Closing Update for Tuesday, August 4

by: Midnight Trader

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.


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


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 (NYSE: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 (NYSE: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 (NYSE: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 (NYSE: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 (NYSE: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.