7-Year Low in Gas; U.S. Stocks Downward Bias

Mukesh Buch
26 Aug, 2009
New York City

U.S. stocks traded sideways after the release of durable goods orders, new home sales and weekly inventory reports. European markets decreased but hovered near 10-month high. Crude oil declines and natural gas tradees near seven-year low. European markets edge lower on weak metals and commodities.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks traded sideways after the release of durable goods orders, new home sales and weekly inventory reports. European markets decreased but hovered near 10-month high. Crude oil declines and natural gas drops to a seven-year low.[/R]

After the release of new home sales and better than expected durable goods orders, the market indexes in New York traded sideways. The orders in July, excluding volatile aircraft orders decreased 0.3%.

Seasonally adjusted new U.S. home sales in July increased 9.6% from the previous month to 433,000 but fell 13.4% from a year ago. Unsold homes inventory represent 7.5 months supply.

U.S. durable goods orders in July increased 4.9% to $168.4 billion, the third monthly increase in the last four months and the largest percentage increase since July 2007. The orders increased 1.3% in June. Shipments of manufactured goods increased 2.0% after rising 0.7% in June.

U.S. crude oil inventories increased 0.2 million barrels from the previous week. At 343.8 million barrels and inventories are above the upper boundary of the average range for this time of year. Total motor gasoline inventories decreased by 1.7 million barrels last week.

Brown Shoe Company reported second quarter net loss. Dollar Tree comparable same store sales increased 6.8%. Bridgepoint Education files for secondary offering.

European markets edged lower on a weakness in miners and commercial banks. Natixis surged on the expectations of profit in the third quarter. Continental AG said it repaid €800 million of debt on time. The German business confidence index increased in August. Suez Environnement and Heineken gained.

UK stocks declined after the flood of weak earnings. The benchmark index edged lower after surging to new highs in three of the last six days of trading. Antofagasta declined after first half earnings fell. Tullow Oil, Premier Oil and Cairn Energy fell on the weak sentiment in the resource stocks.

Stocks in Mumbai edged higher as companies report new export orders. IT and auto sector stocks edged higher. Large order fuels Aban Offshore. Tech Mahindra in demand after new order win. NTPC gains on a likely government support in the natural gas dispute with Reliance Industries.

Australian stocks edged higher as international markets closed up. The positive sentiment was further bolstered by a surge in earnings at Macarthur Coal. Westfield surged after it reported a net loss but guided stable property values and said it does not need additional capital.

North American Markets

Dow Jones Industrial Average increased 4.23 or 0.04% to a close of 9,543.52, S&P 500 Index increased 0.12 or 0.01% to 1,028.12, and Nasdaq Composite Index edged higher 0.20 or 0.01% to close at 2,024.43. Toronto TSX Composite Index decreased 8.36 or 0.08% to 10,912.17.

Of the stocks in S&P 500 index, 245 increased, 245 declined and 10 were unchanged.

SLM Corporation led the decliners in the S&P 500 index with a loss of 4.6% followed by losses in Cummins Inc of 3.9%, in UnitedHealth Group of 3.3%, in Torchmark Corp of 3.1% and in CSX Corp of 3.1%.

Eastman Kodak led gainers in the S&P 500 index with a rise of 20.0% followed by gains in AIG 11%, in Textron Inc of 5.7% and in D R Horton Inc of 5.7%.

South American Markets Indexes

Mexico Bolsa Index increased 207.39 to 28,212.85 Brazil Bovespa Stock Index increased 344.26 or 0.6% to 57,765.69.

Argentina Merval Index decreased 0.09%. Chile Stock Market Select index edged higher 0.1%, Peru Lima General Index edged lower 1.0% and Colombia IGBC General Index fell 0.8%.

Europe Markets Review

In London FTSE 100 Index closed lower 26.22 or 0.53% to 4,890.58, in Paris CAC 40 Index decreased 12.27 or 0.33% to close at 3,668.34 and in Frankfurt DAX index lower 35.12 or 0.63% to close at 5,521.97. In Zurich trading SMI decreased 23.88 or 0.39% to close at 6,176.97.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 142.35 or 1.36% to 10,639.71, Hang Seng index in Hong Kong increased 21.08 or 0.10% to 20,456.32 and CSI 300 index in China higher 62.56 or 2.01% to 3,172.39. ASX 200 index in Australia increased 48.70 or 1.11% to 4,454.50. The FTSE Bursa KL Composite index in Malaysia closed higher 1.47 or 0.13% to 1,172.56.

The Kospi Index in South Korea increased 12.74 or 0.80% to close at 1,614.12. SET index in Thailand closed higher 2.82 or 0.43% to 658.28 and JSE Index in Indonesia decreased 0.43 or 0.02% to 2,380.09. The Sensex index in India increased 81.38 or 0.52% to 15,769.85.

Commodities, Metals, and Currencies

Crude oil decreased $0.64 to close at $71.41 a barrel for a front month contract, natural gas increased 2 cents to $2.80 per mBtu and gasoline decreased 2.70 cents to 198.25 cents.

Wheat futures closed up 8.00 cents in Chicago trading to $5.06 a bushel. Sugar increased 0.45 cent in trading at 22.37 cents a pound. Soybean future closed down 2.50 cent to $9.96 a bushel.

Gold increased $2.70 in New York trading to close at $946.40 per ounce, silver closed up $0.08 to $14.31 per ounce and copper for the front month delivery decreased 7.05 cent to $2.86 per pound.

Dollar edged higher against euro to $1.425 and closed lower against the Japanese yen to 94.20.

Yield on 10-year U.S. bonds was unchanged at 3.43% and with 30-year maturities edged lower to 4.20%.