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Jul 26, 2016

Wall Street at Close Report on July 26, 2016, by CNBC: Stocks Close Mixed Amid Earnings; McDonald's Falls Nearly 4.5%

Evelyn Cheng

U.S. stocks closed mixed Tuesday, amid major earnings reports and lower oil prices, ahead of the week's central bank meetings.

The defensive telecommunications and utilities sectors lagged in afternoon trade. U.S. crude oil futures settled half a percent lower, or 21 cents, at $42.92 a barrel.
The Dow Jones industrial average held about 50 points lower in afternoon trade, with McDonald's falling 4.5 percent for the greatest negative impact on the index. Earlier, the Dow fell 100 points in late-morning trade. Traders were chattering about a sell program.
The S&P 500 abruptly fell to session lows of 2,160 around 11 a.m. ET and was last trading several points above that level. The index hit an all-time intraday high of 2,175.63 last Wednesday, and set a closing record Friday of 2,175.03.
"Right now it's a very technical trade. We failed at the highs from last week," said Jeremy Klein, chief market strategist at FBN Securities. Now he said traders were looking for the index to hold last Thursday's intraday low around 2,160.

"I wouldn't look too much into today's price action because it keeps the SPX within its several-day consolidation phase," BTIG Chief Technical Strategist Katie Stockton said in an email. "The period of consolidation has helped alleviate widespread short-term overbought conditions (as of July 14th)."

The Nasdaq composite attempted gains, with the iShares PHLX Semiconductor ETF (SOXX) more than 2.5 percent higher in afternoon trade.

McDonald's was one of six Dow stocks that reported quarterly earnings ahead of the open. Apple traded more than half a percent lower, ahead of its earnings report due after the close.
  • 3M posted earnings that beat by one cent a share, on revenue a touch below estimates. The firm lowered its guidance for 2016 sales growth.
  • Caterpillar reported earnings that beat on both the top and bottom line.
  • DuPont posted earnings that beat on both the top and bottom line, and raised its full-year forecast.
  • McDonald's reported a lower-than-expected rise in U.S. same-store sales. Quarterly earnings, ex-items, did beat expectations.
  • United Technologies raised full-year guidance and posted quarterly earnings that beat on both the top and bottom line.
  • Verizon reported quarterly earnings that topped expectations on revenue that missed. The telecommunications giant said a seven-week workers' strike hurt results.
"It looks like the rebound is beginning to occur in earnings," said David Kelly, chief global strategist at J.P. Morgan Funds.

The Federal Open Market Committee is scheduled to conclude its two-day meeting Wednesday afternoon with its statement on monetary policy. Traders do not expect the Fed to raise interest rates, but will watch for indications on the timing of the next hike.

"On the Federal Reserve, I can't come up for any rationale for them to not to raise rates except that no one expects them to," Kelly said.
"I do think September is a live meeting. I think they'll try to establish that," he said.
The U.S. dollar index traded mildly lower, with the euro near $1.099 and the yen near 104.7.

The yen eased against the dollar after hitting its strongest level against the greenback in nearly two weeks, ahead of the Bank of Japan's scheduled meeting later in the week.
"There's no main headline driving this bid in the yen today. Certainly (there's) the idea the Bank of Japan may disappoint once again," said Adam Button, currency analyst at
Treasury yields were mixed, with the 2-year yield lower around 0.76 percent and the 10-year yield near 1.56 percent.
The Treasury auctioned $34 billion auction of five-year notes at a high yield of 1.180 percent. The bid-to-cover ratio, an indicator of demand, was the lowest since July 2009.
In economic news, the flash Markit services PMI edged down to 50.9 in July from 51.4 in June.

New U.S. single-family home sales rose 3.5 percent in June to a seasonally adjusted annual rate of 592,000 units last month, topping expectations and the highest level since February 2008, Reuters said.
The Conference Board's consumer confidence index was 97.3 in July, a touch below June's 97.4 print.
DJIA Dow Industrials 18473.75 -19.31 -0.10%
S&P 500 S&P 500 Index 2169.18 0.70 0.03%
NASDAQ NASDAQ 5110.05 12.42 0.24%
In afternoon trade, the Dow Jones industrial average declined 71 points, or 0.39 percent, to 18,420, with McDonald's leading decliners and Caterpillar the top advancer.
The S&P 500 traded 5 points lower, or 0.24 percent, at 2,163, with telecommunications leading seven sectors lower and materials the top advancer.
The Nasdaq composite declined 3 points, or 0.06 percent, to 5,094.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded above 13.
About four stocks advanced for every three decliners on the New York Stock Exchange, with an exchange volume of 466 million and a composite volume of nearly 2.2 billion in afternoon trade.
Gold futures for August delivery settled up $1.30 at $1,320.80 an ounce.
—CNBC's Peter Schacknow contributed to this report.
CORRECTION: This story has been updated to reflect that McDonald's earned $1.45 a share in the latest quarter, on an adjusted basis, which topped analyst expectations.
On tap this week:

Earnings: Apple, Caterpillar, Verizon, 3M, DuPont, United Technologies, McDonald's, Eli Lilly, BP, Twitter, KeyCorp, KKR, Freeport-McMoRan, Martin Marietta Materials, Paccar, United Health Services, Starwood Hotels, T. Rowe Price, LVMH, Valero Energy, Under Armour, JetBlue, Anadarko Petroleum, Chubb, Panera Bread, U.S. Steel
Two-day Fed meeting begins
1 p.m. $34 billion 5-year note auction
Earnings: Boeing, Coca-Cola, Comcast, Facebook, Amgen, State Street, Whole Foods, Groupon, GoPro, Cheesecake Factory, GlaxoSmithKline, Lumber Liquidators, Six Flags, Altria, Deutsche Bank, Fiat Chrysler, Statoil, Dr. Pepper Snapple, Ingersoll Rand, Hess, Corning, Nissan, Norfolk Southern, Nintendo, Southern Co, Anthem, Statoil, General Dynamics, Nasdaq OMX, Northrop Grumman, Mondelez
7 a.m. Mortgage applications
8:30 a.m. Durable goods; pending homes
11:30 a.m. $15 billion 2-year floating rate notes auction
2 p.m. FOMC rate decision
Earnings:, Alphabet, AstraZeneca, Bristol-Myers Squibb, Colgate-Palmolive, Celgene, Cigna, Total, MasterCard, Ford, Dow Chemical, Diageo, ConocoPhillips, Credit Suisse, Royal Dutch Shell, BNP Paribas, Hershey, HCA, Harley-Davidson, Marsh & McLennan, Marathon Petroleum, Potash, PG&E, TransCanda, Raytheon, Expedia, CBS, Samsung
8:30 a.m. Jobless claims; advance trade balance
1 p.m. $28 billion 7-year auction
Earnings: Exxon Mobil, Chevron, Merck, AB InBev, UPS, UBS, Sanofi, Xerox, CBOE Holdings, Philips 66, Cabot Oil, Barclays, Eni, Tenneco, Lexmark, CNA Financial
8:30 a.m. Q2 GDP
9:30 a.m. San Francisco Fed President John Williams
9:45 a.m. Chicago PMI
10 a.m. University of Michigan consumer sentiment
1 p.m. Dallas Fed President Rob Kaplan
*Planner subject to change.