U.S. stocks retreat as natural gas plunges while yen strengthens

Earnings Season

Earnings beat estimates at about 73% of the 265 companies in the S&P 500 that have released results so far in the reporting season, according to data compiled by Bloomberg. Profits have increased 5.8%, compared with a projection for 3.3% growth in a Bloomberg compilation of analysts’ estimates.

U.S. financial companies, fueled by the fastest earnings growth in the S&P 500, are poised to reclaim their position as the market’s biggest industry for the first time since the credit crisis.

Banks, brokers and insurance companies make up 16.8% of the S&P 500, almost double the level from 2009 and closing in on technology companies at 17.6%, according to data compiled by Bloomberg. Bank of America Corp. and Morgan Stanley are helping lead gains in the index this month after profits topped estimates. Intel Corp. and Microsoft Corp. are among the worst after earnings trailed forecasts.

Fed Meeting

Thirty-year U.S. Treasury bonds also declined, sending their yield up four basis points to 3.66%.

The Fed has said economic data will determine the timing and pace of any reduction in its asset purchases. The central bank will probably maintain its benchmark interest rate at 0.25% after concluding its two-day policy-setting meeting on July 31, economists predicted. The Fed will begin to reduce its bond-purchase program in September, according to economists surveyed by Bloomberg.

U.S. gross domestic product probably rose 1% on an annualized basis in the second quarter, after gaining 1.8% in the previous period, data is forecast to show July 31, according to the median of economists’ estimates compiled by Bloomberg. Payrolls increased by 185,000 after a 195,000 gain in June, and the jobless rate fell to 7.5% from 7.6%, according to the median forecast of economists in a Bloomberg survey before Labor Department data on Aug. 2.

“It’s a big week with earnings reports, central bank meetings, and of course U.S. payrolls,” Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion, said by phone. “Where markets go from here depends a lot on the data and the Fed.”

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