Bob Pisani is off; this post was written by CNBC producer Robert Hum.
Despite some good earnings reports this morning and modestly higher futures pre-open, stocks have given up much the day’s early gains on some disappointing economic data.
The Conference Board reported that July consumer confidence fell once again to 50.4, below expectations of 51.0. It was the second consecutive month of declines for the index as economic jitters continued amid a frustratingly tough job market and as the housing market showed little signs of life.
Richmond Fed’s manufacturing index also slipped in July, falling to 16 from a reading of 23 in June.
On the earnings front, a couple of global firms reported strong results, headlined by big sales beats as they benefited from their large presence overseas:
a) DuPont trades just shy of a 52-week high after reporting better-than-expected earnings ($1.17 vs. $0.94 consensus). Revenues jumped 26 percent to $8.6 billion (vs. $8.3 billion consensus). Sales grew double-digits across each of the chemical maker’s divisions, boosted by an overall 21 percent rise in volumes and a 5 percent rise prices. However, the key sales drivers were Asia and Emerging Markets, where volumes rose 40 percent and 32 percent, respectively (compared to an 18 percent rise in the U.S.). Notably, 58 percent of DuPont’s total sales come from overseas.
Guidance for the full year was also raised above estimates (2.90-$3.05 vs. $2.64 consensus).
b) Engine maker Cummins also beat estimates ($1.25 vs. $0.91 consensus) on impressive sales numbers ($3.21 billion vs. $2.84 billion consensus). Engine and components sales were particularly strong, up 45 percent from the year-ago quarter. But just like DuPont, the real strength was overseas, where sales grew 51 percent. Fortunately for Cummins, nearly two-thirds of its total sales come from international countries.
Guidance for the full year is also raised and the stock is being rewarded – it is now trading at an all-time high.
Some other earnings highlights this morning:
1) Shares of Regions Financial are getting a boost after reporting a narrower-than-expected loss (loss of $0.11 vs. loss of $0.20 consensus). The regional bank saw its net interest margins expand and expects that metric will “continue improving gradually throughout the year.” The bank’s credit metrics also improved: its loan loss provisions, charge-off rate, and non-performing assets all fell from the prior quarter.
One negative for Regions Financial: loans outstanding contracted 3 percent due to “challenging loan demand.”
2) European banks are all modestly higher as UBS and Deutsche Bank earnings beat estimates.
UBS reversed the loss it had a year ago with a profit in the latest quarter, buoyed by better performance at its investment bank and improvements in its private banking operations (investor withdrawals were at the lowest levels in 2 years).
Deutsche Bank also turned in a Q2 profit as it reported that its loan loss provisions significantly fell (from 1 billion Euros a year ago to 244 million Euros this quarter). Although its investment banking revenues fell 11 percent, revenues at its asset and wealth management business improved.
One notable disappointment today:
U.S. Steel’s earnings missed estimates ($0.45 vs. $0.63 consensus) despite better-than-expected sales. Its top line was helped by higher flat-rolled shipments and price increases.
However the steel giant’s outlook is a bit murky. CEO John Surma cautions that “operating results are expected to be below the second quarter largely due to a decrease in shipping and production volumes for our Flat-rolled segment, reflecting slower order rates…thus far in the quarter.”
As a result, other steel stocks are tumbling this morning: AK Steel , Allegheny Technologies , Nucor , Mittal Steel are all modestly lower.
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