Closing Update for Monday, August 10: Rally Pauses

4:09 PM, Aug 10, 2009 --

• NYSE down 21.43 or 0.33% to 6,564.93.
• DJIA down 34.16 or 0.36% to 9,335.9
• S&P 500 down 0.58 or 0.06% to 1,009.9.
• Nasdaq down 2.25 or 0.11% to 1,998.00.

GLOBAL SENTIMENT

• Hang Seng up 2.7%
• Nikkei up 1.1%
• FTSE up 0.7%

UPSIDE MOVERS

(+) FRE gains after announcing late on Friday it does not need to request more capital aid from the US government. FNM also recovers from deep drop Friday.

(+) PCLN says Q2 profits, sales beat estimates.

(+) DYN to sell nine plants for about $1.5 billion in cash and stock in a move to cut debt.

(+) MCD says global same-store sales rise 4.3% for July.

(+) TIBX reportedly in deal talks with SAP.

(+) YRCW inks deal with union.

(+) CHDX beats with earnings.

(+) YMI gets OK for extending clinical program.

(+) ELON in supply agreement with Duke Energy.

DOWNSIDE MOVERS

(-) LLY downgraded by Goldman Sachs.

(-) MSFT sells Razorfish.

(-) RTP dips as reports say company subject of scathing Chinese
editorial.

(-) BBY downgraded by Goldman Sachs.

(-) VNDA reports wider-than-expected second-quarter loss.

MARKET DIRECTION

Stocks eased moderately, down around 0.3% and 0.4%, as Wall Street pocketed some of the profits from a four-week rally that landed the averages at fresh 2009 highs last week. Investors are also awaiting a two-day Federal Reserve meeting and more economic data, including retail sales figures, later in the week.

The central bank is expected Wednesday to keep rates near zero after its two-day meeting. Also later this week, Wal-Mart Stores (WMT), J.C. Penney (JCP) and Macy's (M) will report earnings.

Crude oil ends down 0.5% at $70.60 a barrel. Gold ends down 1.3% at $945 an ounce. The broader commodity market, including metals prices, fell, dragging on materials stocks.

As for corporate movers:

McDonald's (MCD) was a gainer after its better-than-expected sales results.

Best Buy (BBY) and Eli Lilly (LLY) declined after analyst downgrades.

Merck & Co. (MRK) was given a Buy rating by Goldman Sachs.

Comments

[Bill L.:]

What worries me is the lack of follow through after the release of the "good" jobs data. Although there was a gap up, equities retreated into the close, and today we have no follow through. Rallies end on good news; we are starting to see failure to respond to good news. The lack of follow through combined with overbought conditions, markets looks like they are due for a correction here.

Aug 10 04:51 PM

[TonyNed:]

Alot of the stocks that were up today, either extending rallies or refusing to go downward, were on lighter volume. The volume has been steadily trending down since earnings. Today was about 75% of the average daily volume pretty much throughout. The roller coaster always goes slowest right at the top of that first steep hill.

Aug 10 04:58 PM

[robert.b.fe...:]

The market knows that the "Good." job numbers are bogus. Over 400K people saw their unemployment bennefits stop. They still aren't employed but they didn't drop off the face of the earth just the continuing claims rolls.


On Aug 10 04:51 PM Bill L. wrote:

> What worries me is the lack of follow through after the release of
> the "good" jobs data. Although there was a gap up, equities retreated
> into the close, and today we have no follow through. Rallies end
> on good news; we are starting to see failure to respond to good news.
> The lack of follow through combined with overbought conditions, markets
> looks like they are due for a correction here.

Aug 10 06:54 PM

[Joe Shareho...:]

Krugman is confused, he should just stop talking in my opinion. I'm not sure what Roubini is doing. Some say he's campaigning for a spot on the Obama cabinet. I'm not sure about that, but he doesn't seem to stick to his guns either.

Aug 10 09:47 PM

[Joe Shareho...:]

I think you're right, the market will drop a bit; but I don't see much of a pullback, however. The market is expecting Q3 to show GDP growth. About the only thing that will stop the bulls right now is to see massive layoffs ahead, which I don't believe will happen.


On Aug 10 04:51 PM Bill L. wrote:

> What worries me is the lack of follow through after the release of
> the "good" jobs data. Although there was a gap up, equities retreated
> into the close, and today we have no follow through. Rallies end
> on good news; we are starting to see failure to respond to good news.
> The lack of follow through combined with overbought conditions, markets
> looks like they are due for a correction here.

Aug 10 09:50 PM

[greenshoots...:]

Are you kidding me???? The market has NOTHING to do with Q3 GDP or any other kind of news. When is the last time the market actually dropped on 'worse then expected' news? For real. I challenge you to find an example in the past couple months.

The fact is that market goes higher because the large firms CAN move it higher. They lagged the market for months, now they can push it as high as they want with such anemic volumes. Easy.

Program trading, algorithms, flash trading, billions in TARP funds.....the direction has NOTHING to with news, or expectations.

Aug 10 10:29 PM