Amazon Shares Fall on Missed Expectations

Shares of Amazon slid 15% this week after the media retailer's second-quarter earnings report failed to meet Wall Street's expectations. Amazon reported earnings of $207 million for the quarter, which was well below market analysts' estimates.

Amazon pointed out that higher costs over this last year prevented the company from reaching its earnings target, despite Amazon's net income increase of 45% when compared with the second quarter of 2009. Jeff Bezos, Founder and CEO of Amazon.com, remained positive. He stated, "We're seeing rapid growth in Kindle, Amazon Web Services, third-party sales and retail."

Bezos said that Amazon is also encouraged by mobile device growth. In the last 12 months, customers around the world have ordered more than $1 billion worth of products from Amazon using a mobile device. While the leading mobile commerce device is still the smartphone, wireless tablet computers have become an entirely new category of mobile devices.

Amazon also said that the Kindle is quickly becoming the most popular way to read books. Amazon.com is now selling more Kindle books than hardcover books. The U.S. Kindle Store now offers more than 630,000 books. The company plans to continue to expand Kindle book offerings to meet customer demand.

Amazon (AMZN) ended the week down at $118.87.

Microsoft Exceeds Market Expectations

Microsoft Corporation announced record fourth-quarter revenue this week. The company reported revenue of $16.04 billion for the quarter, a 22% increase from the same period one year ago.

"This quarter's record revenue reflects the breadth of our offerings and our continued product momentum," said Peter Klein, Chief Financial Officer. "The revenue growth, combined with our ongoing cost discipline, helped us achieve another quarter of expansion."

Microsoft said that its product momentum continued to be strong during the quarter with the successful launch of Office 2010 and strong performance from existing products including Windows 7, which has sold more than 175 million licenses to date. Microsoft's search engine, Bing, achieved its 13th consecutive month of market share gain.

Microsoft said that its transition to cloud services is well underway with offerings like Windows Azure and Business Productivity Online Services. The company said that it looks forward to continuing its product momentum this fall with the upcoming launches of Windows Phone 7 and Xbox Kinect.

Microsoft (MSFT) ended the week down at $25.81.

AT&T Reports Double-Digit Earnings Growth

AT&T reported double-digit earnings growth this week. The company said that these results were driven by continued growth in mobile broadband, including a record quarter for iPhone activations, gains in IP-based and strategic business services and cost cutting initiatives.

AT&T's revenue totaled $30.8 billion, up $194 million, or 0.6%, from the same quarter of last year. This marks the company's second consecutive quarter with a year-over-year revenue increase. Versus the first quarter of this year, consolidated revenues were up $278 million, or 0.9%.

"We delivered another strong quarter, with improved revenue trends, double-digit earnings growth and solid cash flow. These results add to our confidence going into the second half of the year," said Randall Stephenson, AT&T Chairman and Chief Executive Officer.

AT&T says that it continues to see positive signs of growth in almost every customer segment of its business, especially wireless, which speaks to the quality of its execution and leadership in the industry's most powerful growth driver - mobile broadband. The company is excited by the opportunities ahead.

AT&T (T) ended the week up at $25.54.

The Dow started the week at 10,098 and ended at 10,424. The S&P 500 started the week at 1,065 and ended at 1,102. The NASDAQ started the week at 2,179 and finished at 2,269.

Treasuries Rise and Fall on Uncertain Economy

Treasury prices rose early this week following testimony from Federal Reserve Chairman Ben Bernanke before Congress concerning the state of the U.S. economy. Bernanke's statement that the economic outlook is "unusually uncertain" brought the stock market down as investors sought a safe haven in Treasuries.

Following the Fed Chairman's remarks, 10-year yields reached their lowest point since April 2009. Analysts said that the rally in the bond market was triggered by a sell-off of equities by investors who anticipated the Fed would take additional action to help the economy.

Earlier in the week, Treasury prices rose following a disappointing report on homebuilder confidence. The National Association of Home Builders/Wells Fargo housing-market index fell to 14 in July from 16 in June. Additional data released this week showed a fall in housing starts, suggesting the possibility of further decline in the U.S. housing market.

By end of the week, Treasuries fell when the European bank released the result of its "stress test" of European banks. The test showed that only 7 out of 91 banks failed, suggesting to investors that European financial institutions are healthier than otherwise thought. The seven banks that failed may need to make up a total capital shortfall of approximately $4.5 billion in U.S. dollars.

The 10-year Treasury note yield began at 2.92% and ended at 2.99%. The 30-year Treasury note yield began at 3.94% and finished at 4.02%.

Mortgage Rates Reach Record Lows

Freddie Mac reported mortgage rates at record lows this week. The 30-year fixed-rate mortgage (FRM) averaged 4.56%, down from last week when it averaged 4.57%. Last year at this time, the 30-year FRM averaged 5.20%.

The 15-year FRM this week averaged a record low of 4.03%, down from last week when it averaged 4.06%. One year ago at this time, the 15-year FRM averaged 4.68%.

"The decline in mortgage rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. Homebuilder confidence declined in July to the April 2009 record low according to the NAHB/Wells Fargo Housing Market Index.

Similarly, July's consumer confidence dropped to the lowest level since August 2009, based on the Reuters/University of Michigan's Consumer Sentiment index. "We see these as part of the normal pattern of ebbs and flows in recovery and believe that there is sufficient momentum to carry the U.S. economy forward, albeit moderately," said Nothaft.

The money market fund finished this week at 0.74%. The 1-year CD finished at 1.13%.

Stocks - CPK Rises on Better-Than-Expected Earnings
Bonds - Treasury Prices Rise
Interest Rates - Interest Rates Continue to Decline

Stocks - China Renews Google License
Bonds - Treasuries Fall on Jobless Claims
Interest Rates - Moderate Rise in Fifteen-Year Mortgage Rates

Stocks - Apple Reports Record Sales for iPhone 4
Bonds - Treasuries Fall on Disappointing Economic Data
Interest Rates - Rates Hit Another Record Low

Stocks - Home Builder Woes Continue
Bonds - Treasury Yields Drop on Sluggish Economy
Interest Rates - Mortgage Rates Hit Record Low, Shake-Up at Freddie Mac

Stocks - Pier 1 Imports Posts a Profit
Bonds - Treasury Yields Drop on Jobless Claims
Interest Rates - Little Change in Mortgage Rates