Sixth Weekly Rise on Wall Street; Records in Facebook and Apple

Bikram Pandey
17 Aug, 2012
New York City

U.S. indexes extended gains for the sixth week in a row on improving consumer confidence and economic conditions. S&P 500 index is up 12.8% in the year and the Nasdaq Composite is up 17%. Facebook, Groupon and Zynga dropped to new lows after more stocks are available for trading.

[R]4:45 PM New York – U.S. indexes extended gains for the sixth week in a row on improving consumer confidence and economic conditions. S&P 500 index is up 12.8% in the year and the Nasdaq Composite is up 17%. Facebook, Groupon and Zynga dropped to new lows after more stocks are available for trading.[/R]

U.S. stocks advanced after consumer confidence index increased and the latest batch of earnings release were ahead of expectations. However, the last six weeks of market gains have stretched valuations.

The S&P 500 index is set to advance for the sixth week in a row and the Nasdaq Composite index for the fifth week in a row.

The S&P 500 index is nearing 4-year high and is up 0.7% in the week and has soared 12.8% in the year so far. The Nasdaq index is up 1.7% in the week and has jumped 17% in the year so far.

The latest read on the consumer confidence index tracked by University of Michigan and Reuters increased to 73.6 in August from the final read of 72.3 in July.

The indexes in Europe and Asia were higher after comments from German Chancellor Angela Merkel supported another round of bond buying by the European Central Bank and appeared a willingness to ease austerity measures for Greece.

In corporate news, Illinois Tool Works agreed to divest a 51% stake in its unit for $1.1 billion.

Among the earnings, Ann Inc ((ANN)) soared 22% after second quarter net climbed 24% and Foot Locker ((FL)) net jumped 60%. Hibbett Sports net surged 33%. Marvell Technology dropped 14% after chipmaker reported third quarter net plummeted 52% to $93.1 million and J. M. Smucker added 5% after quarterly net slid but guided higher fiscal year net. Gap Inc ((GPS)) advanced 5% after second quarter net soared 29% to $243 million.

Apple Inc ((AAPL)) 1.6% to $645.75, record high and reaffirmed its status as the company with the largest market cap after analysts lift price target higher than $900 a share and on the rumors of impending release of new version of mobile phone and iPad mini as early as September.

Internet stocks suffered another down day after Facebook ((FB)) faced wave of sell orders. Facebook declined 4% to $19.07; a record low on 105 million shares after 157 million shares in Thursday’s trading.

Approximately additional 243 million Facebook stocks are scheduled to expire lockup on October 15, and 1.2 billion shares on November 14 and 150 million on December 15 and additional 47 million plus more shares are expected to be released on May 18.

The selling in Facebook is likely to intensify in the weeks to come as company battles slower than expected revenues growth and more stocks are available for sale in the next three months. Quarterly sales growth has declined to 32% in the second quarter from 45% in the first quarter and 55% in the last quarter of 2011.

Groupon ((GRPN)) dropped 7% to $4.74 on 36 million shares, triple the daily average of 12 million shares on the worries that the quarter-to-quarter sales growth is likely to decelerate further below 2%.

The European indexes gained on positive comments from German Chancellor Angela Merkel. Euro zone current account and trade surplus rose in June. German producer price inflation eased to a two-year low in July. Swiss Life first-half profit from operations rose 17%.

The Nikkei index gained more than 3% for the second week in a row after investors covered short positions and the yen weakened. Japan Tobacco was volatile for the third day in a row after China proposed tobacco advertising ban and higher taxes.

Australian markets indexes surged 0.9% on stronger local earnings and improving sentiment in the euro zone. ANZ reported first half profit increased 9%. QBE net surged but stock dropped on weaker outlook in the U.S.

Commodities, Bonds and Currencies

The yield on 10-year bond traded lower to 1.81% and on 30-year bond eased to 2.93%.

The U.S. dollar inched higher to $1.232 to a euro and increased against the Japanese yen to 79.55 yen.

Immediate delivery futures of Texas crude oil increased 39 cents to $95.99 a barrel and Brent crude fell $1.50 to $113.71, futures of natural gas rose 0.7 cents to $2.731 per mbtu and gasoline price edged down 5.47 cents to 302.85 cents a gallon.

In metals trading, copper increased 3.2 cents to $3.42 per pound, gold fell 80 cents to $1,618.40 per ounce and silver decreased 19 cent to $28.10.