Late day rally helps US stocks to end modestly higher

Earning data keeps the momentum positive across the market

A late day rally helped US stocks end modestly higher on Wednesday, 04 August 2010. Stocks kicked off the day higher but traded with mild gains throughout most part of the day. Better than expected economic data for the day were the main reasons that helped stocks end higher.



For the day, that ended on Wednesday, 04 August 2010, Dow ended higher by 44.05 points at 10,680.43. Nasdaq ended higher by 20.05 points at 2,303.57. S&P 500 ended higher by 6.78 points at 1,127.74.

Nine out of ten economic sectors ended in the green led by consumer discretionary, materials, and healthcare sectors. Telecom sector was the sole laggard.

Among economic data expected for the day, the July ADP Employment report showed that 42,000 jobs were added to private payrolls last month. The figure was greater than the 25,000 additions that had been widely expected. This led to some positive momentum among stocks since the very start of the day.

In a separate report, Institute for Supply Management's report on the service sector came in higher than expected. The index rose 54.3 in July, from 53.8 in June.

Despite these better than expected reports, stocks couldn't quite extend their advance past the weekly highs. That combined with a negative, automatic response to reports that China's regulators have requested their banks conduct stress tests to account for a 60% decline in residential property prices. Though there was no real leadership to speak of, stocks fought off efforts to take them into the red. They then chopped along with modest gains before gradually climbing into the close.

Among the earning reports scheduled for the day, Priceline.com surged to a 10-year high after its quarterly earnings jumped 72%, easily topping Wall Street forecasts. This gave the consumer discretionary sector a huge boost today. Goldman Sachs raised its target price on the stock, calling Priceline.com one of the best growth stories on the Internet.

Crude oil prices ended their four-day winning streak and ended lower on Wednesday, 04 August 2010. Prices dropped as energy department reported build up in gasoline inventories for last week. A strong dollar also led to drop in prices. On Wednesday, crude oil futures for light sweet crude for September delivery closed at $82.47/barrel (lower by $0.08 or 0.1%). Prices rose to a high of $83.01 during intra day trading.

In the latest weekly inventory report, the EIA report showed a decline of 2.8 million barrels of crude stockpiles for the week ended 30 July. That compares with an expected decline of about 1.2 million barrels. In addition, the EIA reported gasoline stocks rose 700,000 barrels, which compares with expectations for a decline of around 870,000. Stocks of distillates increased 2.2 million barrels, against an expected rise of 1.2 million.

In the currency market on Wednesday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, rose by 0.4%.

Among other energy products on Wednesday, gasoline for September delivery settled 2 cents lower, or 0.8%, to $2.18 a gallon. Heating oil, a distillate, for September delivery settled higher by less than a penny to $2.20 a gallon. Also, on Wednesday, natural gas for September delivery added 10 cents, or 2.1%, to finish at $4.74 per million British thermal units.

Bullion metal prices ended mixed on Wednesday, 04 August 2010 at Comex. Gold prices rose and crossed the $1,200 mark during intra day trading. Silver prices dropped though. Gold for December delivery ended at $1,195.9 an ounce, higher by $8.4 (0.7%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $1,205.6. Prices rose for six consecutive sessions. September Comex silver futures ended lower by 14 cents (0.8%) at $18.28 an ounce.

Barring Tata Motors, all Indian ADRs ended mostly higher on Wednesday. Infosys and Wipro were the main gainers soaring 1.4% and 1.6% respectively. Tata Motors slipped 0.6%.

Tomorrow, the economic data expected for the day are the initial claims and continuing claims data. Other than that, earning reports will continue to pour in.