Closing Update for Thursday, August 20: Three in a Row

4:39 PM, Aug 20, 2009 --

• NYSE up 74.1 (1.1%) to 6,553.40.
• DJIA up 70.9 (0.8%) to 9,350.
• S&P 500 up 10.9 (1.1%) to 1,007.
• Nasdaq up 20 (1%) to 1,989.

GLOBAL SENTIMENT

• Hang Seng up 1.88%
• Nikkei up 1.76%
• FTSE up 1.43%

DOWNSIDE MOVERS

(-) GME misses with Q2, sets guidance below Street.

(-) GFG reportedly to be bought by BBVA.

(-) SHLD misses with unexpected adjusted loss.

(-) NTAP continued downside evening reaction to earnings.

(-) PETM continued downside evening slide after guidance miss.

(-) RF gets analyst downgrade.

UPSIDE MOVERS

(+) UBS gains as Switzerland reportedly sells stake near high, continued reaction to IRS settlement.

(+) HNZ beats with Q1 results.

(+) GOOG gets analyst upgrade.

(+) SOL jumps on contract.

(+) DKS beats with Q2 and guides above Street.

MARKET DIRECTION

Stock averages end near the top of the day's range, clawing back from early declines and now posting three straight days of positive closes after a steep sell-off to start the week. The S&P 500 retakes the psychologically important 1,000 level. Volume was light and analysts look for further consolidation near these levels.

Stocks and oil got an early boost from gains for Chinese stocks but an unexpected rise in weekly jobless claims and other mixed economic data limited some of the impact from global equities early in the U.S. session.

Initial applications for state unemployment benefits rose by 15,000 to 576,000. The four-week average of initial claims rose by 4,250 to 570,000, and continuing claims climbed as well. Analysts had forecast new claims to slip to 550,000 last week from a previously reported 558,000, according to a Reuters poll.

The Conference Board's forward-looking index of leading economic indicators gained 0.6% last month. The index, which looks out three to six months, climbed 0.8% in June and 1.2% in May. The Conference Board says the indicators suggest the recession has bottomed out, and growth in economic activity will begin soon. Six of ten indicators that make up the index increased in July, three were negative, and one was steady.

The Philadelphia Fed survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -7.5 in July to 4.2 this month, the highest reading of the index since November 2007. Labor market conditions remain weak. Firms continue to report declines in employment and work hours, but overall job losses were not as large this month.

September crude oil closed up $0.12 at $72.54 a barrel. October futures end down $0.92 at $72.91 a barrel.

Natural gas for September delivery slid 17.40 cents, or 5.6%, to close at $2.945 per million British thermal units on the New York Mercantile Exchange -- the lowest close on a benchmark contract since 2002. Futures settled at $2.910 per million British thermal units on Aug. 25 that year, according to MarketWatch.

The catalyst for the move was a new government report, reflecting another build of natural gas inventories.

Comments

[CautiousInv...:]

In a state of schizophrenia, the market alternated between bouts of depression, owing to jobless claims, rising foreclosures and continued concerns over China, and euphoria over leading economic indicators and improvement in the Fed Philly index. As it is wont to do, the market overlooked the more consequential jobless claims report only to warmly embrace the notion that the recession has ended and we are about to embark upon a jobless recovery that can only be patched together by upper income spending and expanded exports. Failing to see the implications for a jobless recovery, it may take one or more quarters before the market realizes it is discounting something that does not exist.

Aug 20 05:08 PM

[Bill L.:]

Despite the Dow Theory buy signal that shot off a few weeks ago, I think the signal are at odds with the theory. In Dow theory the first leg of a Bull market pessimism should still be very rampant, with valuations near historical lows. The second phase, sentiment is mixed an improving, with stocks continuing to rise as earnings show continued improvement. The Third and finals phase has sentiment at highs, and has manic emotion driven buying.

It almost seems as we went from the beginning of phase 1, skipped all the way to the end of phase 3; money managers are piling in at any pull back in fear of performance anxiety. There haven't been any consistent earnings improvement, but trader sentiment is at it's highest levels since the peak in October '07. It's been a nice ride, but I'm off the crazy train. I hope the next stop isn't off a cliff.

Aug 20 06:15 PM

[qqq fox:]

$66.6 Billion in one week. That is the amount of mortgage backed securities the FED added to its balance sheet in just one week, up to a new total of 609.5 Bil. And this new total is up over $100 Bil in the last 3wks. Additionally, they added over $12 Bil in Treasuries and Agencies. Take off some for expiring swap lines & commercial paper guarantee expirations, and the new FED balance sheet is up to a whopping $2.093 Tril. Now we know why Tsy's have been so strong in the last 2 wks while the stock mkt has been going up. The Fed creating shortages of Agency MBS drives govt paper buyers into the Treasury mkt. Once the Tsy market wakes up to this I can’t believe something won’t shake out. New lows in the dollar and Tsy’s accompanied by resurgent gold and commodities mkts.

Aug 20 07:52 PM

[ebworthen:]

"The Conference Board says the indicators suggest the recession has bottomed out, and growth in economic activity will begin soon."

ROFL!

LMFAO!

Oh dear...

Aug 20 11:21 PM