It was a rough start for the major market indexes today, with the Dow Jones Industrial Average (DJIA) down triple digits within the first 15 minutes of the opening bell. Fueling the bearish fire were the latest gross domestic product (GDP) estimates from the Commerce Department, which indicated slower-than-anticipated economic growth for the second quarter. Adding insult to injury, the Thomson Reuters/University of Michigan consumer sentiment index tumbled to an eight-month low in July, reflecting escalating concerns about the pace of the economic recovery. Meanwhile, the lone bright spot of the day came courtesy of the Institute for Supply Management-Chicago's business barometer, which unexpectedly rose in July – pointing to robust manufacturing activity in the Midwest. In fact, the upbeat data helped the bulls stage a valiant afternoon recovery, with stocks negating most – if not all – of their losses by the close. "It was another wild day filled with volatility, but in the end nothing happened as we closed flat," summarized Senior Technical Strategist Ryan Detrick. "All in all, earnings have been better than expected, but the overall economic data continues to disappoint." Looking ahead, Detrick noted a packed calendar next week, including "a lot more earnings and the always-important monthly jobs data on Friday."
The Dow Jones Industrial Average (DJIA – 10,465.94) pared most of its deficit by the close, ending with a modest loss of 1.2 points, or 0.01%. Fourteen of the Dow's 30 blue chips settled in the red, with Intel Corp. (INTC) and Merck (MRK) leading the laggards, while Boeing (BA) and Home Depot (HD) paced the 16 advancing equities. For the week, the DJIA added 0.4%, but fell shy of toppling its 20-week moving average. For the month, the blue-chip barometer skyrocketed 7.1% - its heftiest monthly gain in a year – to finish north of its 10-month trendline for the first time since April.
The S&P 500 Index (SPX – 1,101.60) also clawed back from its session lows, eking out a gain of less than a point, or 0.01%. For the week, the SPX gave back 0.1%, but managed to finish the month 6.9% ahead – its best monthly rally since July 2009. Finally, the Nasdaq Composite (COMP – 2,254.70) followed suit, erasing its early deficit to end 3 points, or 0.1%, higher. For the week, the tech-rich index surrendered 0.7%, but still added 6.9% in July. What's more, both the SPX and COMP also clawed their way back atop their respective 10-month trendlines.
Turning to equities in focus, analysts adjusted their respective price targets on Potash Corp. of Saskatchewan (POT) ... Call traders targeted Microsoft Corp. (MSFT) after the firm unveiled its four-point plan for winning business customers ... Alternative-energy issues Evergreen Solar (ESLR) and Solarfun Holdings (SOLF) prepared to storm the earnings stage ... Apple Inc. (AAPL) dealt with more iPhone 4-related headaches overseas ... Pre-earnings pessimists pounced on blue-chip bigwig Procter & Gamble (PG) ... and today's Quote of the Day comes from NFL veteran and former No. 1 pick Keyshawn Johnson. As highlighted by this USA Today article, stock speculators aren't the only group at risk of poor money management – so, too, are pro football players. As such, the NFL players union is lobbying for financial education for league rookies, who tend to overestimate their take-home pay. In fact, Johnson – now an analyst with ESPN – warns young players just how fast a $1 million bonus check can be depleted:
"After Uncle Sam comes first, your agent is going to get his cut. Then there's your wife, girlfriend or baby's mama. You're going to hook up your family and homeboys, and get yourself some nice things, like jewelry or some sweet tire rims. By the time you've done all of that, you'd be lucky to have $320,000 left."
But these weren't the only headlines hitting the Street today. Click on the links below for our coverage of:
And, in case you missed it, Joseph Hargett considered the implications of bearish speculation on Ventas Inc. (VTR) in today's installment of The Casual Contrarian. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude futures erased early losses to end higher today, thanks to data showing better-than-expected business activity in the Midwest. In addition, black gold got a boost from expiration-related volatility, with August-dated oil and gasoline futures expiring today. Against this backdrop, crude oil for September delivery added 59 cents, or 0.8%, to settle at $78.95 per barrel. While oil futures ended the week relatively flat, the commodity finished the month with a 4.4% gain – crude's second straight monthly increase, and its best month-over-month rally since March.
Gold futures also finished in the black today, as weaker-than-expected GDP data sparked an onslaught of safe-haven investing. By the close, December-dated gold futures – the most active contract – tacked on $12.70, or 1.1%, to end at $1,183.90 an ounce. For the week, the malleable metal gave up less than 0.1%, but finished July on a deficit of nearly 5% -- gold's heftiest monthly loss since December.
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Bulls got an early boost from today's employment data, as the Labor Department noted that initial jobless claims fell by a steeper-than-expected 27,000 last week. This solid report stoked some buying pressure during the first half of the day, and the major market indexes found themselves perched on year-to-date gains -- albeit very briefly, as an afternoon report out of the euro zone forced the bulls to tap their brakes. Deutsche Bank (DB) is said to be considering a stock sale to raise up to $11.4 billion, according to Bloomberg, which reignited all-too-familiar concerns about the fiscal health of European banking giants. Wall Street was swept by an afternoon bout of buyer's remorse, with stocks pulling back fast from their early highs -- but the tug-of-war eventually ended in the bulls' favor. "The economic data continues to come in a little bit better than expected," concluded Senior Technical Strategist Ryan Detrick. "With the weekly initial claims fluctuating between 450,000 and 500,000 since November 2009, today's reading of 451,000 was very encouraging. If we can get that number beneath 450,000 and down closer to 400,000, it could be very kind to the stock market." read more...
The major market indexes shot higher right out of the gate this morning, after a successful auction of Portuguese debt helped to alleviate concerns about Europe's fiscal health. However, the afternoon release of the Federal Reserve's Beige Book took some wind out of the bulls' sails, with the latest economic survey pointing to "widespread signs of deceleration." Of the 12 regions tracked by the Fed, five showed slower economic expansion in August, compared to just two reporting sluggish growth in the July report. Echoing that sentiment, in an election-year speech outlining proposed tax reform and business initiatives, President Obama acknowledged that the economic recovery "has been painfully slow." Nevertheless, the bulls clung to their lead through the closing bell, with stocks finishing modestly higher. "We got back some of yesterday's losses, but overall trading continues to be slow," noted Senior Technical Strategist Ryan Detrick. "What's more," he added, "given that today is the start of Rosh Hashanah, expect more light volume until after options expiration next week." read more...
Stocks kicked off the holiday-shortened week on a sour note today, thanks to fresh financial concerns from across the pond. According to the Wall Street Journal, European banks may harbor more risky debt than the recent round of stress tests revealed, reviving fears about the true fiscal health of the euro zone. As a result of the uncertainty, investors shunned stocks in favor of "safe-haven assets" like Treasury notes and gold, with the widespread worry translating into a record high for the malleable metal. Against this backdrop, the major market indexes snapped their four-session winning streak, with the Dow Jones Industrial Average (DJIA) giving up triple digits by the close. "Everyone returned from the three-day weekend and decided to hit the 'sell' button, I guess," opined Senior Technical Strategist Ryan Detrick. From a broader standpoint, he thinks the S&P 500 Index (SPX) will eventually break north of its current range between 1,040 and 1,130, but says the big question will be the catalysts. "I think it'll be two things: better-than-expected third-quarter earnings, and the excitement – whether you like it or not – of gridlock coming to Washington this November in the form of the Republicans in power in the House," he explained. read more...
Stocks explored the black for a fourth straight session today, as the government's highly anticipated employment figures were received with a collective sigh of relief. According to the Labor Department, nonfarm payrolls declined by 54,000 in August – much narrower than the 110,000 drop predicted by economists. Excluding census workers and other government employees, the private sector added 67,000 jobs last month, more than doubling forecasts for a gain of 30,000. Against this backdrop, the Street spent the session in celebration mode – in fact, not even a discouraging report on the services sector could rain on the bulls' parade – with the major market indexes effectively halting a three-week losing streak. "Another day, another better-than-expected economic report," observed Senior Technical Strategist Ryan Detrick. "Let's hope that the recent data can quiet the double-dip crowd, at least for a while," he added. Looking ahead, Detrick notes that we're "entering earnings warning season, but the next big driver for the market will be third-quarter earnings next month." read more...
Stocks spent most of the session just north of breakeven today, as the Street's initial reaction to relatively upbeat retail and economic reports was somewhat muted ahead of tomorrow's highly anticipated nonfarm payrolls report. On the retail front, the back-to-school shopping season boded well for many major retailers, with heavyweights like Costco (COST) and Nordstrom, Inc. (JWN) recording stronger-than-expected sales in August. Meanwhile, a second straight dip in weekly jobless claims, as well as a surprise increase in pending home sales last month, helped to overshadow a slimmer-than-anticipated rise in July factory orders. Against this backdrop, the bulls emerged from the sidelines as the afternoon progressed, with the major market indexes settling at session highs. "Looks like the shorts didn't want to make much of a push into the close, as the market found a nice bid late in the session," observed Senior Technical Strategist Ryan Detrick. "So far, September has been very kind to stocks," he added, "but with the always-important monthly jobs numbers out tomorrow, that could change in a hurry." read more...
It was an unusually bloody August for the stock market, but traders seemed determined to make up for lost ground today. Stocks bolted higher right out of the gate this morning, as upbeat economic data from China and Australia inspired an optimistic mood ahead of the open. Traders also cheered the latest manufacturing data from the Institute for Supply Management (ISM), which reported that its index of factory activity improved to 56.3 in August. By midday, the Dow Jones Industrial Average (DJIA) was sitting on a robust gain of well over 200 points -- which might seem overly enthusiastic, with Friday's key nonfarm payrolls report still on tap. However, with the major market indexes settling yesterday near key round-number support at the low end of their recent trading ranges, the bulls opted to buy first, and ask questions later. "Let me get this right," said Senior Technical Strategist Ryan Detrick. "We rallied this morning because of strong data out of China... but China was actually lower on the day? Anyway," he continued, "the economic data from around the globe was strong enough to fend off the apocalypse for at least one more day. Given the extremely negative overall sentiment, if we can get any more good news -- this rally could have some legs to it." read more...
The month of August wrapped up in chaotic fashion today, with stocks rocketing back and forth across the breakeven line throughout the session. With no major earnings reports on tap today -- and merger-and-acquisition activity continuing at its new-normal clip -- traders took their cues from a mixed bag of economic data. Chicago-area manufacturing activity slumped in August, falling in line with expectations, but early losses inspired by that report were quickly erased by more upbeat data on home prices and consumer confidence. But what the Conference Board giveth, the Fed taketh away: After the minutes from the latest Federal Open Market Committee (FOMC) hit the Street, stocks quickly surrendered their modest gains. The notes revealed dissension among the ranks in the policy-setting group, with some members arguing for more supportive measures in light of a deteriorating economic recovery. Thanks to this fresh dose of uncertainty, the major market indexes finished the day -- and the month of August -- with a whimper. By the close, all three of the major market indexes had turned in their worst August performance since 2001, and their first negative August in five years. read more...
The major market indexes stair-stepped lower throughout the merger-and-acquisition-marked session today, as the Street interpreted the latest round of economic data as a sign the proverbial glass is half empty. While the Commerce Department said personal spending climbed 0.4% in July – more than the expected rise of 0.3% – the figures were quickly overshadowed by discouraging personal income data. More specifically, the government said personal income rose only 0.2% last month, falling short of economists' prediction for 0.3% growth, and leading many to believe that the jump in spending is only temporary. Furthermore, the disappointing results loomed even more ominously ahead of Uncle Sam's highly anticipated employment figures for August, which are set to hit the Street on Friday. Against this backdrop, stocks extended their retreat through the final hour of trading, with the Dow Jones Industrial Average (DJIA) harboring a triple-digit deficit by the time the closing bell mercifully rang. "In what is going to be a busy week on the economic-data front, today's sell-off is rather disappointing, as it continues to show the bulls can find no consistent buyers," noted Senior Technical Strategist Ryan Detrick. read more...
After a brief trip into the red this morning, stocks eventually powered higher thanks to reassuring remarks from Federal Reserve Chairman Ben Bernanke. At a conference in Jackson Hole, Wyo., the central banker pledged to do whatever's necessary to resurrect the U.S. economy, should "unexpected developments" stifle the recovery. The promise did more than just pacify the Street, with investors essentially shrugging off a downwardly revised forecast from Intel Corp. (INTC) and another 787 Dreamliner delay from fellow blue chip Boeing Company (BA). What's more, the bulls even triumphed despite a Commerce Department report showing second-quarter gross domestic product rose at a slower pace than previously estimated, with the major market indexes paring the majority of their weekly deficits by the close. Further reflecting investors' revived appetite for riskier assets was the action in the bond markets, according to Senior Technical Strategist Ryan Detrick, who noted the heftiest single-session drop for the iShares Barclays 20+ Year Treasury Bond (TLT) exchange-traded fund in over a year. "Proving we all can't win all the time, it was a great day for stocks, but a horrible day for bonds. The risk trade was off for the day, as money came running out of the safety play and into risky assets," he said. read more...
Today's market action was an eerie reversal of Wednesday's pattern. Yesterday, a negative housing report sparked early losses -- which were then erased by an afternoon wave of bargain-hunting. Unfortunately, traders seem to have misplaced their rose-colored glasses overnight: Stocks started off on strong footing today after a surprisingly large drop in weekly jobless claims, but lingering economic anxieties pressured the major market indexes into negative territory by the time midday rolled around. In particular, a bit of bad news from the Kansas City Fed seems to have sparked the sudden shift in sentiment; the region's manufacturing index dwindled to zero in August, down substantially from July's reading of 14. As a result, the major market indexes reversed course from respectable gains to modest daily losses -- and the Dow Jones Industrial Average (DJIA) settled south of the key 10,000 mark. If traders seem unusually skittish this week, it's probably due to a pair of highly anticipated economic reports hitting the Street Friday, says Senior Technical Strategist Ryan Detrick. "Between the revised GDP number and Federal Reserve Chairman Ben Bernanke's scheduled speech on the economy, no one was willing to make a big bet today," noted Detrick. read more...
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