Recovery Interrupted

U.S. markets sell-off into the close amid a wave of earning reports and warning signs about the recovery.

Read in Browser   The Market Sum | Insight after the bell By Caleb Silver, Editor in Chief Tuesday's Headlines 1. US markets sell off into the close 2. Tech stocks are stalling out 3. Starbucks swings to a loss 4. Consumer confidence cools in July 5. Tracking New York City's recovery Markets Closed Dow 26,379.28 −205.49 (-0.77%) S&P 3,218.44 −20.97 (-0.65%) Nasdaq 10,402.09 −134.18 (-1.27%) VIX 25.44 +0.70 (+2.83%) Bitcoin $10,816.55 +$163.39 (+1.51%) US 10-Yr Yield 0.581 −0.0280 (-4.60%)     Photo courtesy KenWiedemann Markets Today Big Tech gives, and Big Tech takes away. U.S. markets followed the mega-cap tech stocks lower today as Apple (AAPL) , Amazon (AMZN), and Netflix (NFLX) all fell 1% or more. Gold hit another fresh high, and the U.S. Dollar continued its descent. Earnings reports from companies across sectors are a mixed bag, but any company closely tied to the consumer (except Amazon), is feeling the headwinds.    Republican leaders unveiled their new $1 trillion stimulus bill late yesterday, and the battle lines are already being drawn with a little over one week to go before Congress goes on summer break. The HEALS Act, as it is called, calls for some of the same stimulus payments and small business help that the Democrats' HEROES Act, calls for. The only problem is that they are about $2.4 trillion apart, and there is a lot of pork in between.   In the meantime, consumer confidence is fading right at the time it was supposed to be gathering momentum - but we all know what happened. Where do we go from here? Investopedia is trying to put some data around that by creating a new Economic Recovery Index for New York City, that we debuted today (more below). Photo courtesy photoframd.com Headlines: The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020, to help an economy still struggling with the coronavirus pandemic. U.S. Treasury Secretary Steven Mnuchin said in a separate statement that he had approved the three-month extensions. Pfizer and BioNTech have begun the Phase 2/3 study of their COVID-19 vaccine candidate, BNT162b2, with up to 30,000 participants. It recently received U.S. FDA Fast Track designation. Assuming clinical success, they are on track to seek regulatory review as early as October 2020 and supply up to 100 million doses by the end of 2020 and approximately 1.3 billion doses by the end of 2021. Pfizer just beat Q2 earnings and revenue forecasts as well. McDonald's said global revenues fell 30% in Q2 to $3.77 billion, slightly better than analysts expected. Adjusted EPS disappointed at 66 cents. Global same-store sales declined 23.9% but were seen to be improving sequentially throughout the quarter (-20.9% in May and -12.3% in June). Tencent Holdings has offered to take Sogou, China's second-largest search engine after Baidu, private for $9 a share or $2.1 billion. Tencent already owns 39.2% of the company and is looking to buy the remaining 60.8%. It also has 52.3% of the voting power. Shares in Sogou, a subsidiary of Sohu, closed 48% higher on the NYSE exchange yesterday. Shares of Eastman Kodak, yes ... the camera maker, more than tripled Tuesday on plans to secure a $765 million government loan to help produce ingredients used in key generic medicines to fight the coronavirus. The development bank loan is the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense. It's intended to speed production of drugs in short supply and those considered critical to treat Covid-19, which may include hydroxychloroquine, the controversial antimalarial drug. Starbucks announced its first quarterly loss in quite some time as the quarantine hit its business severely. Earnings and sales fell by less than analysts expected, but still experienced sharp declines. Same-store sales overall fell 40%, roughly in line with the 41% that analysts expected. On the bright side, Starbucks narrowed the range of its full-year adjusted EPS guidance largely to the upside, from $0.55-$0.95 to $0.83-$0.98. AMD reported slightly higher-than-expected profits and the chipmaker is raising its full-year revenue guidance. This comes on top of the news that its rival, Intel, said it would be delaying the release of its chips with 7-nanometer transistors until 2022 or 2023, a type of product AMD already sells. Visa delivered a small earnings beat as its profits fell slightly less than expected. Its sales matched analysts' expectations, as did its decline in payments volume. The huge economic disruption from COVID-19 hurt Visa across the board. Due to the "significant uncertainty in the global economy" caused by the virus, Visa did not issue full-year guidance. chart courtesy Schwab Research There Goes Consumer Confidence The Conference Board's Consumer Confidence Index decreased in July, after increasing in June. The Present Situation Index – based on consumers' assessment of current business and labor market conditions – improved a little. But the Expectations Index – based on consumers' short-term outlook for income, business, and labor market conditions – fell from last month.   Translation: Consumers thought things were getting better in June, but changed their tune when the number of daily cases spiked, and businesses were forced to close again.   Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said, "Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19. Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects. Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending."   As we know, consumer spending accounts for about 70% of U.S. GDP, so the waning of confidence is troublesome, to say the least - especially as unemployment benefits run out. Tracking New York City's Economic Recovery Today, we launched a new economic index designed to track New York City's road to recovery. We are partnering with NY1, the ubiquitous New York City cable news channel to present the index on television, and online.   It's a little hard to believe that it was 6 months ago today that the World Health Organization declared COVID-19 a global pandemic. Since then, cities around the world have seen their economies leveled as we stopped doing everything that makes a city a city. New York and New Yorkers have been right in the epicenter of that as one of the hardest hit cities in the world.   The concentration of population, front line workers, and use of public transit are all factors in how heavily it was struck by the virus. The toll on human life and economic disruption has been staggering, but NYC's resilience has also shown through as it fights back to recovery.   The economic downturn was sudden and all-encompassing, as demonstrated by near vertical drops in transit, dining, and other indicators reflecting normal life in New York.   What Does the Recovery Index Track? Weekly metrics will include: Health: Are COVID-19 hospitalizations declining week over week? Jobs and Unemployment: Are we getting back to work? Small Business Licenses: Are entrepreneurs starting or restarting their businesses? Mobility: Are we taking trains like we used to? Restaurants: Are we comfortable eating both indoors and outdoors at restaurants again? We'll be updating this index every week and adding more data points as they become available and reliable. While it's not an all encompassing index of every facet of economic life in one of the world's biggest cities, it is our mark in the sand as we try to gauge the strength, or weakness, in our economic recovery.   Here's a video clip of me introducing the index on NY1's cable channel.   And here is the weekly index: More News: Visa Earnings: What Happened Top Strategists on Where to Invest Now Starbucks Earnings: What Happened SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. LEARN MORE  > (chart courtesy YCHARTS)     The stocks of consumer finance firm OneMain Holdings and off-road vehicle maker Polaris both shot up today on significant earnings beats. Real estate investment trusts including Empire State Realty Trust, Ventas, and Regency Centers all rose in unison today.     Ceiling and wall-maker Armstrong World Industries' stock fell today after a significant earnings and revenue miss. Several oilfield equipment makers, including National Oilwell Varco and water and infection-prevention services provider Ecolab, were also among today's top decliners. Word of the Day Same Store Sales Same-store sales is a financial metric that companies in the retail industry use to evaluate the total dollar amount of sales in the company's stores that have been operating for a year or more. Same-store sales statistics provide a performance comparison for the established stores of a retail chain over a given time period, such as a fiscal year or quarter or a calendar year or quarter, comparing revenues for the current period to the same period in the past, for example, comparing first-quarter 2019 revenues to first-quarter 2018 revenues. Photo: loc.gov   Today in History July 28, 1868: Following its ratification by the necessary three-quarters of U.S. states, the 14th Amendment, granting citizenship to all persons born or naturalized in the United States—including formerly enslaved people—is officially adopted into the U.S. Constitution.  The 14th Amendment forbids states from denying any person "life, liberty or property, without due process of law" or to "deny to any person within its jurisdiction the equal protection of the laws." By directly mentioning the role of the states, the 14th Amendment greatly expanded the protection of civil rights to all Americans and is cited in more litigation than any other amendment.   Source: https://guides.loc.gov/14th-amendment Want more Investopedia market news? Sign Up for 'Chart Advisor' Investopedia's expert analysts present market performance for the day and discuss with in-depth charting and technical analysis, a must read for traders. 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