This morning investors were hit with two major economic data points and two important earnings reports. The economic data points were the U.S. producer price index, which tracks the prices of basic goods and services and many say is the best indication of possible inflation. The index rose by 0.8% in June as oil and passenger cars saw some big price gains. Furthermore, the 12-month reading for core inflation rose to 1.7% from 1.6%, which some economist see as a good things for the economy, as it shows consumer demand firming up.
The preliminary Thomson Reuters/University of Michigan consumer confidence reading was also released. The index fell to 83.9 from a previous reading of 84.1. While that's not a massive drop, it does indicate that consumers are once again becoming concerned about the economy. This is the second month in a row that the reading has fallen since it hit a near-six-year high in May of 84.5.
JPMorgan Chase and Wells Fargo released earnings this morning, and both banks beat analysts expectations on both the top and bottom lines. But what many investors have been focusing on is mortgage originations and interest rate spreads. While both banks reported better results and a larger number of originations, their interest rate spreads have been quickly closing, which is hurting profits.
Despite mixed economic data and the strong earnings reports, the Dow Jones Industrial Average (DJINDICES:^DJI) is down by 38 points, or 0.25%, this morning. The other major indexes have gone nowhere this afternoon: The S&P 500 is down a negligible 0.09%, while the Nasdaq sits at breakeven. Now let's take a look at two of the Dow's biggest losers today.
Shares of Verizon (NYSE:VZ) are down 1.5%. My colleague Dan Caplinger noted earlier that shares are likely down as a result of a report released by Moffett Research, which doesn't believe the wireless-service provider can uphold its end of a deal with Apple, in which Verizon committed to sell $23.5 billion worth of iPhones during the year. Moffett believes the company will miss that mark by as much as $14 billion, but as Dan also mentioned, no one knows how Apple would enforce the agreement.
After yesterday's announcement that Microsoft (NASDAQ:MSFT) will restructure its different business units and pull them all together so that they work as one cohesive organization, the share price of Mr. Softy rose 2.85% during the day. But now that investors and analysts have had a little time to think about this plan, shares are down 1% today. While a number of analysts have come out and said they feel it's a good move for the company, some have questioned its implementation and whether Steve Ballmer is the best man for the job. As I mentioned yesterday, this transition will take some time, and it will take even longer for shareholders and investors to figure out whether this was a good move; and by "longer," I mean years.