

U.S. stocks flat before Bernanke, Fed minutes

Thu July 20, 2006 10:05 AM ET (Updates to early morning) By Caroline Valetkevitch NEW YORK, July 20 (Reuters) - U.S. stocks were little changed on Thursday as caution before Federal Reserve Chairman Ben Bernanke's second round of congressional testimony offset stronger-than-expected profits from companies such as Apple Computer Inc. (AAPL.O: Quote, Profile, Research) Even with mostly favorable earnings, analysts said investors were worried about making huge bets before Bernanke's testimony and the release of Fed minutes from its recent policy meeting. Bernanke is repeating the Fed's semiannual monetary policy report before the House Financial Services Committee. "There are a lot of positive earnings numbers, but people are cautious in front of Bernanke talking. They're also going to be cautious before the FOMC minutes," said Mark Bronzo, managing director at Gartmore Separate Accounts LLC. The market rallied on Wednesday after comments by Bernanke suggested the central bank may be close to ending two years of interest-rate hikes. Weighing on Nasdaq, shares of Intel Corp. (INTC.O: Quote, Profile, Research) dropped 4.9 percent to $17.58, a day after the world's largest chip maker posted a sharply lower second-quarter profit. For details, see [ID:nN19295880]. The Dow Jones industrial average was up 17.91 points, or 0.16 percent, at 11,029.33. The Standard & Poor's 500 Index was up 0.96 point, or 0.08 percent, at 1,260.77. The Nasdaq Composite Index was down 4.74 points, or 0.23 percent, at 2,075.97. Shares of Apple jumped more than 11 percent to $60.35 after the company said late Wednesday that quarterly profits rose 48 percent, topping analysts' estimates. [ID:nN19294506]. Motorola Inc. (MOT.N: Quote, Profile, Research) shares also advanced after the world's second-biggest cell phone maker said its second-quarter earnings and revenue increased. [ID:nN19286823]. Its shares gained 10.6 percent to $21.27. The minutes from the Fed June 28-29 rate-setting meeting are expected at 2 p.m. (1800 GMT). (Additional reporting by Ellis Mnyandu)

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Reuters.com - US stocks rally on Bernanke's inflation comments - Wed Jul 19, 2006 4:31 PM ET

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US stocks rally on Bernanke's inflation comments

Wed Jul 19, 2006 4:31 PM ET (Updates to close) By Vivianne Rodrigues NEW YORK, July 19 (Reuters) - U.S. stocks rallied on Wednesday, giving the Dow its second-best day of the year, as the Federal Reserve chairman's comments on inflation suggested the central bank may be close to ending two years of interest-rate increases. Stock investors took their cue directly from Fed Chairman Ben Bernanke, who told the U.S. Senate Banking Committee that he saw core inflation moderating in the coming quarters. For details, see [ID:nN19222626]. That set off a burst of buying that resulted in a single-session record number of stocks advancing on the New York Stock Exchange and drove the S&P 500 back up into positive territory for the year. Financial stocks, which climbed after news of strong earnings from JPMorgan Chase & Co. <JPM.N> and Bank of America Corp. <BAC.N>, got another boost from the central banker's comments. [ID:nN19227702] "The combination of Bernanke's comments, strong earnings from banks and a drop in oil prices, swept the stock market," said Weston Boone, vice president of listed trading at Stifel Nicolaus Capital Markets in Baltimore. "This was a very good day, with a broad rally." The Dow Jones industrial average <.DJI> shot up 212.19 points, or 1.96 percent, to end at 11,011.42. The Standard & Poor's 500 Index <.SPX> jumped 22.95 points, or 1.86 percent, to finish at 1,259.81. The Nasdaq Composite Index <.IXIC> gained 37.49 points, or 1.83 percent, to close at 2,080.71. Shares of JPMorgan, a Dow component, rose 5.8 percent, or $2.34, to $43.05, while Bank of America's stock added 3.1 percent, or $1.51, to $49.95 on the New York Stock Exchange. The Philadelphia Keefe Bruyette index of bank stocks <.BKX> climbed 3 percent. The blue-chip Dow and the Nasdaq extended gains and rose more than 2 percent in the afternoon on news that a U.S. judge struck down a Maryland health-care law in a ruling that was favorable to Wal-Mart Stores Inc. <WMT.N>. [ID:nN19259380] Shares of Wal-Mart, a Dow component and the world's largest retailer, rose 2.4 percent, or $1.03, to $44.20. Still, the Dow's biggest gainer was Boeing Co. <BA.N>. Shares of the aircraft maker and U.S. defense contractor rose nearly 4 percent, or $3.12, to $82.29 as the company and Airbus <EAD.PA> announced deals worth more than $10 billion on Wednesday. [ID:nL19144543] International Business Machines Corp. <IBM.N> also was among the Dow's best-performing stocks, a day after the world's largest computer services company reported higher-than-expected quarterly profit. [ID:n18451499] IBM shares rose 2.4 percent, or $1.81, to $76.07. But Yahoo Inc. <YHOO.O> bucked the trend of positive financial results. Shares of the Internet media company tumbled after a disappointing earnings report and product delays led many Wall Street analysts to cut stock ratings and profit estimates. [ID:nN19236057] Yahoo was among the Nasdaq's biggest percentage losers. It slid 21.8 percent, or $7.04, to $25.20. Bernanke told the Senate committee that the central bank remained worried about pricey oil and tight labor markets and the risk that they might foster expectations for rising prices. After Bernanke spoke, interest-rate futures <FFQ6> pointed to reduced chances that the Fed will hike the benchmark fed funds rate by 25 basis points in August to 5.50 percent. [ID:nN19209893] Analysts said fighting in the Middle East remained a major concern for markets because of the risk that a widening conflict could propel crude oil prices higher. U.S. crude oil for August delivery <CLQ6> fell 88 cents to settle at $72.66 a barrel on the New York Mercantile Exchange. Trading was heavy on the New York Stock Exchange, where about 1.87 billion shares changed hands, above last year's daily average of 1.61 billion. On Nasdaq, about 2.37 billion shares traded, above last year's daily average of 1.80 billion. On the NYSE, advancing shares outnumbered declining ones by a ratio of more than 6 to 1, with more than 2,900 stocks rising on the Big Board, a record for a single day. On Nasdaq, about four stocks rose for every one that fell.

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REUTERS : Mideast, oil and earnings to roil stocks

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Extracted News :

 

By Ellis Mnyandu

 

NEW YORK, July 16 (Reuters) - An escalation of Middle East fighting and crude oil prices close to $80 a barrel will create more angst on Wall Street this week, just as the quarterly earnings reporting season hits full swing.

 

If that doesn't give investors enough to worry about, here is one more thing. Federal Reserve Chairman Ben Bernanke is set to appear before congressional committees on Wednesday and Thursday to testify about the Fed's semiannual monetary policy report.

 

Two major U.S. economic reports, notably the Producer Price Index and the Consumer Price Index for June, will be released this week, along with the minutes of the Fed's most recent policy-setting meeting. Economists polled by Reuters expect that the PPI and the CPI rose in June, in the overall figures and the core indexes, excluding food and energy.

 

Wall Street will watch the PPI and CPI reports for signs of whether the pace of inflation is picking up, and comb through the Fed's minutes for clues on when the central bank might take a break from raising interest rates.

 

The violence in the Middle East, though, will keep Wall Street on edge.

 

"The real concern is not so much Israel going to Lebanon, but it's whether Israel is going to threaten Syria," said Steve Goldman, a market strategist at Weeden & Co. in Greenwich, Connecticut.

 

"With Iran's backing of Syria, that would bring up a whole new issue. It's this lingering concern, which makes it tougher for stocks to rebound at this juncture."

 

Last week, Israel launched a military assault against targets in Lebanon after two of its soldiers were seized and eight killed.

 

The assault drove the price of crude oil up on Friday to a record $78.40 a barrel in electronic trading, fueling concerns that U.S. consumers may cut spending as their gasoline bills soar.

 

For the past week, the Dow Jones industrial average<.DJI> dropped 3.1 percent, while the S&P 500 index <.SPX> shed 2.3 percent, while the Nasdaq <.IXIC> lost 4.4 percent.

 

HOPING FOR A CEASE-FIRE

 

Analysts said if there were any signs over the weekend that the Middle East tensions might ease, then earnings will take center stage in the week ahead. That could give the market a catalyst to crawl back up out of its slump.

 

"The geopolitical risks are a stiff headwind," said Joseph Quinlan, chief market strategist at Banc of America Capital Management in New York.

 

"Over the weekend," he said, "we do need to see a cease-fire ... Hopefully the G8 can craft some kind of deal that lowers the temperature," he added, referring to the Group of Eight summit of industrialized nations, which meets through Monday in St. Petersburg, Russia.

 

But "if things continue to boil, oil prices could break through $80 a barrel, and that would weigh on the stock market early on Monday.

 

EARNING BLITZ

 

In the coming week, the numbers blitz will begin. Earnings reports are scheduled from Dow components Microsoft Corp. (MSFT.O: Quote, Profile, Research), the software maker; diversified health-care company Johnson & Johnson (JNJ.N: Quote, Profile, Research); heavy equipment maker Caterpillar Inc. (CAT.N: Quote, Profile, Research) and diversified manufacturer Honeywell International Inc. (HON.N: Quote, Profile, Research).

 

Apple Computer Inc. (AAPL.O: Quote, Profile, Research), the maker of the iPod digital music player, and Web search company Google Inc. (GOOG.O: Quote, Profile, Research), are among the major technology names and Nasdaq stalwarts set to post their quarterly results, along with chip maker Intel Corp. (INTC.O: Quote, Profile, Research).

 

According to Reuters Estimates, S&P 500 companies' earnings are forecast to rise nearly 10 percent for the quarter. This could lead to a 16th consecutive quarter of double-digit profit growth -- if most companies deliver the standard margin of earnings outperformance of between 2 percent and 3 percent over consensus estimates.

 

"It's going to be important to see that you don't get too many disappointments this quarter because that's going to make the next quarter even more concerning," said Barry Hyman, equity market strategist at EKN Financial Services Inc. in New York.

 

"We could see some upside surprises in health care and staples. The consumer discretionary sector will probably have a lot of misses," said Scott Wren, senior equity strategist at A.G. Edwards & Sons Inc. in St. Louis.

 

FED CHAIRMAN ON THE HILL

 

Bernanke's testimony on Capitol Hill is scheduled for Wednesday and Thursday, starting at 10 a.m. EDT (1400 GMT) each day. On Wednesday, the Fed chairman will speak to the U.S. Senate Banking Committee and on Thursday, he will testify before the House Financial Services Committee.

 

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, will speak on "The U.S. Economy and Current Challenges in Monetary Policy" on Wednesday before a business leaders' luncheon in Omaha, Nebraska.

 

The minutes of the Federal Open Market Committee's June 28-29 meeting, when it raised interest rates for the 17th consecutive time, will be released on Thursday at 2 p.m. EDT (1800 GMT). 

 

PPI AND CPI FORECAST HIGHER

 

Economists polled by Reuters forecast that the overall U.S. Producer Price index, a gauge of prices received by farms, factories and refineries, rose 0.3 percent in June after a 0.2 percent rise in May. Core PPI, excluding volatile food and energy prices, is forecast up 0.2 percent after a 0.3 percent gain in May. The Labor Department will release the June PPI report on Tuesday at 8:30 a.m. EDT. (1230 GMT)

 

The overall Consumer Price Index is expected to rise 0.2 percent in June after climbing 0.4 percent in May, according to the Reuters poll. Core CPI, meanwhile, is expected up 0.2 percent in June, following a 0.3 percent increase in May. The June CPI report is set for Wednesday at 8:30 a.m. EDT. (1230 GMT)

 

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