Mixed economic data help stocks to end higher after volatile session
Investors digested mixed economic data and US stocks closed modestly higher today, Thursday, 6 September, 2007. Of the nine sectors finishing in positive territory, utilities turned in the best performance followed by the materials sector. The financial sector was the only sector that failed to participate in today's recovery.
Federal Reserve again added $31.25 bln of temporary reserves to banking system in three installments. But U.S commercial paper market shrinking for 4th week and another report from Mortage Bankers Association related to subprime issues led to some volatility in stocks.
The Dow Jones industrial Average closed higher by 57.88 points at 13,363.35. The Nasdaq Composite Index, finished up by 8.37 points at 2,614.32. S&P 500 finished up by 6.26 points at 1,478.55.
Twenty-two out of thirty Dow stocks ended in green today. United Technologies, Honeywell, Merck, CoCo Cola and 3M led the group of Dow winners. Home-Depot, AIG, Altria, Citigroup and Du Pont led the group of Dow laggards.
Merck shares were today up by more than 2% after the company won a case before the New Jersey Supreme Court. The court reversed a lower-court ruling that had granted nationwide class-action status to insurers seeking reimbursement for past spending on Merck's arthritis drug Vioxx.
Wal-Mart, Target reports encouraging same-store sales data
Stocks got a good boost right out of the gate in the morning after Wal-Mart reported better than expected August same-store sales growth of 3.1%. Target too said same-store sales rose 6.1% during the month. The report garnered notable attention mainly after Costco, yesterday, reported drop in same store sales for August.
The Institute for Supply Management index for August was released today. The ISM employment index dropped to 47.9% from 51.7%, the lowest since February 2003 and the first decline in hiring since July 2004. Only three of 18 industries were hiring; eight industries were reducing their workforce.
But the survey said that despite the caution in hiring, most firms were growing at a steady pace in August, with strong gains in new orders. The ISM non-manufacturing (service) index was unchanged at 55.8% in August, slightly stronger than the 55.0% expected.
Indian ADRs close mixed
The Labour Department reported today that the number of U.S. workers applying for jobless benefits saw its biggest drop last week since April. The first-time claims for state unemployment benefits fell by 19,000 to 318,000 for the week ending 1 Sept, the first such drop after five straight weeks of increases.
Top of the hour, the Mortgage Bankers Association said that quarterly foreclosures rose to their third consecutive record high during the second quarter. The same also affected the Financial sector today.
Indian ADRs closed mixed today. VSNL and HDFC Bank were the two top most gainers gaining 3.9% and 3.2% respectively. MTNL and Tata Motors followed them with gains of 3% and 2.8% respectively.
Crude crosses $77 during intra day trading
Crude oil future prices rose today after the weekly Energy Department report showed that U.S. oil and gasoline inventories declined more than expected last week. Renewed violence in the Middle East also contributed support to oil prices.
For the day ending Monday, 6 September, 2007, crude-oil futures for light sweet crude for October delivery closed at $76.3/barrel (higher by $0.57/barrel or 0.75%) on the New York Mercantile Exchange. The contract had touched $77.23 ahead of the supply data's release. Prices are up 13% from a year ago.
Over 1.2 billion shares were traded on the New York Stock Exchange, with advancing stocks outpacing decliners 5 to 3. At the Nasdaq, more than 1.8 billion shares exchanged hands and advancers beat decliners 4 to 3.
For tomorrow, traders’ attention will be focused on economic data to help set the tone of trading. The Labor Dept. will release its August employment report at 8:30 ET. Also garnering attention will be July Wholesale Inventories, which is expected to hit the wires at 10:00 ET.