Walt Disney is Downgraded
On Monday, the Walt Disney Company (DIS, -1.65%) was downgraded by Wells Fargo from outperform to market perform. At the close of Friday’s trading session last week, the shares of Disney declined 0.33%, or 0.36 points, to trade at $107.16 after hitting an intraday low of $106.52 and an intraday high of $107.67. Walt Disney has a market cap of $180,871 million and during the last week, the share price has declined by 2% while they have also declined by 9.84 percent over the last 4 weeks. In comparison, the Dow Jones Industrial Average has slipped 0.8% so far this month. In addition to the Walt Disney Company, Wells Fargo also downgraded CBS Corp. (CBS, -1.46%) and 21st Century Fox Inc. (FOXA, -0.21%) from outperform to market perform. According to analyst Marci Ryvicker, these downgrades came about as a result of the poorest earnings seasons since the Great Recession. Interestingly, Ryvicker maintained a rating of outperform on Time Warner Inc. (TWX, -0.26%) stating that the company’s second quarter earnings were not bad. The shares of Walt Disney are currently trading $107.30 a share.
After a volatile trading session on Tuesday, U.S. stocks traded slightly lower. This came in response to mixed earnings results as well as to a positive report on home construction in the U.S. for July. According to the Commerce Department, the construction of new U.S. homes in July rose at the fastest pace since before the Great Recession. This positive data came only one day after a stronger than expected report on home-builder confidence was released. This positive data is evident that the housing market is continuing to gain strength. At the close of U.S. trading, the S&P 500 index (SPX) declined 0.2%, or 4 points, to 2,098.02. Also on the downside was the Dow Jones Industrial Average (DJIA) which dropped 0.1%, or 16 points, to 17,530.02. Following the downward trend was the tech heavy Nasdaq Composite index (COMP) which declined 0.4%, or 18 points, to 5,072.85.
On Tuesday, the U.S. dollar traded higher. This increase was prompted by positive data on U.S. housing starts which showed an increase in July to an almost eight-year high. In addition, the British pound (GBP) was boosted by expectations for higher interest rates. According to the Commerce Department, in July, housing starts rose 0.2% to an annual pace of 1.21 million units. This marked the highest level since October 2007 and also the 4th straight month that housing starts have remained above the one million-unit rate. In addition, in July, building permits declined 16.3%, after 3 consecutive months of strong gains. The EUR/USD traded at 1.1034, down 0.36% while the USD/JPY traded steady at 124.40. Against the currencies in Britain, Switzerland and Canada, the U.S. dollar traded mixed with the GBP/USD at 1.5654, up 0.45%, the USD/CHF steady at 0.9774 while the USD/CAD also held steady at 1.3076. The US dollar index also increased to 96.98.
On Tuesday, U.S. crude futures rallied sharply. This came after the contract touched a fresh 6-year low earlier in the trading session as investors remained focused on China as well as a possible interest rate hike by the Federal Reserve. WTI crude oil for delivery in October traded at $43.09 a barrel, up $0.68, or 1.60%, on the NYMEX. Over the last month, Texas Long Sweet futures are still down approximately 17 percent. Meanwhile, Brent crude oil for delivery in October traded at $48.81 a barrel, up 0.09%, or $0.07, on the Intercontinental Exchange (ICE) in London. The current spread between the U.S. and international benchmarks of crude stands at $5.72. This is below the level of $6.33 reached on Monday.