Financial Review with Sinclair Noe
DOW + 123 = 17,100
SPX + 20 = 1978
NAS + 68 = 4432
10 YR YLD + .01 = 2.48%
OIL – .31 – 102.88
GOLD – 7.30 = 1311.90
SILV – .27 = 20.99
President Obama today demanded Russia stop supporting separatists in eastern Ukraine, calling it “an outrage of unspeakable proportions.†Obama stopped short of directly blaming Russia for the incident but warned that he was prepared to tighten economic sanctions. He echoed international calls for a rapid and credible investigation. While the West has imposed sanctions on Russia over Ukraine, the United States has been more aggressive than the European Union. German Chancellor Angela Merkel said it was too early to decide on further sanctions before it was known exactly what had happened to the plane. Emotions are undoubtedly running high across Europe, but whether that translates into action remains to be seen.
Meanwhile, Israel says it could significantly widen a Gaza land offensive. The Israeli land advance followed 10 days of barrages against Gaza from air and sea, hundreds of rockets fired by Hamas into Israel and failed attempts to arrange a ceasefire or a truce.
How does all this play out? We don’t know. Yesterday was a terrible day, with Israel sending in ground troops to Gaza and somebody shooting down a Malaysian jetliner; it felt like an inflection point, like a moment when the narrative shifts, but for now we don’t know if that is true, or which way the winds blow.
Markets are funny; the financial markets were jittery; today, not so much. What changed? Not much. For the week, the Dow climbed 0.9 percent, the S&P 500 rose 0.5 percent and the Nasdaq gained 0.4 percent. So, volatility spiked yesterday; the VIX moved higher by 32%, but gave back 17% today. One day does not change a trend. War can change a trend, but we’re not at that point today, or maybe the markets are just ignoring reality. The market’s attention to geopolitical hotspots shifted to earnings. S&P 500 companies’ profits are expected to grow 5 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.2 percent.
Strong earnings from several companies kept the market in positive territory after it opened. Investors drove up shares in Google, Honeywell International, furniture company Knoll and Huntington Banchsares, among others. The Conference Board’s latest index of leading indicators, designed to predict the economy’s trajectory, climbed in June for the fifth consecutive month.
