Stocks Resume Rally; S&P Tops 1,100

Word on the Street

• Ford Motor (F) continued its successful turnaround and posted better-than-expected sales and profits . The automaker posted a second quarter profit of $2.6 billion, reflecting stronger sales and marking the best year-over-year improvement in six years. Net income was up 15% compared with last year.
• McDonald’s (MCD) beat the Street’s expectations on earnings, but same-store sales didn’t meet forecasts. The company said that same-store sales, a key metric used to measure a retailer’s performance, rose 4.8% in the quarter, as well as in the month of June.
• Verizon Communications (VZ) swung to a loss during the second-quarter. One-time costs related to layoffs were largely blamed for the disappointing results. Verizon Wireless, meanwhile, added 665,000 contract customers, which topped Wall Street expectations but still represented a 40% decline from a year earlier.
• Two top ratings agencies said they might downgrade Hungary’s sovereign debt after talks with the IMF collapsed this past weekend. A rating downgrade would raise the cost of borrowing for Hungary at a time when the country is struggling to repair investor confidence.
• The Treasury Department is allowing Morgan Stanley (MS) to sell more of the Citigroup (C) shares that it currently owns. The third phase of Citigroup stock sales will begin immediately and end by Sept. 30.
• Obama administration pay czar Kenneth Feinberg said 17 financial companies overpaid executives in late 2008 and early 2009 by about $1.6 billion during the financial crisis. Feinberg reviewed 419 companies that received bailout money before pay curbs were enacted by Congress in February 2009.
• Honeywell Raises Outlook – Honeywell (HON) forecast sales growth of 6% to 8% excluding the effect of currency fluctuations and any acquisitions. This upbeat forecast followed the company’s report of an increase in second-quarter net income.
• Dell (DELL), several former executives, and its founder, Michael S. Dell have agreed to pay more than $100 million in penalties to settle charges of disclosure accounting fraud filed by the Securities and Exchange Commission.

Other Interesting Tidbits

• Just How Bad is China’s Real Estate Bubble? – Many aspects of China’s real-estate bubble mirror the run-up to the housing bust in the US. But there are important differences as well.
• Why Is the Euro Rising and the US Dollar Falling? – An analysis of Fundamental Equilibrium Exchange Rates might provide some clues.
• The Way to Win on Wall Street Now – The markets may be a rigged game, but don’t count on federal reform to help you out. You can gain the upper hand by making smart investment decisions.
• Five Myths about Unemployment
• Liberal Tax Revolt – Some Democrats decide they prefer lower rates. Obama isn’t one of them.