The NYSE Shuts Down

What happened to the New York Stock Exchange yesterday? The market shut down at 11:30 yesterday morning, and stayed down for nearly four hours, because of what the exchange called "a technical glitch." Officials were quick to reassure investors that there was no terrorism or sabotage involved.

But the market, in the larger sense never closed. The glitch halted trading on the floor of the exchange, but the various electronic networks that are available for stock trading never shut down. Only 20 percent of the NYSE's volume actually take place on the floor, so the majority of the trades still went through.

It certainly wasn't a good thing, though. The Dow Jones industrial average was already down 200 points when the trading floor was closed. It stumbled around for the rest of the day, although the decline wasn't as steep, finishing down 269 points, or 1.5 percent of its value.

Americans Love Small Business

Americans are more than three times as likely to express confidence in small business as they are in big business, according to a new survey from Gallup. Sixty-seven percent of U.S. adults report having "a great deal" or "quite a lot" of confidence in small business, up from 62 percent last year, while just 21 percent are similarly confident in big business.

Small business is the only major institution aside from the military that is polling above its historical average. Confidence in big business, meanwhile, peaked at just 34 percent in 1975 - and has been slowly decreasing over the next few decades.

Confidence in big business bottomed out at 16 percent in 2009, and has since improved only slightly since then, to its current 21 percent. Big business regularly ranks near the bottom in confidence among major U.S. institutions, and has finished last or tied for last in nine separate Gallup surveys.

Reading the Earnings Tea Leaves

As we mentioned yesterday, Alcoa kicks off the second-quarter reporting period tomorrow, and it's not expected to be a pretty sight. Analysts are expecting a 4.5 percent profit decline from a year earlier for S&P 500 companies, according to FactSet.

But that's not as bad as it might seem. In most quarters of late, actual earnings have come in between where expectations start a quarter and where they ended. As of March 31, the prediction for the second quarter was that earnings would decline by just 2.2 percent.

And recent history suggests that the analysts have been even more wrong lately. Coming into first-quarter earnings season three months ago, analysts expected the S&P 500 to report a 4.6 percent decline in profits. But in the end, earnings grew slightly.

Optimism for July

Summer is widely considered the doldrums for the stock market, but July, for some reason, is often an exception to that. Since 1985, the S&P 500 has risen by an average of 0.8 percent in July. By contrast, it has fallen by 0.1 percent in June, by 0.4 percent in August, and 0.7 percent in September.

One theory for July's relative success is that there's usually an earnings-report season that happens during it. Alcoa, the traditional opener of earnings season, announces on Wednesday of this week, followed by Pepsi and Walgreens on Thursday.

In addition to being the historically worst-performing time for the market, summer is also the time of the market's lowest volume. The reasoning behind the stronger July is that having a little bit of news going on draws interest when traders might otherwise be on summer vacation - coming back to trade off good earnings news. We'll see if that's the case this July.

First Half Scorecard: The Dow

The other day we mentioned that the S&P 500 was virtually flat in the first half of 2015, rising just 0.2 percent. But the record for the Dow Jones Industrial Average was even worse. The Dow fell 1.4 percent through the first six months of 2015.

That's the first losing first half for the Dow since 2010. But that year, when the index lost 6.3 percent in that first half, it came back to gain 18 percent in the second half and finished the year up 11 percent overall.

That's unusual, though not unheard of. In the Dow's 117-year history, it has lost ground in the first half in 45 years (38 percent of the time). Of those 45 years, the index has climbed into positive territory by the end of the year only 31 percent of the time.

The June Jobs Report

June was another solid month for hiring in America, as the first quarter economic doldrums continue to recede into the past. The economy added 223,000 jobs in June, right in line with what we've seen over the past three months, and the headline unemployment rate dropped to 5.3 percent, according to figures released this morning by the Bureau of Labor Statistics.

Job growth in June was concentrated in services. Retailers added 33,000 jobs to payrolls, the health-care sector added 40,000 and leisure and hospitality increased by 22,000. Manufacturing jobs grew by just 4,000, and the public sector added a net of zero jobs.

One sign of caution: The labor participation rate continues to drop, falling another 0.3 percent in June to just 62.6 percent. That's the lowest that figure has been since 1977.

First Half Scorecard

The first half of 2015 is now in the books, and the news is pretty uninspiring. After a fair number of ups and downs, the S&P 500 has risen an almost imperceptible 0.20 percent on the year. The index actually declined by 0.2 percent in the second quarter of the year.

The malaise has been broad-based. The biggest winners among sectors have been health care stocks, up 8.4 percent, and banking stocks, up 7.7 percent. Usually, the best performing-sectors do much better than that over the course of six months.

Meanwhile, several sectors slumped during the first half. Utilities fell by 12.0 percent, transportation stocks dropped by 11.7 percent, and energy stocks, which many expected to rebound after the collapse in oil prices last year, fell by another 5.7 percent.