Good gains at Wall Street

Encouraging earning reports and merger news keep the momentum going

US stocks ended substantially higher on Tuesday, 17 August 2010. Dow ended its five-day losing streak boosted by stronger than expected earning reports from a couple of key Dow components. Economic data for the day checked in mixed in nature. Spate of news in the merger and acquisition area kept the momentum ongoing since the very start of the day.



For the day, that ended on Tuesday, 17 August 2010, Dow ended higher by 103.84 points at 10,403.85. Nasdaq ended higher by 27.57 points at 2,209.44. S&P 500 ended higher by 13.16 points at 1,092.54. Dow was trading higher by 160 points earlier during the day.

All ten economic sectors ended higher led by materials, industrial, and energy sectors. Twenty-seven of thirty Dow components ended higher led by Home Depot and Wal Mart. Kraft led the pack of three Dow decliners.

The advance among US stocks was helped along by news that BHP Billiton proposed to acquire Potash for $130 per share in a $39 billion deal. Potash refused the offer though.

Among economic data expected for the day, data showed that housing starts for July increased 1.7% month-over-month to an annualized rate of 546,000 units, which is less than the rate of 555,000 units that had been widely anticipated. Building permits for July fell 3.1% month-over-month to an annualized rate of 565,000, which is below the rate of 573,000 that had been expected.

Separately, Producer Price Index (PPI) for July checked in line with expectations, but core PPI was a bit hotter than expected. Housing prices and building permits for July was both lower than expected. The Labor Department reported wholesale prices climbed in July on increased costs of food, cars and light trucks. But core prices, which exclude food and energy costs, rose 0.3%, signaling that inflation remains subdued. Also, industrial production for July increased 1%, which was more than the expected increase of 0.6%.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.5%. The dollar index dropped mainly due to the bounce by the euro.

Among earning data expected for the day, Dow component Wal-Mart reported in-line earnings for its latest quarter and raised the midpoint of its forecast, while fellow blue chip Home Depot bested earnings expectations and issued a mixed forecast.

Crude prices rose for first time in seven sessions on Tuesday, 17 August 2010. Prices rose in tandem with US stocks. Lower dollar also aided in rising crude prices. On Tuesday, crude oil futures for light sweet crude for September delivery closed at $75.77/barrel (higher by $0.53 or 0.7%). Last week, crude ended lower by 6.7%.

On Tuesday, gasoline, was a top gainer among energy products. The September contract rose 3 cents, or 1.5%, to settle at $1.95 a gallon. Meanwhile, natural-gas futures recouped some of their recent losses, with the September contract rising 4 cents, or 0.9%, to $4.27 per million British thermal units.

Bullion metal prices ended marginally higher on Tuesday, 17 August 2010 at Comex. Prices rose due to weak dollar. Gold for December delivery ended at $1,228.3 an ounce, higher by $2.1 (0.2%) on the New York Mercantile Exchange. September Comex silver futures ended higher by 16 cents (0.7%) at $18.59 an ounce.

Indian ADRs ended mixed on Tuesday. VSNL and Tata Motors were the main gainers soaring 5.3% and 3.6% respectively. WNS and Dr Reddys were the main losers shedding 3% and 0.6% respectively.

For tomorrow, no economic data are expected. But earning reports will continue to trickle in.