U.S. Stocks Halt After Two-Week Rally

Mukesh Buch
24 Jul, 2009
New York City

U.S. stocks closed mixed after two week rally halted. Weak earnings from Microsoft, Amazon.com and American Express slowed the market momentum. UK second quarter GDP contracted but South Korean economy gained. U.S. consumer confidence fell further in June.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – U.S. stocks closed mixed after two week rally halted. Weak earnings from Microsoft, Amazon.com and American Express slowed the market momentum. UK second quarter GDP contracted but South Korean economy gained. U.S. consumer confidence fell further in June.[/R]

U.S. stocks struggled after rallying in the last twelve days especially Nasdaq faced headwinds after Amazon.com and Microsoft disappointed investors. The tech heavy index declined 0.4% today after rising 12% in the last eleven days of trading. Energy companies gained after crude oil and natural gas futures gained.

U.S. consumer confidence index in June declined and preliminary read on July index showed further weakness. The rising unemployment and stagnant wages have sapped consumer confidence in recent months. The Reuters/Michigan Index decreased to 66 in June and initial read for July indicated a reading of 64.6.

Chinese search engine company Baidu.com surged 7% after it estimated higher revenues next quarter. Amazon.com, Microsoft and American Express declined after earnings. Broadcom plunged 10% after its net plunged. Sunpower soared on better than expected earnings.

Stocks in London closed higher for the tenth day in a row despite the economy contracting in the second quarter. The benchmark FTSE 100 index increased for the tenth day in a row, the longest rally in five years. Vodafone sales increased 9.3% on currency and acquisitions.

Home builders, energy companies and resource stocks continued their ascent after Chinese regulators did not revised the mortgage rules for second homes. Separately, statistics bureau in Beijing reported that property sales in China increased 53% in June from a year ago.

Global rally in stocks lifted Tokyo benchmark index. Fujitsu increased for the second day after offering target for record earnings in fiscal 2011. Panasonic gained 8% on broker recommendation. Shipping companies increased. Japan Tobacco dropped for the second day on the prospect of higher taxes.

Improved monsoon rains in the last seven days and earnings momentum lifted the benchmark index Sensex higher. Rupee edged higher. Earnings released from 450 companies to date have increased 17.4% in the first fiscal quarter.

Reliance Industries, the most valued company in India, revenues declined 22.6% to $7 billion and net income fell 11.5% to $759 million in the fiscal first quarter ending in June. The price decline in crude oil and sharp fall in refining margins contributed the revenues and earnings shortfall.

North American Markets

Dow Jones Industrial Average increased 20.17 or 0.2% to a close of 9,089.46, S&P 500 Index increased 2.65 or 0.3% to 978.94, and Nasdaq Composite Index edged lower 10.01 or 0.5% to close at 1,963.59. Toronto TSX Composite Index increased 14.92 or 0.1% to 10,690.60.

Of the stocks in S&P 500 index, 306 increased, 188 declined and 6 were unchanged.

MEMC Electric Material led decliners in the S&P 500 index with a loss of 10.5% followed by losses in Microsoft Corp of 9.3%, in Amazon.com Inc of 8.1%, in Broadcom Corp of 7.5%, in Federated Investors of 5.7% and in Northrop Grumman of 5.4%.

RadioShack Corp led gainers in the S&P 500 index with a rise of 10.2% followed by increase in Black & Decker of 9.9%, in Prologis of 9.5%, in Capital One Financial of 7.7%, in CA Inc of 7.4% and in Manitowoc Company of 6.4%.

South American Markets Indexes

Mexico Bolsa Index decreased 157.69 or 0.6% to 26,647.73. Brazil Bovespa Stock Index increased 234.65 or 0.4% to 54,484.01.

Argentina Merval Index decreased 0.2%. Chile Stock Market Select index edged higher 0.6%, Peru Lima General Index added 0.5% and Colombia IGBC General Index increased 0.02%.

Europe Markets Review

In London FTSE 100 Index closed higher 16.81 or 0.37% to 4,576.61, in Paris CAC 40 Index decreased 7.27 or 0.22% to close at 3,366.45 and in Frankfurt DAX index lower 17.92 or 0.34% to close at 5,229.36. In Zurich trading SMI decreased 4.61 or 0.08% to close at 5,760.90.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 151.61 or 1.55% to 9,944.55, Hang Seng index in Hong Kong increased 165.09 or 0.83% to 19,982.79 and CSI 300 index in China higher 15.59 or 0.43% to 3,667.56. ASX 200 index in Australia increased 25.70 or 0.63% to 4,089.80. The FTSE Bursa KL Composite index in Malaysia closed higher 3.73 or 0.32% to 1,155.88.

The Kospi Index in South Korea increased 6.10 or 0.41% to close at 1,502.59. SET index in Thailand closed higher 2.05 or 0.33% to 614.24 and JSE Index in Indonesia increased 24.94 or 1.15% to 2,185.65. The Sensex index in India increased 147.92 or 0.97% to 15,378.96.

Commodities, Metals, and Currencies

Crude oil increased $0.81 to close at $67.97 a barrel for a front month contract, natural gas increased 13 cents $3.68 per mBtu and gasoline increased 0.38 cents to 191.70 cents.

Wheat futures closed down 15.50 cents in Chicago trading to $5.16 a bushel. Sugar increased 0.17 cent in trading at 18.43 cents a pound. Soybean future closed down 17 cent to $9.15 a bushel.

Gold decreased $3.30 in New York trading to close at $951.50 per ounce, silver closed up $0.08 to $13.85 per ounce and copper for the front month delivery decreased 0.05 cents to $2.52 per pound.

Dollar edged higher against euro to $1.419 and closed up against the Japanese yen to 95.00.

Yield on 10-year U.S. bond decreased to 3.66% and with 30-year maturities decreased to 4.54%.