The Dow Jones Industrial Average and S&P 500 reached record trading levels in early July due to constructive economic data, including growing consumer confidence and better-than-expected US GDP growth. Following a revised 2.1% decline in the first quarter, advance estimates for the second quarter GDP growth came in at a robust 4.0%. However, equity gains were quickly erased in the final trading sessions of the month due to geopolitical tension in Gaza and Ukraine, Argentina’s debt default and fears of rising interest rates in the US. For the month, the Dow, S&P 500 and NASDAQ fell 1.6%, 1.5% and 0.9%, respectively. Year to date, the Dow is down 0.1%, while the S&P 500 and NASDAQ are up 4.5% and 4.6%, respectively.

All four IBO Stock Indexes declined in July, led by the Process/Metrology Instrumentation Stock Index, which slumped 7.9%. The Diversified Instrumentation, Lab Consumables/Equipment and Laboratory Instrumentation Stock Indexes dropped 4.9%, 3.6% and 1.3%, respectively.

Laboratory Instrumentation Stock Index

The Index slipped 1.3% in July to 1,036.13 but is up 6.3% for the year. Most companies traded in negative territory this month, including four in double digits. Pacific Biosciences had the largest price decline in the Index, falling 26.1%. The company fell 13.6% on July 25 after reporting slower sequential revenue and order growth in the second quarter.

Cepheid also disappointed investors on July 17 as the company widened its full-year adjusted EPS loss by 45% due to higher operating expenses and weak demand for nonclinical products. Shares contracted 9.3% the following day and are down 21.5% for the year. NanoString Technologies fell 19.4% in July, which was attributed to reduced second quarter analysts’ EPS projections.

Illumina was the final company in the Index to post a double-digit decline this month, sliding 10.4%. The company fell 4.9% on July 24 despite posting strong second quarter EPS and raising its full-year EPS guidance by 7% to $2.26–$2.28. Illumina also announced during its earnings call that it repurchased $600 million of convertible senior notes and spent $72 million on of its share-repurchase plan.

In contrast, prices for several firms expanded as a result of strong EPS reports and raised forecasts. Luminex recorded the largest gain in the Index in July, rising 6.1% due to stronger-than-expected second quarter adjusted EPS on July 29. Thermo Fisher Scientific also beat second quarter adjusted EPS estimates on July 23 and raised its full-year EPS outlook from $6.80–$6.95 to $6.85–$6.97 as a result of added Life Technologies synergies. Shares rose 3.0% for the month.

Waters beat second quarter adjusted EPS guidance on July 22 but lowered the top range of its 2014 adjusted EPS outlook by $0.10 to $5.25–$5.40 due to currency headwinds and a slower recovery in China. Despite an initial boost in price, the company ended the month down 1.0%.

Sequenom reported positive second quarter EPS on July 29 following the sale of its Bioscience business (see IBO 5/31/14). On July 31, PerkinElmer and Becton, Dickinson maintained their 2014 adjusted EPS forecasts of $2.42–$2.46 and $6.22–$6.25, respectively. On the same day, Affymetrix raised its 2014 revenue guidance by $5 million to $340 million for 3% growth. All four firms fell for the month. On July 8, ISI Group downgraded Bruker from “Buy” to “Neutral.”

Process/Metrology Instrumentation Stock Index

The Index slumped 7.9% in July to 730.06 and is down 5.4% for the year. FEI and Nanometrics contracted 15.6% and 14.7% for the month, respectively, due to weak guidance. On July 30, FEI projected third quarter adjusted EPS of $0.60–$0.70, 28% below analysts’ estimates. The company also lowered its full-year revenue growth guidance from 8%–10% to 5%–7%. Shares slumped 12.1% the next day. On July 30, Nanometrics estimated a third quarter adjusted EPS loss of $0.17–$0.30, compared to analysts’ projections of a profit of $0.08. Shares fell 6.2% the next day.

Veeco Instruments fell 6.8% in July as it projected a third quarter adjusted EPS loss of $0.28–$0.20, which was below analysts’ consensus. But on July 31, Noble Financial upgraded the company from “Sell” to “Hold.” MKS Instruments was the only company in the Index to increase in price for the month, rising 1.7%. On July 23, the company easily beat second quarter adjusted EPS estimates and projected adjusted third quarter EPS of $0.28–$0.42. On July 14, Needham initiated coverage of MTS Systems with a “Buy” rating.

Lab Consumables/Equipment Stock Index

The Index contracted 3.6% in July to 913.32 but is up 0.8% for the year. The largest drop in price this month was recorded by Cellular Dynamics, which fell 21.1%. Several other companies posted significant losses for the month including Pall and Enzo Biochem, which fell 9.3% and 8.6%, respectively. Kewaunee Scientific recorded the only notable gain in the Index, rising 2.4%.

Only two companies in the Index reported earnings this month. On July 24, Sigma-Aldrich raised the bottom range of its full-year outlook by $0.02 to $4.32–$4.40. On July 29, QIAGEN reaffirmed its 2014 adjusted EPS guidance of $1.07–$1.09, including EPS of $0.26–$0.27 for the third quarter. It also initiated another $100 million share repurchase program. Both companies traded slightly lower in July.

Diversified Instrumentation Stock Index

The Index declined 4.9% in July to 211.48 and is down 2.0% year to date. All companies in the Index declined this month except Mettler-Toledo, which improved 1.6%. On July 24, the company maintained its 2014 adjusted EPS outlook of $11.45–$11.60 for growth of 8%–10%.

Xylem recorded the largest price decline in July, falling 9.7% despite beating second quarter adjusted EPS on July 29 and raising the lower range of its 2014 adjusted EPS outlook by 3% to $1.90–$2.00. Danaher fell 6.2% in July as it narrowed its 2014 GAAP EPS guidance on July 17 from $3.60–$3.75 to $3.67–$3.72 and projected third quarter GAAP EPS of $0.86–$0.89, which was below analysts’ consensus. On July 29, Illinois Tool Works narrowed its 2014 EPS forecast from $4.45–$4.65 to $4.50–$4.62. Shares were down 5.9% in July.

Even stronger EPS projections were unable to push prices into positive territory. On July 24, Teledyne Technologies raised its full-year EPS by 4% to $5.31–$5.35. On July 28, Roper Industries raised its 2014 EPS from $6.22–$6.36 to $6.27–$6.37. However, the two firms slipped 6.1% and 1.3% in July, respectively.

International

Stronger Chinese manufacturing activity helped lift a majority of Asia Pacific equity markets in July, including 3.0% growth for the Nikkei 225. For the month, prices for six Pacific Region companies in the IBO Stock Table improved, while Precision System Science fell 9.1%.

Hitachi High-Technologies gained the most value, climbing 15.4% for the month. On July 25, it reported fiscal first quarter EPS of ¥67.03 ($0.66), compared to a loss of ¥10.76 ($0.11) per share. It raised its EPS outlook by 26% to ¥85.07 ($0.83) for the half year but maintained its full-year EPS forecast ending March 31, 2015, of ¥186.13 ($1.90).

Similar to the US, European equity markets traded mostly lower in July as a result of the geopolitical tensions and debt issues in Argentina. The London FTSE 100 declined a modest 0.2% despite slower-than-expected manufacturing activity in the UK. Most UK-based companies in the IBO Stock Table declined, led by Spectris, which fell 14.1%. On July 25, it announced that adjusted EPS fell 10% to £0.43 ($0.73) for the half year ending June 30 as a result of weak demand in mining and academic research. The firm proposed an interim dividend hike of 8% to 16 pence ($0.27) per share. Spectris was downgraded by Numis Securities on July 25 from “Add” to “Hold,” and by Canaccord Genuity on July 29 from “Buy” to “Hold.”

Renishaw had the highest return for the month among UK-based firms, rising 11.6%. On July 23, it reported that fiscal 2014 adjusted EPS ending June 30 fell 7% to £0.82 ($1.33). But, on a reported basis, EPS jumped 27% due to a £26.3 million ($44.6 million) gain on the disposal of its 19.4% stake in software firm Delcam. Shares soared 22.5%. The company was upgraded by Numis Securities on July 23 from “Hold” to “Add,” and by Investec on July 22 from “Hold” to “Buy.”

On July 22, Sartorius announced that second quarter adjusted EPS was relatively unchanged at €1.03 ($1.41) and reaffirmed its full-year sales growth outlook of 8%–10% excluding currency. Shares fell 1.8% for the month.