Quiet session for stocks Friday, but July ends with solid gains for major market indices. On Friday, the Dow (DJI) lost 1.2 points to close at 10,465.94. The S&P 500 (SPX) was flat at 1,101.60 with the Nasdaq (COMP) up 3.01 points to 2,254.70. Volume was light on the session with the NYSE trading 1.18 billion shares and the Naz turning over 2.14 billion shares. Market breadth was positive on the session by an 18-to-13 and 15-to-12 margin on the Big Board and Naz respectively.

We got a mixed batch of economic news Friday, leading to a flat session for stocks. The week also ended flat for the major market indices, although the month of July was bullish. The Dow gained 7.08 percent during the month, with both the SPX and Naz up 6.9 percent. During this month of strength, the fear indicators did fall substantially with the CBOE Market Volatility Index (VIX) down 31.96 percent to 23.5. 

The initial release on second quarter GDP was below expectations, but the Chicago PMI and consumer sentiment release were both much better than anticipated. GDP rose 2.4 percent in the quarter, a tenth below estimates, but the first quarter was revised higher by a full percentage point to 3.7 percent. The GDP price index rose 1.8 percent from quarter to quarter with real GDP rising 3.2 percent year to year. 

The slightly negative GDP report was offset by a strong gain in the Chicago PMI release. This measure of business activity in the Chicago region rose to 62.3 in July from 59.1 in June. Economists were looking for a reading near 56.0. The employment component rose 2.5 points to 56.6, which bodes well for next week’s employment report. Consumer sentiment also rose more than expected as measured by the Reuter’s/University of Michigan report. This index came in at 67.8 in July, up from 66.5. 

We did get a number of second quarter earnings announcements since Thursday’s close and the results were mixed. Shares of Motorola (MOT) fell 1.58 percent despite beating earnings and revenue estimates. The mobile phone maker had its estimates lowered at Credit Suisse thanks to a decline in unit sales. MOT closed at $7.49, remaining above support at its 200-day moving average. 

Chevron (CVX) was the latest oil company to announce results with the oil giant besting expectations for earnings and revenues. However, the stock rose just 19-cents to $76.21, possibly a result of gains heading into the company’s release. Several oil related stocks reported this week with positive results for the most part. 

Earnings will continue to be heavy next week and so far, with about two-thirds of the SPX announcing, 75 percent have beat estimates. Besides earnings, the focus next week will be on the employment report due out Friday. 

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site