Benchmarks ended their see-saw ride on Thursday with only paltry
gains. Despite, the meager gains, the S&P 500 extended its stay
in the green into a fifth consecutive day. However, the Dow closed
in the red as investors were caught in a dilemma, whether to focus
on positives at home or the negative economic reading from
The Dow Jones Industrial Average (DJI) dropped 0.08% to end
10.45 points lower at 13,165.19. The Standard & Poor 500
(S&P 500) edged up a mere 0.04% to finish yesterday's trading
session at 1,402.80. The tech-laden Nasdaq Composite Index gained
0.3% and was up to 3,018.64. The fear-gauge CBOE Volatility Index
shed 0.3% and settled at 15.28. Consolidated volumes on the New
York Stock Exchange, the American Stock Exchange and Nasdaq were
roughly 5.41 billion shares, once again lower than 2011's daily
average of 7.84 billion shares. Advancing stocks moved past the
decliners on the NYSE; as for 53% stocks that gained, 43% closed in
Markets struggled to find definite direction through the day's
trading session. While the benchmarks added modest points in the
morning, they slipped into the red soon after noon, only to rebound
once again. Investors have gained strength from what has become the
S&P 500's longest winning stretch since March this year. Apart
from trading over its psychological level of 1, 400, the S&P
500 has gained over 10% since June 1, when it registered a
five-month low. A major factor behind this uptrend is the earnings
results by S&P 500 companies. A Bloomberg data noted that 72%
of the S&P 500 companies have managed to outperform the Street
estimates in the second quarter.
Investors were faced with both positive as well negative
developments yesterday. The dilemma was evident in the benchmarks'
movement. For one, investors were greeted by further encouraging
labor data. The U.S. Department of Labor reported that the
advance figure for seasonally adjusted initial claims dropped 6,000
from prior week's revised figure of 367,000 to 361,000 in the week
ending August 4. This also compared favorably with consensus
estimates of 370, 000. As a quick reminder, this is the second set
of positive labor data after a strong government nonfarm payroll
report had helped benchmarks snap their four-day losing streak last
Thus, investors' confidence about labor conditions was buoyed
for the second time. Meanwhile, the U.S. Census Bureau and the U.S.
Bureau of Economic Analysis, through the Department of Commerce,
reported that trade deficit narrowed in June. According to the
data: "Total June exports of $185.0 billion and imports of $227.9
billion resulted in a goods and services deficit of $42.9 billion,
down from $48.0 billion in May, revised. June exports were $1.7
billion more than May exports of $183.3 billion. June imports were
$3.5 billion less than May imports of $231.4 billion". Consensus
estimates had expected a trade deficit of 47.5. The trade deficit
was at its lowest in 18 months.
Amidst these positives, investors' sentiment was somewhat jolted
after China's factory output growth was down to the weakest level
in over three years. The second-largest economy's yearly industrial
output growth weakened to 9.2% in July, according to National
Bureau of Statistics. This was lower than June's level of 9.5%.
Also, 'the finished goods inventory sub-index of the manufacturing
purchasing managers index' was down to 48 in July as against June's
reading of 53.2, thus suggesting a contraction. Further, there was
evidence of slowing demand for raw materials as the producer price
index suffered a yearly decline of 2.9% in July.
Thus, investors struggled to gain a perspective, leaving
benchmarks unsure of a definite direction. As for the individual
stocks, E TRADE Financial Corporation (NASDAQ:
) jumped sharply by 6.9% following an announcement that CEO Steven
Freiberg has been sacked. On the earnings front, Kohl's Corporation
) reported soft sales numbers but managed to edge past estimates.
However, the company's shares lost 1.2%. Monster Beverage Corp
) slumped 9.7% after missing estimates. Meanwhile, NVIDIA
) and Nordstrom, Inc. (NYSE:
) were slated to report their results after the closing bell.
Separately, English soccer club Manchester United was en route
to finalize its initial public offering and Financial Times quoted
a close source saying that "Institutional investors have shown
strong interest". Each share of the 19-time English Premier League
champion boasting star players like Wayne Rooney and Nani will
reportedly be priced in the range of $16 to $20. Manchester United
will trade under the ticker name MANU and the club giant will be
offering 16.7 million class A shares.
E TRADE FINL CP (ETFC): Free Stock Analysis
NORDSTROM INC (JWN): Free Stock Analysis Report
KOHLS CORP (KSS): Free Stock Analysis Report
MONSTER BEVERAG (MNST): Free Stock Analysis
NVIDIA CORP (NVDA): Free Stock Analysis Report
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