IBM Pulls Up the Dow

[Excerpted from Bill Cara's Daily Report]

Commodity prices drifted higher on the day Friday, while IBM earnings pulled up the Teck sector (XLK +1.0%) and GE earnings pulled down the Industrials (XLI -1.2%). After a low volume trading session, the S&P 500 (940.38 -0.36 -0.04%) closed a tad lower for the first loss of the week, while the DJIA (8,743.94 +32.12 +0.37%) was a winner because of the weighting of IBM (IBM +4.3%). The NASDAQ Composite (1,886.61 +1.58 +0.08%) was up marginally. Both the DJIA and NASDAQ had winning days every day this week.

There were no remarkable gains or losses in the leading industries. The winners were Goldminers ($XAU +1.5%) and Hardware ($HWI +1.3%, while the big losers were financials REITs ($DJR -2.7%) and the Banks ($BKX -2.2%).

Among the Cara 100 companies, the leading stocks were Teck Corp (TCK +5.1%), IBM and ICICI Bank (IBN +3.8%). The biggest losers were Carnival Cruise (CCL -3.3%), optionsXpress (OXPS -2.9%) and Google (GOOG -2.8%).

The $USD (79.51 +0.26 +0.32%) was higher on the day, but down W/W. The Euro (140.96 -0.52 -0.37%), Pound (163.30 -1.12 -0.68%) and Yen (106.12 -0.40 -0.38%) were all weak against the Dollar on the day. The Loonie (85.79 -0.27 -0.31%) gained against the dollar.

In Canada, the Toronto Composite (10,369.42 +65.00 +0.63%) was higher, while the Toronto Venture bourse (1,095.62 -2.18 -0.20%) pulled back.

On Friday, the US long bond ($USB 116.27 -0.95 -0.81%) was weak on the day and W/W. The Treasury yields for 30-year (4.529 +0.83 +1.87% and up from 4.201 W/W), 10-year (3.651 +0.94 +2.64% and up from 3.295 W/W), and 5-year (2.513 +0.68 +2.78% and up from 2.211 W/W) were all strong. In fact, a characterization of the capital market this week is that a lower Dollar and Treasury prices kept the equity market strong and the commodity prices rising as well.

The Treasury bill yield was quiet at 0.165, unchanged on the day and also on the week as it appears the monetary authorities have the entire capital market under firm control. But the USD may be slipping below its tight trading range since mid-June (79.65 and 80.75).

Earlier Friday, Austral-Asian markets closed strong, particularly India and Hong Kong with closing prices as follows: Australia (3992.9), Japan’s Nikkei 225 (9,395.3), China (3,189.7), Hong Kong (18,805.7) and India (14,744.9).

The European equity bourses traded a tad higher as well. The French CAC (3,218.5), German DAX (4,978.4) and UK FTSE 100 (4,388.8) were up from +0.4 to 0.6% on the day.

Spot gold, palladium, platinum and silver were stronger on the day despite the stronger $USD: (937.05 +0.20 +0.02% up from 912.75 W/W); (246.0 +2.0 +0.82% and up from 232 W/W); (1174 +10 +0.86% and up from 1106.0 W/W); and (13.3725 +0.1125 +0.85% and up from 12.67 W/W), respectively.