Closing Update for Thursday, Sept. 3: Market Modesty

4:16 PM, Sep 3, 2009 --

• NYSE up 71.8 (1.1%) to 6,546.60.
• DJIA up 63.9 (0.7%) to 9,345.
• S&P 500 up 8.5 (0.9%) to 1,003.
• Nasdaq up 16.13 (0.8%) to 1,983.

GLOBAL SENTIMENT

• Hang Seng up 1.23%
• Nikkei down 0.64%
• FTSE down 0.15%

UPSIDE MOVERS

(+) FNM, FRE rebound from Wednesday sell-off that followed Mortgage Bankers call to break up companies.

(+) Sepracor (SEPR) gains as Dainippon Sumitomo Pharma to buy company for $23 a share.

(+) Ciena (CIEN) beats with Q3, guides in line for Q4 revenue.

(+) Alcoa (AA) expects aluminum demand to fall less than expected.

(+) Ford (F) gets credit rating upped at Moody's, which may also raise credit arm.

DOWNSIDE MOVERS

(-) Allos Therapeutics (ALTH) erases early gains made on FDA committee OK for Lymphoma treatment.

(-) Sun Micro (JAVA) down as EU regulators probing Oracle (ORCL) deal.

(-) Hovnanian (HOV) seeing continued downside reaction to latest results.

(-) Deere (DE) gets downgrade.

MARKET DIRECTION

A late surge leaves the major stock averages up just shy of 1%. Stocks managed to cling to modest gains throughout light-volume trading, halting four sessions of declines. Consolidation continues and volume remains modest ahead of Friday morning's August jobs report and the long holiday weekend.

Stocks remained firmer, but gained little traction from the day's economic news.

The number of people applying for state unemployment benefits fell by 4,000 to 570,000 last week, the U.S. Labor Department reported this morning. Economists had predicted a drop to 560,000. Initial claims have been in a fairly narrow range for the past seven weeks. The number of people collecting benefits of any kind remained above 9.5 million.

Separately, the Institute for Supply Management said its service index came in at 48.4 in August, up from 46.4 in July and above economists' forecast for 48, according to by Thomson Reuters. However, a figure below 50 indicates the service sector is still shrinking.

Mixed results from retailers reporting August same-store sales kept buyers at bay. The back-to-school season was disappointing for most. Consumers continue to stay on the sidelines. Clothing stores for kids and teens, from Hot Topic (HOTT) to Wet Seal (WTSLA) posted bigger-than-expected sales declines. Abercrombie & Fitch (ANF) fell on a 29% decline in August same-store sales.

However, Aeropostale (ARO) reported a 9% rise in August same-store sales and raised its Q3 EPS outlook. American Eagle Outfitters (AEO) says its August same-store sales fell 7% but maintained its Q3 EPS outlook. Shares of both of those companies were firmer. Gap (GPS) and Costco Wholesale (COST) posted results that topped investors' expectations.

Sun Micro (JAVA) was lower and a volume leader after European Union antitrust regulators launched an in-depth probe today into Oracle's (ORCL) $7 billion takeover of JAVA on concerns the deal could hurt competition in the database market, Reuters and other news outlets are reporting.

Google (GOOG) was a modest gainer after the WSJ and Bloomerg report YouTube is in talks with studios to stream movies.

Sinovac (SVA) rallied on China state approval for the company's swine flu vaccine production. The company now expects annual sales to rise more than 20% versus a year ago.

Fannie Mae (FNM) and Freddie Mac (FRE) rebounded partially from the sell-off on Wednesday that followed the Mortgage Bankers Association's call to split up the mortgage lenders into smaller, private companies.

ING (ING) gained after Reuters reports that DBS Group has made a bid to buy ING's Asian private banking unit.

Crude ends just in the red, at $67.96 a barrel. Gold futures hit six-month highs, with nearby contracts approaching $1,000 an ounce. A weakening dollar and continued fund buying pushed up prices. Gold for December delivery gained $19.20, or 2%, to $997.70 an ounce.

Markets are closed on Monday for the US Labor Day holiday.

Comments

[Bill L.:]

"A weakening dollar and continued fund buying pushed up prices. Gold for December delivery gained $19.20, or 2%, to $997.70 an ounce."

I was actually consistently surprised today watching the dollar index creep upward despite the strong performance of precious metals and stocks. This is the exact opposite behavior from what we have seen the last six months. Not sure what it means, but one thing is for sure, someone is buying the dollar...

Sep 03 04:32 PM

[Diogenes of...:]

Gold is so right.

Sep 03 04:35 PM

[JD of OZ:]

A flashback day...Stick save in the last 15 minutes driven by the a trip to the garbage dump. A look at the charts for Fannie, Freddie and AIG tells it all.

Sep 03 05:20 PM

[OceanTiger:]

Friday unemployment report is most important report. Big concerns about job losses and the weakness of labor markets will determine this month market direction. 298,000 private jobs were lost last month. Some fields such as manufacture, house building , unemployment rate is over 40%. Giant state like CA unemployment rate is about 13%. Actual unemployment rate include part-time is about 16%. Job market is only thing decides if recession is over. If more people get jobs , they will buy more, more GDP, more car and house buy. But now the problem is absent of industrial leaders, who will hire more peoples? Good to Hold education stocks such as APOL, ESI... see Trade4Rich.com

Sep 03 05:31 PM

[cbc:]

"Big concerns about job losses and the weakness of labor markets will determine this month market direction."

No, wrong! Concerns of job losses and weakness in labor markets may determine one or two of the next days of this month's market direction but no more. This market is like a blade of grass in the wind. Schizophrenic at worst and manic depressive at best.

And sorry to say you are confusing "market" with "economy". Two, almost completely different entities. So, the jobs market can stink and so can the economy but the market is something altogether separate.

I think maybe English is your second language so maybe you have difficulty expressing yourself adequately in English.

What I think you are generally saying is correct but maybe my differences are only a matter of second language semantics. If you know what I mean. English is my first language and I still do not know what i am saying half the time.

I gave your post a thumbs up!


On Sep 03 05:31 PM OceanTiger wrote:

> Friday unemployment report is most important report. Big concerns
> about job losses and the weakness of labor markets will determine
> this month market direction. 298,000 private jobs were lost last
> month. Some fields such as manufacture, house building , unemployment
> rate is over 40%. Giant state like CA unemployment rate is about
> 13%. Actual unemployment rate include part-time is about 16%. Job
> market is only thing decides if recession is over. If more people
> get jobs , they will buy more, more GDP, more car and house buy.
> But now the problem is absent of industrial leaders, who will hire
> more peoples? Good to Hold education stocks such as APOL, ESI...
> see Trade4Rich.com

Sep 03 07:14 PM

[whidbey:]

Thanks,

Nice summary and useful to those interested in both indexes and the principals.

I am always surprised that the GSEs are still being hauled around as possible reorganizations. How can this work? The suggestion points out that larceny lurks in the heart of Wall Street.

There is no fix for these flat tire GSEs and we need to stop flogging the zombies to the market. No one can afford the GSE and if someone does swallow them, we have a new zombie.

Sep 03 08:58 PM