Closing Update for Tuesday, August 4

4:15 PM, Aug 4, 2009 --

• NYSE up 3.5 (0.05%) to 6,569.14.
• DJIA up 33.6 (0.4%) to 9,320.
• S&P 500 up 3 (0.3%) to 1,006.
• Nasdaq up 2.7 (0.1%) to 2,011.

GLOBAL SENTIMENT

• Hang Seng down 0.05%
• Nikkei up 0.22%
• FTSE down 0.6%

MARKET DIRECTION

After-hours earnings include ERTS, DENN, CEPH, BMC, WFMI, PLXT, ODSY, MOLX.

Stock averages close narrowly higher and in the middle of the day's range. The DJIA and S&P 500 held slender gains throughout the last half hour of trading, while the tech-heavy Nasdaq staged a late recovery to end just in positive territory. Averages were lower earlier in the day but a financial sector recovery helped the broader market.

Consolidation kicked in after the S&P 500 cleared the 1,000 line on Monday for the first time since November. The S&P has advanced 14% since July 10. All indexes hit fresh highs for the year on Monday.

The National Association of Realtors said its pending home sales index rose 3.6 percent to 94.6, from an upwardly revised reading of 91.3 in May. The last time there were five consecutive monthly gains was July 2003.

The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2.

The rise in pending home sales helped ease earlier pressure from a drop in personal income. Personal incomes fell 1.3% in June, reversing the 1.3% gain in May that was due to a one-time stimulus payment to Social Security recipients. Economists expected personal incomes to fall 1 percent. Excluding the one-time payment in May, incomes fell 0.1% in June after a decline of less than 0.1% in May.

Within the same report, consumer spending rose 0.4%. Consumer prices measured in the report increased 0.5% in June, the most in a year. Energy prices rose 8.3%. The core inflation rate - which excludes food at home and energy - rose 0.2%. Although the gain in consumer spending, which accounts for about 70% of economic activity, was welcomed, the drop in personal income had stymied enthusiasm. If personal income continues to drop, consumer spending could be hard to sustain.

Stock bulls did take some comfort in two economic reports showing a slight rise in consumer spending and the fifth straight monthly rise in pending home sales. Caterpillar (CAT) was a gainer and influenced the broader market after the heavy equipment-maker said its cost cuts are aiding its long-term view regardless of how fast the economy recovers.

UBS (UBS) remained under pressure though its early negative tug on the broader financial space lessened as the session progressed. UBS reported a Q2 loss of 1.4 bln Swiss francs, wider than year ago levels and Street estimates.

Archer Daniels Midland (ADM) reported Q4 EPS of $0.10 vs $0.58 a year earlier and below the Thomson Reuters mean analyst estimate for $0.45, if comparable. Q4 sales fell 24% to $16.5 billion. The Street looked for $15.2 billion.

CVS Caremark (CVS) was a gainer. It reported Q2 revs of $24.9 bln, ahead of the analyst mean of $24.4 bln on Thomson Reuters. Adjusted EPS was $0.65, better than the Street view of $0.64 per share. The company now expects to deliver adjusted EPS from continuing operations of $2.59 - $2.64 for the year, up from its previous guidance of $2.55 - $2.63. The Street is at $2.60 per share.

UAL (UAUA) gained after United Airlines reported a July consolidated passenger load factor of 86.9%. Total July traffic fell 4%.

In mergers and acquisitions news, PepsiCo (PEP) was firmer after it said it would acquire its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) in a $7.8 billion deal.

Oil futures ended slightly lower amid mixed stock action and expectations for rising supplies. September crude closed down $0.16 at $71.42 a barrel. Oil had ranged as high as $71.91 and as low as $70.16 a barrel in electronic trading. In after-hours, oil is down $0.22 at $71.20 a barrel.

Comments

[Mad Hedge F...:]

Hasta la vista baby! Welcome to the new bubble. I four months we have gone from 35% below the 200 day moving average to 15% above. It turns out that 1,000 in the S&P 500 is 38.2% recovery of the fall from the 2007 peak, a great Fibonacci number. DeMark indicators are showing that buying power is getting exhausted. Daily sentiment indicators are 88% bullish. RSI’s and oscillators are over extended. Every day the buyers show up, marching in lockstep with military precision, to give us our needed spike up at the close to keep the rally alive on the charts one more day. Worst of all, I am getting deluged with emails from subscribers asking if they shuld start buying now, buying everything. All of this, and we still have the second half of the “W” to discount. If the American stock market was the only issue, I wouldn’t really care, since most of my longs are overseas. But if the US rolls over like the Bismarck, emerging markets, foreign currencies, commodities, the energies, and junk bonds will be dragged down with it because everything is so interlinked these days. There will be no place to hide. I think the glass half full crowd is coming to the end of their run, so I would urge investors to pare down some risk. If your friends stay in, and they make a ton of money, that’s fine. Just let them buy the next round of drinks.

Aug 04 05:40 PM

[herbert hoover:]

another whiner....


On Aug 04 05:40 PM Mad Hedge Fund Trader wrote:

> Hasta la vista baby! Welcome to the new bubble. I four months we
> have gone from 35% below the 200 day moving average to 15% above.
> It turns out that 1,000 in the S&P 500 is 38.2% recovery of the
> fall from the 2007 peak, a great Fibonacci number. DeMark indicators
> are showing that buying power is getting exhausted. Daily sentiment
> indicators are 88% bullish. RSI’s and oscillators are over extended.
> Every day the buyers show up, marching in lockstep with military
> precision, to give us our needed spike up at the close to keep the
> rally alive on the charts one more day. Worst of all, I am getting
> deluged with emails from subscribers asking if they shuld start buying
> now, buying everything. All of this, and we still have the second
> half of the “W” to discount. If the American stock market was the
> only issue, I wouldn’t really care, since most of my longs are overseas.
> But if the US rolls over like the Bismarck, emerging markets, foreign
> currencies, commodities, the energies, and junk bonds will be dragged
> down with it because everything is so interlinked these days. There
> will be no place to hide. I think the glass half full crowd is coming
> to the end of their run, so I would urge investors to pare down some
> risk. If your friends stay in, and they make a ton of money, that’s
> fine. Just let them buy the next round of drinks.

Aug 04 06:42 PM

[Benito Camela:]

A few ideas:

-- Personal Income goes down then lets buy stocks
-- Consumer sentiment goes down, then lets buy stocks
-- MSFT has its first quarter with lower revenues, then lets buy stocks
-- Mortgage defaults go up, then lets buy stocks
-- Corporate revenues go down, then lets buy stock
-- States have a deficit of $160 billion and are cutting expenditures, then lets buy stocks
-- Commercial real state is plunging, then lets buy stocks

Aug 04 08:10 PM