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Midday Market Update

Stocks Turn Lower; Strong Data, Terror Attacks Eyed

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U.S. Market    
Stocks gave up early gains as the market weighed robust data against the terror attacks in France.

Retail sales rose 0.6% in June from the previous month, well above expectations of a 0.1% increase. Previous month’s data was also revised upwards. The robust data points to a rebound in consumer spending in the second-quarter after a weak start to the year.

Industrial production grew 0.6% in June, the fastest level since July 2015 and slightly ahead of expectations. Year-over-year, production is still down 0.7%. 

The consumer price index rose 0.2% in June, in line with views. Core prices, which excluding food and energy, were also up 0.2%. On a year-over-year basis total prices were up 1% and core prices were up 2.3%.

Consumer sentiment fell in early July according to the University of Michigan survey. The reading of 89.5 was off 4.3 points and economists said the decline was partially driven by wealthier Americans concerns around the Brexit vote. 

At midday the Dow was off slightly while the S&P 500 and Nasdaq were each off 0.2%.

Stocks on the Move
Wide-moat  Wells Fargo's (WFC) second-quarter results were essentially flat over the past 12 months, as provisioning for loan losses more than doubled due to weakness in energy portfolios and expansion of the company's allowance for card and auto loans. We attribute this performance in part to aggressive management in recent years--Wells Fargo's success might have led to a bit more willingness to take credit and interest rate risk--but aren't reading too much into a slight pause in earnings growth. Charge-offs are still negligible at only 0.39% of the total loan portfolio, and nonperforming loans actually fell slightly.  Shares were down 2.8% at midday.

 Citigroup’s (C) second-quarter results demonstrated the company’s long-term earnings potential.  The company is managing through a difficult environment, generating a 0.9 % return on assets, maintaining solid credit quality, and reducing expenses. Citi shares were down less than 1% on the report. 

Foreign Markets
European markets were mixed today in choppy trading. The FTSE 100 was up 0.2%, Germany’s DAX was flat while the Paris CAC fell 0.3%.

Asian shares were higher after data showing stability in the Chinese economy. The Nikkei 225 was up 0.7%, the Hang Seng gained 0.5% while the Shanghai Composite  was little changed. 

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.