Market Facing Steady Headwinds

| About: SPDR S&P (SPY)

U.S. stocks are facing headwinds again Tuesday, with troubling news weighing from Europe and ongoing economic warning signals continuing to flare red here at home. The latest were the weekly chain store sales and the Markits PMI data. The SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (NASDAQ: QQQ) were each fractionally lower Tuesday morning with earnings reports flowing in. With GDP laying in wait for the close of the week, it seems the market will approach it with trepidation.


Moody's (NYSE: MCO) cut Germany's rating outlook to negative as Spain seemed to edge toward new need. Meanwhile, the German private sector was reported shrinking for the third straight month. Still, German shares were our only representative below trading higher Tuesday.

Overseas Markets

Euro STOXX 50: -0.25%

FTSE 100: -0.02%

DAX: +0.33%

Hang Seng: -0.79%

Nikkei 225: -0.24%

The market started looking the Fed's way again Monday, but Chairman Bernanke will not be sharing any special information Tuesday morning when addressing the Children's Defense Fund National Conference via recorded video.

The Markit Economics PMI for June showed the slowest rate of manufacturing growth in 18 months. The index for July was expected by economists to rise slightly to 52.6, from 52.5 at the close of June. Unfortunately, the latest report showed an even slower pace of expansion as the index fell to 51.8. The PMI data will be followed by the Richmond Federal Reserve's reporting of its regional manufacturing index. Economists see no change for July, after the index marked negative 3 in June. These manufacturing data points of course follow the ISM's national manufacturing measure falling underwater at last report. Last week, we saw the Philadelphia Fed's measure deteriorate while the New York area measure improved.

The weekly chain store sales reports reached the wire before the market opened today. Consumer spending trends seem to be following sentiment measures lower. The latest look at the data showed ICSC Weekly Same-Store Sales rose just 1.0% in the week ending July 21, after remaining unchanged the week before. On a year-over-year basis, sales increased 3.3% in the latest period, after 2.6% and 3.0% increases in the two previous periods. Redbook showed a soft 1.3% year-to-year increase this past week, after a 1.7% increase the week before. These are very light sales results and only serve to support our argument that recession signals are flaring red.

At 10:00, look for the latest FHFA House Price Index for the month of May. In April, the index increased 0.8%, but economists see the pace slowing in May to 0.3%. The heart of the spring selling season was relatively disappointing in my opinion, and pending new economic issues will weigh on the inherently cyclical sector.

Tuesday's EPS Notables

Company & Ticker

Consensus Quarterly EPS Estimate



Aflac (NYSE: AFL)




Altria (NYSE: MO)




Avery Dennison (NYSE: AVY)


BE Aerospace (NASDAQ: BEAV)


Biogen Idec (NASDAQ: BIIB)


Boyd Gaming (NYSE: BYD)


Buffalo Wild Wings (NASDAQ: BWLD)


Cabot Oil & Gas (NYSE: COG)


Ceradyne (NASDAQ: CRDN)


Domino's Pizza (NYSE: DPZ)






Illinois Tool Works (NYSE: ITW)


Juniper Networks (NASDAQ: JNPR)


Lexmark Int'l (NYSE: LXK)


Lockheed Martin (NYSE: LMT)


Nabors Industries (NYSE: NBR)


Netflix (NASDAQ: NFLX)


Norfolk Southern (NYSE: NSC)




Panera Bread (NASDAQ: PNRA)


Peabody Energy (NYSE: BTU)


Pentair (NYSE: PNR)


Polaris Industries (NYSE: PII)


Polycom (NASDAQ: PLCM)


Reynolds American (NYSE: RAI)


RF Micro Devices (NASDAQ: RFMD)


Rockwell Collins (NYSE: COL)




TripAdvisor (NASDAQ: TRIP)


Under Armour (NYSE: UA)


Unisys (NYSE: UIS)


United Parcel Services (NYSE: UPS)


Virgin Media (NASDAQ: VMED)


Waters Corp. (NYSE: WAT)


Websense (NASDAQ: WBSN)


Western Union (NYSE: WU)


Whirlpool (NYSE: WHR)


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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