HSBC earning report gives a huge lift to US stocks

Dow trades with triple digit gains throughout the day

US stocks rallied right out of the gate on Monday, 02 August 2010 and stayed consistently higher throughout the day. Better than expected reports from couple of banks in Europe coupled with stronger than expected economic data at home helped stocks trade with triple digit gains throughout the day. Crude prices and other commodities also shot up with dollar weakening.



For the day, that ended on Monday, 02 August 2010, Dow ended higher by 208.44 points at 10,674.34. Nasdaq ended higher by 40.66 points at 2,295.36. S&P 500 ended higher by 24.26 points at 1,125.86. Dow was trading higher by almost 217 points earlier during the day.

All ten economic sectors ended in the green led by financials, technology and healthcare sectors. Twenty-nine out of thirty Dow components ended higher led by JP Morgan Chase, Bank of America, Intel, Exxon Mobil and Cisco Systems. Wal Mart was the only element to end in the red.

U.S. stocks followed other global markets which closed sharply higher as Asian and European stock markets posted solid gains after strong earnings reports from banking giants HSBC Holdings. Financials strengthened, boosted by upbeat earnings from HSBC and BNP Paribas. Europe's largest bank by market capitalization, jumped 5.2% after the bank's first-half net profit more than doubled to $6.76 billion, as loan impairments and other provisions fell to their lowest level since the start of the financial crisis.

Among the economic reports expected for the day, the Institute for Supply Management in US reported on Monday, 02 August 2010 that its manufacturing index fell to 55.5% in July from 56.2% in June. This was the third decline in succession but the figure was above the expected figure of 55%.

The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last. Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting.

In a separate report, the Commerce Department reported that construction spending was up 0.1% in June. This was also higher than expected. However, spending in May was revised sharply lower to a 1% fall from the prior estimate of a 0.2% drop.

In the energy sector, Exxon Mobil and Chevron rose by 3.8% and 2% respectivelt following higher crude prices. H-P, Intel and Cisco Systems led the rally in the technology sector.

Telecommunications stocks also strengthened as BlackBerry maker Research In Motion's decline boosted rivals. Research In Motion's shares slipped 1% after the United Arab Emirates said it would block the firm's BlackBerry services starting in October because of a dispute over the way the smartphone maker handles electronic data.

In the currency market on Monday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, fell by 0.8%.

Crude oil prices ended substantially higher on Monday, 02 August 2010. A weak dollar coupled with strong rally in US stocks and better than expected economic data led to rise in prices. On Monday, crude oil futures for light sweet crude for September delivery closed at $81.34/barrel (higher by $2.39 or 3%). This was highest close for crude in almost three months time.

Bullion metal prices ended higher on Monday, 02 August 2010 at Comex. Gold for December delivery ended at $1,185.4 an ounce, higher by $1.5 (0.1%) on the New York Mercantile Exchange. Gold had opened in the red, staged a comeback, but swerved in and out positive territory in the later third of the session, lacking a strong reason to go one way or the other. September Comex silver futures ended higher by 42 cents (2.3%) at $18.42 an ounce.

Indian ADRs ended higher on Monday. ICICI Bank and Tata Motors were the main gainers soaring 6.4% and 2.3% respectively. Patni Computers was the sole exception shedding 1.7%.

Tomorrow, the economic data expected for the day are the personal income and spending data. Other than that, earning reports will continue to pour in.