Friday marked another session of paltry gains for the markets
where volumes reached significantly low levels. In the absence of
any major headlines, benchmarks traded in the red throughout the
session, eking out gains only during the closing moments. Even the
IPO of English football major Manchester United saw little
excitement. Meanwhile, trade data from China was discouraging,
generating fears about the global economy. However, even paltry
gains were enough to secure a sixth straight day of gains for the
S&P 500's sixth; while the Dow registered a fifth-straight week
of gains.
The Dow Jones Industrial Average (DJI) gained 0.3% and was up to
13,207.95. The Standard & Poor 500 (S&P 500) edged up 0.2%
to finish Friday's trading session at 1,405.87. The tech-laden
Nasdaq Composite Index added a meager 0.1% to end 2.22 points
higher at 3,020.86. The fear-gauge CBOE Volatility Index (VIX)
dropped 3.5% to settle at 14.74. Consolidated volumes on the New
York Stock Exchange, the American Stock Exchange and Nasdaq were
4.97 billion shares, sharply lower than last year's daily average
of 7.84 billion. Advancers outpaced the decliners in the NYSE; as
for 52% stocks that gained, 44% stocks closed in the red.
For the past couple of days the benchmarks have been reluctant
to move too far in either direction. Investors have adopted a
cautious stance awaiting concrete action from the central banks.
European Central Bank head Mario Draghi is yet to live up to his
vow of doing "whatever it takes" to preserve the Euro-zone. On the
domestic front also, investors await the U.S. Federal Reserve's
next move on a possible third round of quantitative easing
(QE3).
With a cautious stance dominating the mood, investors have
refrained from betting big and volumes have been drastically low.
Strategists opined that the volumes will pick up only after
investors are back from summer holidays. Meanwhile, investors have
also been balancing their hopes for economic measures from central
banks against dismal data from China. Eventually, volumes remained
low while markets struggled to find a definite direction.
Coming to dismal Chinese economic data, China's General
Administration of Customs said both export and import growth
decelerated in China. According to the report, imports were up 4.7%
to $151.8 billion 1% higher than year-ago levels to $176.9 billion
in July. Imports were estimated to grow at 7.2%, while export
growth was projected at 8.6%. Thus, the reported figures were
sharply below estimates. The meager 1% rise in exports was also the
lowest since January. Trade surplus slumped to $25.1 billion in
July from prior month's $31.7 billion.
Analysts opined that the world's second largest economy was
feeling the effects of weak demand from U.S. and Europe. The report
comes just a day after the nation reported factory output growth
had sunk to its lowest level in over three years. Also, 'the
finished goods inventory sub-index of the manufacturing purchasing
manager's index moved down to 48 in July as against June's reading
of 53.2, thus suggesting a contraction. Taken together, the
economic situation in China is grim and the government has plunged
into action to intervene..
Economic reading from the domestic front was also anything but
encouraging. The U.S. Bureau of Labor Statistics reported a 0.6%
fall in import prices in July, as against consensus estimates of a
0.2% rise. This was the fourth-consecutive month of declines.
In line with the lackluster trading session, the English
football club giant MANCHESTER UNITED PLC (NYSE:
MANU
) had a dull debut on the NYSE. Soccer fans are feeling the
excitement as the English league prepares to kick off in a month,
but investors showed little interest in the initial public
offering. The stock had a price tag of $14 a share, lower than the
expected price of $16 to $20. Earlier, Financial Times had quoted a
close source saying that "Institutional investors have shown strong
interest". However, the stock limped through the session and ended
flat. A report from CNBC noted that analysts viewed the
"debt-ridden" club, which boasts the likes of star players
including Wayne Rooney and Nani, to be "overvalued".
Manchester United's dull debut comes after social networking
bellwether Facebook, Inc. (NASDAQ:
FB
) also had a disappointing start. Meanwhile, Facebook's Chief
Financial Officer David Ebersman was reported to be meeting
investors ahead of the termination of the stock sales ban. Shares
of the company jumped 3.8%.
Separately, Bloomberg reported that International Business
Machines Corp. (NYSE:
IBM
) will be taking over the enterprise division of embattled Research
In Motion Limited (USA) (NASDAQ:
RIMM
). Shares of IBM gained 0.4%, while RIMM's shares jumped 6.3%.
Separately, data suggesting an eighth consecutive month of decline
in video game industry sales affected some of the related stocks.
Activision Blizzard, Inc. (NASDAQ:
ATVI
), Electronic Arts Inc. (NASDAQ:
EA
) and Zynga Inc (NASDAQ:
ZNGA
) dropped 0.1%, 0.3% and 2.0%, respectively. However, Take-Two
Interactive Software, Inc. (NASDAQ:
TTWO
) and International Game Technology (NYSE:
IGT
) jumped 6.4% and 2.3%, respectively.
ACTIVISION BLZD (ATVI): Free Stock Analysis
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ELECTR ARTS INC (EA): Free Stock Analysis
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FACEBOOK INC-A (FB): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
INTL GAME TECH (IGT): Free Stock Analysis
Report
(MANU): ETF Research Reports
RESEARCH IN MOT (RIMM): Free Stock Analysis
Report
TAKE-TWO INTER (TTWO): Free Stock Analysis
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ZYNGA INC (ZNGA): Free Stock Analysis Report
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