Stocks down after airline crash raises prospect of increasing Ukraine tension

Shares declined across the major indexes today, following news that a Malaysia Airlines passenger jet crashed in eastern Ukraine with an estimated 295 people on board. The cause of the crash is under investigation, but reports claimed the plane may have been brought down by a missile. The market had already begun the day in flux in response to reports that a Russian plane shot down a Ukrainian fighter jet yesterday, as well as new U.S. and European Union sanctions against Russia.

The Dow dropped 161 points, with 27 of its 30 components declining; the S&P 500 Index fell 23; and the Nasdaq decreased by 62. Decliners led advancers by just over four to one on both the NYSE and the Nasdaq. The prices of Treasuries strengthened. Gold futures gained $17.10 to close at $1,316.90 an ounce, as investors sought safety in precious metals following today’s news in Ukraine. The price of crude oil increased $1.99 to settle at $103.19 a barrel, following a government report showing that U.S. and global crude stockpiles fell 7.5 million barrels last week, the largest drop in six months.

In Earnings News:

  • Morgan Stanley surpassed second-quarter profit and revenue estimates, reporting a 90% increase in earnings to $1.94 billion, versus $980 million the year prior. Major contributors to the financial services firm’s gains included a 33% increase in investment banking revenue to $1.43 billion, as well as a $609 million one-time tax benefit. The company’s revenue totaled $8.52 billion, compared to $8.34 billion one year ago. Morgan Stanley’s shares (MS) declined by 0.62%.
  • Shares of UnitedHealth Group Inc. (UNH) gained 1.61%, as its second-quarter earnings fell 2% to $1.41 billion but still managed to beat analysts’ expectations. The parent company for United Healthcare partly attributed the decline to higher operating costs, which rose from $28 billion to $30.02 billion. Revenue increased from $30.4 billion to $32.6 billion, primarily due to increased premium revenues.

In Other Business News:

  • Microsoft’s  shares (MSFT) rose 1.02% today after it announced that it will cut 18,000 jobs. The technology company reported that 12,500 of the job eliminations stem from streamlining efforts, following its acquisition of Nokia’s device and services units. Microsoft also reported it will take a restructuring charge of $1.1 billion to $1.6 billion spanning the next four quarters.
  • New U.S. home construction in June fell short of analysts’ expectations and declined to its slowest pace in nine months, according to the Commerce Department. Housing starts dropped 9.3% last month to a seasonally-adjusted annual rate of 893,000. The results stem in part to decreased starts of apartments and single-family homes and a 29.6% decrease in construction in the South.
  • U.S. foreclosures dropped last month to the lowest level since 2006, before the housing bubble burst, according to RealtyTrac. The industry group reported that 107,194 properties across the nation were in various stages of the foreclosure process in June, marking a 2% decline from May 2014.
  • Manufacturing activity in the Philadelphia region increased this month at the fastest pace in more than three years, according to the Philadelphia Federal Reserve. The regional bank’s business conditions index rose from 17.7 to 23.9 in July, marking the highest level since 2011. The report also showed that new orders and goods shipped to customers both climbed to 10-year highs.

*****

I’m pleased to welcome John Natale to Daily Advantage. John began writing in the asset management field more than 10 years ago, and we’re happy he’s decided to bring to the team his expertise, his sense of humor, and what he assures me is his mostly non-poisonous home-brewed beer. –Jeremy Ryan

The age-old declaration “We’re taking the scenic route” may no longer be limited to delusional dads who refuse to admit they’re lost on family road trips.

  • According to MIT Technology Review, Yahoo researchers have developed a data-crunching algorithm to advise drivers on how to take the most scenic route between two locations.

    The researchers began their project by showing images of various locations throughout London to a test group. Participants voted on which locations they deemed attractive, allowing the researchers to plot “beauty scores” on a digital map. The researchers then coded the algorithm to search through every available route on the map for the most aesthetically pleasing options.

    Next, the Yahoo team set their algorithm loose on the city of Boston, this time automating the crowdsourcing process by combing through millions of images hosted on photo-sharing website Flickr. The algorithm analyzed each image for data-driven clues, such as positive or negative sentiment gleaned from user comments.

    For example, if hundreds of photos taken of Boston’s historic Charles River Esplanade were deemed “wicked cool” by Flickr users, the algorithm might direct you to Storrow Drive, an equally historic – some might say archaic – roadway that runs alongside the river.

    Did it work? More than 50 people surveyed agreed with the algorithm’s picks, and the researchers are now developing an app. My take: I enjoy the scenic route as much as the next guy. What gives me pause is the reliance on social media comments from strangers to advise us on how and where we drive.

    Typically, online comments are a mixed bag of results in terms of credibility.  For example, if JustinBieberFan441 says “dude that street is sick my gramma saw a moose there lol!” that caliber of comment might pass muster with an algorithm, but not me.

  • Just imagine if our entire car-driving society depended on crowdsourcing for directions for everyday travels, such as commuting to work. That scenario may actually be on the horizon.

    Waze, acquired by Google in 2013, is a mobile app that crowdsources information on which roads to avoid from more than 50 million users, based on factors ranging from traffic accidents to roadwork.

    One might ask, isn’t it counterproductive to type missives about 30-car pile-ups while driving towards them? Might you become the 31st piled-up car? Thankfully, Waze offers a hands-free option. Let’s hope its voice recognition technology is better than most automated services:

    • Me – “Waze: There’s a stalled town car blocking the intersection.”
    • Waze – “You said: ‘There’s a small clown car mocking your introspection.’”
    • Me – “Noooo.”

    The upside to crowdsourced driving advice: Lost and delusional dad drivers such as myself will cheer at not having to ask a person for directions. Now that would be crazy.

 

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