US stocks manage a turnaround

Defensive oriented stocks help stocks pare losses

US stocks managed to make a late comeback and end in a mixed mode on Monday, 06 July, 2009. Stocks started the day in the red since early morning as economic uncertainty pushed oil prices and market considerably lower on Monday. The consumer staples and utility sectors tried to hold back stocks as much as possible.

The Institute of Supply Management Services index report checked in line with expectations but it showed that all is not that good in the US economy till now. Leadership from defensive-oriented stocks helped the stock market gradually pare its losses. Dow and S&P 500 managed to end in the green. Nasdaq was the only index to end in the red.

The Dow Jones Industrial Average ended higher by 44 points at 8,324. The Nasdaq Composite Index, ended lower by 9 points at 1,787. S&P 500 ended higher by 2.6 points at 898.

Alcoa, Boeing, Bank of America, Chevron and Exxon Mobil were the main Dow laggards today. Merck, American Express, P&G and Johnson & Johnson were the main Dow winners.

Nine of the ten sectors ended in the green today. Technology sector was the only laggard. Google, Apple and Microsoft were the main losers in the technology sector.

Telecom sector gained today despite reports that the Department of Justice has begun a review to determine whether telecom giants like AT&T and Verizon abused their market power in recent years

The Institute for Supply Management reported on Monday, 06 July, 2009 that the the service sectors of the U.S. economy contracted again during June but at a slower pace. The ISM nonmanufacturing index rose to 47% from 44% in May. This is the highest level since last September.

Readings below 50% in the diffusion index indicate more firms are contracting than expanding. The index has been below 50% for the past nine months, but it has been improving since hitting a record low in November. In June, six industries reported growth, while eleven reported contraction.

The new-orders index rose to 48.6% from 44.4% in May, while the employment index also increased, climbing to 43.4% for June from 39.0% the prior month. The prices-paid index rose to 53.7% in June from 46.9% in the previous month.

Crude prices fell substantially lower at Nymex on Monday, 06 July, 2009. Prices fell on worries about the timing of global recovery from the current recession and strong dollar. Crude prices dropped to six week lows today. On Monday, crude-oil futures for light sweet crude for August delivery closed at $63.05/barrel (lower by $2.68 or 4%). Last week, crude ended lower by 3.5%.

In the currency market on Monday, the dollar index, a six-currency measure of the greenback's value rose considerably. The index rose on speculation that leaders from the Group of Eight nations will make efforts later this week to shore up the greenback. The dollar index dropped by 6.4% in the second quarter and is higher by almost 0.5% on a y-t-d basis.

There are no major announcements scheduled in the US market for tomorrow. Alcoa is scheduled to report its latest quarterly results after Wednesday's closing bell. The announcement marks the unofficial beginning of the second quarter earnings reporting season.