Debt Ceiling Chatter Will Yield Choppy Markets (BIDU, NFLX, UPS, X, REE, OMI)

Stocks backtracked for a second-straight day (three straight for the Dow, which was the only major U.S. index down on Friday), as debt-ceiling gridlock and mixed earnings news failed to inspire buying. With the debt-ceiling deadline quickly approaching (August 2nd), it’s likely to remain a bit of an overhang until the issue is resolved, which likely won’t be until the last minute. Until then, expect a choppy market that ebbs and flows on debt-ceiling related news.

The Rare Earth Stocks Index was the top performing tickerspy Index on the day, led by Rare Element Resources (REE) with a 9% gain. The Medical Product Wholesale Stocks Index was the day’s worst performing tickerspy Index, with Owens & Minor (OMI) down -8%.

Stocks fell on the day, with the Dow off -92 points to 12,501. The S&P slipped -5 points to 1,332, while the Nasdaq edged -3 points lower to 2,840. Oil advanced 39 cents to $99.59 a barrel, while gold rose $4.60 to $1,616.80 an ounce.

In economic news, the Conference Board said consumer confidence rose to 59.5 in July from 57.6 in June, topping the reading of 56.0 economists were forecasting. The expectations index jumped to 75.4 from 71.6. U.S. home prices rose in May for just the second time in eight months as the S&P/Case Shiller Home Price Index showed gains of 1.1% on its 10-city index and 1.0% on the 20-city index.

In earnings news, shares of Baidu (BIDU), the largest Chinese provider of Internet search services, jumped 5.0% after the company reported a second-quarter profit of $252.6 million, or 72 cents a share, nearly double what the company reported a year earlier. Revenue climbed 78.4% to $528.4 million. Analysts were expecting a profit of 66 cents on revenue of $502.6 million. Baidu forecast third-quarter revenue of $611.1-$626.6 million, well above the $569.6 million analysts were expecting.

Share of Netflix (NFLX), the provider of online streaming movie and television services and DVD-by-mail rentals, dropped -5.2% after the company issued third-quarter guidance that was below Wall Street estimates. For the second quarter, California-based Netflix said its profit rose 55% to $68 million, or $1.26 a share, from $43.5 million, or 80 cents, a year earlier, as revenue climbed 52% to $789 million. Analysts were expecting a profit of $1.12 on revenue of $790.5 million. For the third quarter, Netflix is forecasting a profit of 72 cents to $1.07 a share on revenue of up to $828.5 million. Analysts were expecting a profit of $1.11 a share on revenue of $842.9 million.

UPS (UPS), the world’s largest package shipping firm, posted a second-quarter profit of $1.06 billion or $1.07 per share, compared with $845 million, or 84 cents per share, a year earlier. Revenue climbed 8% to $13.19 billion. Adjusted EPS came in at $1.05. Analysts were expecting a profit of $1.04 a share on revenue of $13.14 billion. The company reiterated full-year profit guidance of $4.15-$4.40 a share. Analysts were expecting $4.34. Shares of Georgia-based UPS fell -3.3%. Eighty-three pros held UPS in their portfolios at the end of Q1 and 530 tickerspy members own the stock in their portfolios.

Shares of U.S. Steel (X) plunged -8.3% despite the company reporting a second-quarter profit of $222 million, or $1.33 a share, reversing a year-earlier loss of -$25 million, or -17 cents a share. Revenue increased 9% to $5.12 billion. Adjusted EPS was $1.12. Analysts were expecting a profit of $1.21 on sales of $5.49 billion. Eleven pros counted US Steel among their top holdings at the end of Q1 and nearly 1,200 tickerspy members own the stock in their portfolios.

Tags: BIDU, NFLX, OMI, REE, UPS, X