US stocks extend first half yearly gains

Economic reports dominate the day

US stocks extended second quarter gains to the very first day of the new quarter on Wednesday, 01 July, 2009. Stocks traded in the green for the entire day. But it pared some of its gains in the later part of the day. Economic reports dominated the day. Reports showing that contraction in US manufacturing slowed down for the first time in ten months gave investors some reason to cheer about since early trade.

The Dow Jones Industrial Average ended higher by 57 points at 8,504. The Nasdaq Composite Index, ended higher by 11 points at 1,845. S&P 500 ended higher by 4 points at 923.3. During session highs, Dow was up by 124 points.

Eight of the ten sectors registered gains led by consumer staples and utilities sectors.

The consumer staples sector was a strong performer today due to General Mills. Better-than-expected earnings and an upbeat forecast earned shares of GIS their best single-session advance today and also pushed up the sector considerably higher.

The Institute for Supply Management reported on Wednesday, 01 July, 2009 that USA's manufacturing firms contracted at a slower pace in June, 2009. The report stated that the ISM index rose to 44.8% in June below the 45.6% expected by but higher than the 42.8% reading in May. It's the highest reading since last August. Seven of eighteen industries grew in June, led by petroleum, chemicals, plastics, and food.

The ISM bottomed at a 28-year low of 32.9% in December, and has been marching higher steadily since.

Among other reports, construction spending for May decreased 0.9% month-over-month. It was expected to slip 0.6%. Spending in April was revised lower to reflect a 0.6% increase. Also, pending home sales in May increased 0.1% month-over-month. They were expected to be flat after spiking the month before. April pending home sales were revised higher to reflect a 7.1% monthly increase.

In a separate report, the ADP employment report stated on Wednesday, 01 July, 2009 that companies in the U.S. private sector shed 473,000 jobs in June,2009. The report comes one day before the Labor Department reports on changes in the nation's nonfarm payrolls for June. Employment in the service-providing sector in June fell by 223,000. The goods-producing sector declined 250,000, and employment in factories dropped 146,000. Employment in manufacturing has declined for 40 straight months. Large businesses saw employment fall by 91,000. Medium-sized firms declined 205,000, and small firms dropped 177,000.

Barring Sify and Wipro Technologies, all Indian ADRs ended in the green today. ICICI Bank and Tata Motors were the main winners today gaining 4.2% and 3.9% respectively.

Crude prices reversed early gains and ended lower at Nymex on Wednesday, 01 July, 2009. Prices fell today as energy department reported buildup in crude inventories for last week for the first time in five weeks.

On Wednesday, crude-oil futures for light sweet crude for August delivery closed at $69.31/barrel (lower by $0.58 or 0.8%). During intra day trading, crude rose to a high of $71.85/barrel before the release of the report.

In the currency market on Wednesday, the dollar index, a six-currency measure of the greenback's value, rose, fell by almost 0.7% on reports that U.S. private sector shed 473,000 jobs in June,2009. The report comes one day before the Labor Department reports on changes in the nation's nonfarm payrolls for June. As per the report, employment in the service-providing sector in June fell by 223,000. The goods-producing sector declined 250,000, and employment in factories dropped 146,000. The dollar index dropped by 6.4% in the second quarter and is lower by 1.5% on a y-t-d basis.

Tomorrow will again be a day heavy in economic data. The June employment and weekly jobless claims reports are due at 8:30ET. Factory Orders for May will be released at 10:00ET.