Closing Update for Friday, July 31

4:14 PM, Jul 31, 2009 --

• DJIA up 17.15 (0.19%) to 9,171.61.
• S&P 500 up 0.73 (0.07%) to 987.48.
• Nasdaq down 5.80 (0.29%) to 1,978.50.

GLOBAL SENTIMENT

• Hang Seng up 1.68%
• Nikkei up 1.89%
• FTSE down 0.50%

UPSIDE MOVERS

(+) ANDS reports narrower loss, gets FDA protocol approval.

(+) CVM gets ongoing coverage of its H1N1 products.

(+) CVX gains on better-than-expected sales results.

(+) F rallies as Congress approves adding more money to the "cash for clunkers" program.

DOWNSIDE MOVERS

(-) FSLR continues decline despite earnings beat.

(-) SYNA tumbles lower on mixed guidance.

MARKET DIRECTION

The major U.S. averages traded mostly higher for much of Friday, but late-day selling skinned the bulk of the gains. Traders took heart from economic data that noted the U.S. economy is contracting at a slower pace than expected. The Commerce Department reported gross domestic product slowed by 1%. Economists were expecting a 1.5% drop. Tempering enthusiasm was additional data that highlighted a continuing move by consumers to reduce spending, a sign that while the U.S. economy may be clawing its way out of a recession the consumer engine that will eventually drive future growth is still hunkered down and unwilling to spend as heavy debtloads and lost wealth saps confidence.

Looking forward to next week, earnings season slows but there are still a host of names that could drive sentiment. Among issues slated to report results are: MGM Mirage (MGM), Archer-Daniels Midland (ADM), BMC Software (BMC), Electronic Arts (ERTS), Kraft (KFT), Marvel (MVL), Whole Foods Market (WFMI), ValueClick (VCLK), Cisco Systems (CSCO), CBS Corp. (CBS), Nvidia (NVDA) and VeriSign (VRSN).

On the economic front, construction spending, the ISM index, and auto and truck sales are due out on Monday. On Tuesday, we'll see personal income and spending, as well as pending home sales. ADP employment numbers, factor orders and crude inventories will be released on Wednesday, and on Thursday initial claims are due. Friday will bring unemployment data and consumer credit.

In today's market, government data showed the U.S. economy contracted at a 1.0% annualized rate in the second quarter, compared with an average 5.9% drop over the previous two quarters. It is the fourth straight quarter with a contraction in GDP as the U.S. remains dogged by a recession.

Wall Street expected the economy to contract by around 1.2% in the period, following a 5.5% drop in Q1 and a 6.3% drop in Q4. Economists think slim growth is likely in Q3.

Also this morning, the cost of employing a U.S. worker over the past year increased at the slowest pace since record-keeping began in 1980, which could bode well for employers. The employment cost index rose 0.4% for all civilian workers in the second quarter, slightly more than the 0.3% in the first quarter. In the past year, employment costs are up 1.8%.

Crude oil, meanwhile, turned higher with encouragement from stocks and the lower U.S. dollar against major currencies. Crude settled up 3.7% at $69.45 per barrel.

In company news, Las Vegas Sands (LVS) declined in continued selling that followed its Thursday evening earnings report.

First Solar (FSLR) tumbled lower despite an earnings beat, pressuring the broader solar sector lower as well

Chevron (CVX) firmed after posting Q2 sales of $40 billion, more than the Thomson Reuters mean for $33.41 billion. It earned $0.87 per share, hit in part by currency effects. That was down from a year ago. The mean estimate by analysts was $0.95.

UBS (UBS) was higher on a Reuters report saying that the bank has come to an agreement with the U.S. government over tax evasion issues.

Comments

[Diogenes of...:]

The stock market opened. High frequency trading programs scalped money every time a stock traded. The markets closed. The US Dollar is about to collapse. Next.

Jul 31 04:49 PM

[wendling_r:]

The economic data being laid out now is driving the market higher but it will not last. Neither will the bastardized earnings reports that have been tempered so low that it is almost impossible for companies to miss their markets. I expect the market to move higher for the next month or so. I have just posted my latest report on the DJIA on the site linked to this posting. For those investors who are interested in how the market place is really run and why the current market continues to power higher I would recommend you read the documentation on the DJIA.

There is a major decline coming near term but after that once the average investor has been shaken out of the market the true bull market will happen.

To access the information click on the link and then click on the free reports on the top of the home page. It will take you to the latest report.

I hope you find the information useful in your investing future.

Richard W. Wendling

Jul 31 09:25 PM

[rick12345:]

The market is behaving quite rationally for once, I would have thought. Although I was well and truly in the "bear camp" a few months ago, I'm getting a good feeling this time around. I think it would take a succession of adverse reports to swing the pendulum voraciously in the other direction, and at the moment there appears ostensibly more good news than bad.
On the face of it, this recession doesn't appear to be any worse than the others I've lived through, although I shudder to think what lies ahead once we eventually shake off the hangover.

Aug 02 08:56 AM