Business News: Durable Goods & Microsoft / Yahoo Deal

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Today's economic data offers a tough chew. Both Durable Goods Orders and Mortgage Activity posted declines, offering more poison for skeptical investors to use for sale. Still, the deal between Microsoft and Yahoo has the market a buzz!

Business News: Durable Goods & Microsoft Yahoo Deal

Durable Goods Orders

Durable Goods Orders for June declined 2.5%, driven by soft auto, aerospace and defense orders. Excluding transportation, however, Orders rose 1.1%. The reported data offered an unquestionable disappointment, as economists were expecting just a 0.5% decline. The headline result also contrasts harshly against May's Order improvement of 1.8%. In our "Week Ahead" copy, we presciently offered, "We suspect some of the spring improvement came as a result of pent up demand given the panic-level ordering patterns that existed through the turn of the year and into March." The market seems to be receiving good enough reason to trade sideways to lower as economic recovery appears likely to be slow and weak in its arrival and duration.

Mortgage Activity Report

The Mortgage Bankers Association is once again attempting to draw subscribers for its data, and so made the current report unavailable to us. However, the numbers are public information, and seemed to suffer from prior week rise in contracted 30-year fixed rate mortgages. A week ago we saw those rates jump significantly, to 5.31%, from 5.05%, and this week they rose another 5 basis points. As a result, the Market Composite Index took a hit on Refinance Index decline. Purchase activity drifted only modestly lower, giving further sign to a stabilized housing market.

US Government Events

The Senate Banking Committee will turn its focus on shareholder protection and corporate governance on Wednesday. A U.S. bankruptcy court will deliberate on the reorganization or sale of auto parts supplier Delphi.

New York Fed President Bill Dudley will discuss factors driving US growth and also the topic of inflation at a morning meeting of a NY group. The Federal Reserve releases its Beige Book of regional economic indicators in the afternoon, at 2:00 p.m.

Petroleum Status Report

The EIA releases its Petroleum Status Report at 10:30. Last week's data showed US crude oil inventory decreased by 1.8 million barrels in the week ending July 17, while gasoline stores increased by 0.8 million barrels. Both inventory levels stood above normal for this time of year and therefore offer little support to volatile pricing. However, the jolly sentiment around earnings season has put its arms around the commodity, lifting futures back up towards the $70 mark.

Microsoft & Yahoo Pen Deal

Microsoft (Nasdaq: MSFT) shares are up nearly 2%, while Yahoo (Nasdaq: YHOO) shares have dropped 6% off the morning bell; this after the two technology leaders penned a deal for their online search businesses. Search giant Google (Nasdaq: GOOG) controlled approximately 80% of the search market at our last check, and so the two technology and Internet players felt need to combine their second and third place efforts toward challenging their much more significant rival. Yahoo's share decline reflects disappointment that the company now looks unlikely to be acquired outright by Microsoft. However, the deal, which lasts for 10 years, may still add significant value to both Yahoo and Microsoft shareholders. We may analyze this further for you later. Let me know if you would like that via the "Discuss" button below.

Corporate Earnings Schedule

The day's earnings slate includes news from Advance America Cash America (NYSE: AEA), Aflac (NYSE: AFL), Agnico-Eagle Mines (NYSE: AEM), Akamai (Nasdaq: AKAM), Akzo Nobel (Nasdaq: AKZOF.PK), Amkor (Nasdaq: AMKR), ArcelorMittal (NYSE: MT), Arctic Cat (Nasdaq: ACAT), ASM Int'l (Nasdaq: ASMI), Banco Santander (NYSE: STD), BOK Financial (Nasdaq: BOKF), BorgWarner (NYSE: BWA), Brookfield Homes (NYSE: BHS), Cadence Designs (Nasdaq: CDNS), Cal Dive Int'l (NYSE: DVR), Callaway Golf (NYSE: ELY), Cerner Corp. (Nasdaq: CERN), Coca-Cola (NYSE: CCE), ConocoPhillips (NYSE: COP), Covance (NYSE: CVD), Daimler (NYSE: DAI), Delphi Fin'l (NYSE: DFG), Digital River (Nasdaq: DRIV), Electronics for Imaging (Nasdaq: EFII), Express Scripts (Nasdaq: ESRX), FBR Capital Markets (Nasdaq: FBCM), Fiserv (Nasdaq: FISV), Genco Shipping (NYSE: GNK), General Dynamics (NYSE: GD), General Maritime (NYSE: GMR), GSI Commerce (Nasdaq: GSIC), Goldcorp (NYSE: GG), Hecla Mining (NYSE: HL), Honda Motor (NYSE: HMC), Hospira (NYSE: HSP), Internet Brands (Nasdaq: INET), Jones Apparel (NYSE: JNY), Kaiser Aluminum (Nasdaq: KALU), Kulicke & Soffa (Nasdaq: KLIC), Lam Research (Nasdaq: LRCX), Martha Stewart (NYSE: MSO), MeadWestVaco (NYSE: MWV), Medco Health (NYSE: MHS), Moody's (NYSE: MCO), Nissan Motor (Nasdaq: NSANY), Nomura Holdings (Nasdaq: NRSCF.PK), Oceaneering Int'l (NYSE: OII), Penn National Gaming (Nasdaq: PENN), Praxair (NYSE: PX), Qwest Communications (NYSE: Q), Royal Caribbean (NYSE: RCL), Ryland Group (NYSE: RYL), Sanofi-Aventis (NYSE: SNY), SAP AG (NYSE: SAP), Sealed Air (NYSE: SEE), Southern Co. (NYSE: SO), Sturm Ruger (NYSE: RGR), Symantec (Nasdaq: SYMC), Teradyne (NYSE: TER), Time Warner (NYSE: TWX), Visa (NYSE: V), WellPoint (NYSE: WLP), World Acceptance (Nasdaq: WRLD) and many more.


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