Mid-Day Update: Markets See Marginal Lift on Positive Economic Reports

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Markets saw a modest lift today ahead of the Federal Reserve's monetary policy announcements due this afternoon. Currently economic conditions are more favorable than they were in previous times when the Fed moved to stimulate the U.S. economy, so the chances of the central bank introducing stimulus today are slim. Onlookers will be looking for clues as to when it might happen though.

Sales of motor vehicles in June moved up 2.2% to 14.1 mln annually from May's rate of 13.8 mln. Domestic car sales jumped 5.5% while car imports fell 6.9%. Motor vehicles sales are generally a leading indicator at business cycle turning points, so increases realized tend to point to a recovering economy.

Mortgage Bankers Association ( MBA ) purchases declined 2% this week, but this still marked an improvement in that last week a 3% loss had been reported. This is a leading indicator for single-family home sales and housing construction. Each time construction on a new home begins, it translates to more jobs and spending which, in turn, fuels the economy. While contraction is not a good sign, the fact that the contraction has slowed is positive.

ADP non-farm payrolls are expected to rise 163,000 in July, above consensus estimates of 120,000. This is still below the previous month's revised 172,000 but stronger than expected growth is a good thing and more jobs means there should be more money in the economy.

Manufacturing softened somewhat in July, going down 1.1 points from June to 51.4. Growth in new orders was minimal, moving to 51.9 from 51.0 and export orders contracted for the second straight month. Manufacturing is the backdrop for many industries. While contraction is never ideal, the growth, albeit marginal, in new orders is encouraging.

The ISM Manufacturing Index showed similarly. It posted a level of 49.8 which while above the prior level of 49.7, was under the consensus of 50.1. However, at least it is not contracting. Production is still growing and employment is keeping pace, but that won't last long if orders don't go up.

Growth in construction spending is growing at a slower rate month over month. It increased by just 0.4% in July, down from an increase of 0.9% in June, but it is steady at 7% looking at year over year.

Crude oil is up 0.39 to 88.45 per barrel. Natural gas is down 0.01 to 3.20 per 1 million BTU. Gold is down 8.10 to 1,602.40 an ounce, while silver is down 0.67 to 27.24 an ounce. Copper is down 0.05 to 3.37 per pound.

Among energy ETFs, the United States Oil Fund is up 1.6% to around $33.20 while the United States Natural Gas Fund is down 01% to $21.75. Amongst precious-metal funds, the Market Vectors Gold Miners ETF is down 1.6% to 42.15 while SPDR Gold Shares are down 0.7% to 155.43. The iShares Silver Trust is down 2.4% to 26.47.

Here's where the markets stood at mid-day:

US MARKETS

NYSE Composite Index up 16.07 (+0.2%) to 7,881.39

Dow Jones Industrial Index up 33.07 (+0.2%) to 13,040.46

S&P 500 up 2.39 (+0.2%) to 1,381.80

Nasdaq Composite down 4.27 (-0.2%) to 2,935.40

GLOBAL SENTIMENT

FTSE 100 up 71.56 (+1.3%) to 5,706.94

DAX down 17.87 (-0.3%) to 6,754.45

CAC 40 up 29.76 (+0.9%) to 3,321.78

Nikkei 225 down 53.21 (-0.6%) to 8,641.85

Hang Seng Index up 23.57 (+0.1%) to 19,820.38

Shanghai China Composite Index up 19.73 (+0.9%) to 2,123.36

NYSE SECTOR INDICES

NYSE Energy Sector Index up 80.69 (+0.7%) to 12,271.98

NYSE Financial Sector Index up 12.02 (+0.3%) to 4,454.52

NYSE Healthcare Sector Index up 42.10 (+0.6%) to 7,622.56

UPSIDE MOVERS

CDZI (+52%) Company said the Santa Margarita Water District Board of Directors voted unanimously to certify the Final Environmental Impact Report for the Cadiz Valley Water Conservation, Recovery and Storage Project and approve the Project's Groundwater Management, Monitoring and Mitigation Plan and Purchase and Sale Agreement, which outlines terms for their participation in the Project. These actions follow a nearly 18-month environmental review.

SIMG (+25%) Company reported after hours yesterday that Q2 revenue was $63.8 mln, vs. the analyst consensus of $61 mln on Capital IQ. EPS was $0.05, vs. expectations of $0.03 per share. For Q3, the company sees revenue of $73 to $75 mln, vs. estimates of $72.3 mln.

LH (+3.7%) Completed its acquisition of MEDTOX Scientific, Inc. (MTOX), effective July 31.

PPO (+0.1%, has touched new year lows) Downgraded to Neutral from Outperform at Robert W Baird. Price target lowered to $37 from $55.

DOWNSIDE MOVERS

NICE (-13.9%) Reported record revenues of $216.7 million for Q2, with net income of $35.7 million. EPS was $0.57. Analysts were expecting revenue of $220 mln and EPS of $0.57, according to Capital IQ. In the same period last year, revenues were $196.7 million with net income of $32.3 million.

DWSN (-2.8%) Reports Q3 earnings of $0.14 per diluted share, below the single analyst estimate of $0.48 on Capital IQ. In the same period last year, the company reported EPS of $0.04. Revenues were $68.35 mln, down 30.2% from $98.03 mln in the comparable quarter a year ago. No analyst estimates for revenues were available for comparison.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


This article appears in: Investing , Commodities

Referenced Stocks: MBA

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