Stocks end week higher as earnings season heats up

Stocks ended the week near record-high levels as investors have been mostly encouraged by the early portion of the earnings season. The pace of reporting will pick up even further next week, with Apple (AAPL) and Amazon (AMZN) among the headliners. MACRO NEWS: In the U.S., Markit's manufacturing Purchasing Managers Index rose to 52.9 in the preliminary reading for July, versus expectations for a reading of 51.5. Initial jobless claims fell to 253,000 in the week that ended on July 16, versus expectations for 265,000 first-time claims. The Philadelphia Fed business survey had a reading of -2.9, versus the expected +4.5 reading. The Chicago Fed national activity index rose to 0.16 in June, a little better than expected. The FHFA home price index rose 0.2% to 234.3 in May. Existing home sales rose 1.1% to a 5.57M rate in June, which was better than forecast. The Conference Board's index of leading economic indicators bounced 0.3% to 123.7 in June after sliding 0.2% to 123.3 in May. Housing starts rose 4.8% in June to a rate of 1.19M versus the 1.165M rate expected. Building permits were up 1.5% to a 1.15M rate, nearly matching expectations... In Europe, the European Central Bank kept its key interest rates unchanged, as widely expected. The ECB also confirmed that its monthly asset purchases of EUR 80B are intended to run until the end of March 2017, or beyond, if necessary. A measure of German investor confidence tracked by the ZEW Center plunged to its lowest level since November 2012 in the wake of the Brexit vote in the U.K. The composite Eurozone PMI came in at 52.9, better than the 52.5 reading expected, with the manufacturing PMI coming in at 51.9 and the services PMI at 52.7. However, the U.K. composite PMI of 47.7 was below the 49 reading that was expected and the nation's lowest reading since April 2009. Additionally, the International Monetary Fund cut its forecasts for economic growth for the fifth time in 15 months, with this reduction attributed to uncertainty over Britain's vote to exit the European Union. The IMF now expects global GDP to grow at 3.1% in 2016 and at 3.4% in 2017, which are each down 0.1 percentage point from estimates issued in April. The IMF also made a nearly full percentage-point reduction in its 2017 growth forecast for the U.K... In Asia, Bank of Japan Governor Haruhiko Kuroda said in a BBC radio interview that there was no need and no possibility of so-called "helicopter money," hoping to put speculation to bed that Japan will pursue policies like making direct transfers to the private sector or granting a universal tax rebate. Markit's flash manufacturing PMI for Japan edged up to 49.0 in July on a seasonally adjusted basis versus a final reading of 48.1 in June. COMPANY NEWS: In terms of earnings, this week was marked by the tail end of bank earnings reports and the beginning of the reporting season for the biggest names in technology... On Monday, Bank of America (BAC) advanced a bit over 3% after posting earnings and revenue that were down sharply from the same quarter of last year, but still better than expected. Goldman Sachs (GS) slipped about 1% on Tuesday despite better than expected headline figures. Morgan Stanley (MS) also reported better than expected revenue and profits, with CEO James Gorman saying the results "reflect solid performance in an improved but still fragile environment." Shares of the bank advanced about 2% on Wednesday following the report... On Tuesday, IBM (IBM) slipped fractionally despite beating quarterly earnings expectations and backing its profit outlook for the full year. The same day, shares of Netflix (NFLX) dropped 13% after the company reported second quarter results that included significantly lower than expected subscriber additions in the U.S. and internationally. Following the report, several Wall Street analysts voiced concern over increased subscriber turnover, or "churn," caused by the streaming service's domestic price increase. Shares of Microsoft (MSFT) jumped 5% on Wednesday after the tech giant reported better than expected revenue and earnings. As part of its report, Microsoft noted that revenue in its Intelligent Cloud segment grew 7%, with Azure revenue more than doubling compared to the same quarter of last year. The shares of two major chip makers moved in opposite directions Thursday after they reported their results, with Qualcomm (QCOM) gaining over 7% and Intel (INTC) falling 4%... General Electric (GE) posted second quarter revenue and earnings that topped expectations, but the industrial giant also reported a 2% decrease in orders. GE shares slipped on Friday after the report. Another industrial bellwether, Honeywell (HON), reported second quarter earnings that beat expectations, but sales came in below consensus. Additionally, Honeywell announced plans to split its Automation and Control Solutions unit into two segments... Among the other members of the Dow Jones Industrial Average that reported on their quarterly results this week, J&J (JNJ), UnitedHealth (UNH) and Visa (V) each advanced immediately following their reports... Starbucks (SBUX) reported quarterly profits that matched expectations, but its overall sales, and specifically its same-store sales in the U.S., missed expectations. The stock initially fell on the heels of the report, but recovered as investors digested the information and CEO Howard Schultz expressed confidence in both the company's China plans and the return of greater than 5% comps in the U.S. Chipotle (CMG), meanwhile, also reported worse sales and profits than consensus forecasts and said that its comparable restaurant sales decreased 23.6% last quarter amid its ongoing food safety overhaul... On the M&A front, Japan's SoftBank Group (SFTBF) agreed to acquire Britain's ARM Holdings (ARMH), which owns intellectual property related to semiconductor chips for about $32B in cash. ARM's processor designs power the vast majority of smartphones and its chip architectures, which are designed to use as little power as possible, are well-positioned to play a big role in the still-emerging "Internet of Things," which SoftBank attributed as a big factor in its large bet on the company. Heavy machinery maker Joy Global (JOY) announced it has agreed to be acquired by Komatsu in a $3.7B all-cash transaction. Drugmaker Relypsa (RLYP) jumped 59% after announcing it agreed to be acquired by Galenica Group in a $1.53B deal... As largely expected in the wake of recent media reports, the U.S. Department of Justice filed lawsuits to challenge Cigna's (CI) proposed merger with Anthem (ANTM) as well as Aetna (AET) and Humana's (HUM) pending merger. Aetna and Humana pledged to "vigorously defend" their merger plan, while Anthem claimed the Department's lawsuit is "an unfortunate and misguided step backwards for access to affordable healthcare." Separately, Humana announced an increased earnings outlook for 2016, which it attributed primarily to better-than-anticipated performance year to date for the company's individual Medicare Advantage and Healthcare Services businesses... PayPal (PYPL) shares slipped after the payments company reported quarterly results and announced a partnership deal with Visa. Some Wall Street analysts were bearish on the agreement, with Wells Fargo downgrading PayPal to Market Perform citing worries that the terms of the pact could hurt PayPal's margins and profitability. INDEXES: The Dow gained about 0.28% to close at 18,570.85, the S&P 500 rose about 0.6% to close at 2,175.03, and the Nasdaq advanced about 1.37% to close at 5,100.16.