U.S. stocks hover around zero level
The US stocks market hovered around the zero level for most of the trading session, as investors absorb new economic data points and await comments from Chairman Ben Bernanke at his bi-annual testimony in front of congress on the state of monetary policy. Earnings continue to impress with Citigroup notching up strong gains following last week’s positive results for JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) .
Citigroup (NYSE:C) reported second-quarter earnings of $4.2 billion or $1.25 per share up 42% from a year over year, and beating analysts’ expectations or 1.17 per share. Revenue increased 12% to $20.5 billion, more also than analysts had expected. The driving force behind the increase was due to valuation increases on Citi debt. Despite the good earnings, Citi’s revenue strategy is focused on emerging market growth which could be hampered by the slowdown in China. Chinese report 7.75% growth in quarterly GDP on Monday, which were in line with economists’ expectations.
Retail sales in June expanded by 0.4%, less than the 0.8% expected. Retail sales were driven by auto sales increases but saw declines in furniture and food purchases. Excluding autos, sales fell 0.1%. Consumer discretionary stocks were on the defensive following the softer than expected retail sales news.
Financials shares were higher on Monday and were the largest volume leaders in a mixed tape. Traders continue to await Bernanke’s Humphrey Hawkins testimony scheduled for later than week. The Chairman’s take on the current economic environment is that monetary policy is appropriate and there are likely to be further bumps in the road that do not warrant a change in bond purchases.
The S&P 500 index made a new all-time high as momentum soared to its highest level in the past 12-months. The RSI is still below the oversold trigger printing near 67 which is on the high end of the neutral range.
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