US stocks end modestly lower

Mixed earning and economic reports weigh on stocks

US stocks ended modestly lower on Tuesday, 03 August 2010. Stocks kicked off the day the day in the red, continued to stay somber following disappointing earning reports, and mixed batch of economic data. The July auto sales that were released today also failed to cheer investors.



For the day, that ended on Tuesday, 03 August 2010, Dow ended lower by 38 points at 10,636.34. Nasdaq ended lower by 11.84 points at 2,283.52. S&P 500 ended lower by 5.4 points at 1,120.46. Dow was trading lower by almost 42 points earlier during the day.

Eight out of ten economic sectors ended in the red led by financials, materials, and consumer discretionary sectors. Healthcare and energy sectors were the ones to end higher.

Among economic data expected for the day, the Commerce Department in US reported on Tuesday, 03 August 2010 that the savings rate among U.S. households rose to the highest level in a year in June as income and spending were flat. Income was unchanged in June, failing to show growth for the first month since July 2009. Consumer spending was also flat. Personal savings rate rose to 6.4% in June, the highest level in a year. The June report was slightly weaker than expected and included downward revisions to figures from April and May. Market had been looking for June income to rise by 0.2%, with spending pegged to increase 0.1%.

In a separate report, the Commerce Department in US reported on Tuesday, 03 August 2010 that factory orders decreased 1.2% in June 2010. It was much lower than market expectation of a decrease of 0.5%. Orders for durable goods fell 1.2% in June, revised down from 1.0% estimated a week ago. Orders for nondurable goods fell 1.3% in June. Orders fell a revised 1.8% in May, down from the prior estimate of a 1.4% drop.

Also, the pending sales index of existing U.S. homes fell 2.6% to 75.7 in June, partly reflecting the end of a federal tax credit for first-time buyers of up to $8,000. The pending sales index totaled 77.7 in May and 110.9 in April, when buyers sought to take advantage of the tax credit. The index's current level is 18.6% below June 2009, when it stood at 93.

Among the earning reports scheduled for the day, Dow Chemical swung to a smaller-than-expected second-quarter profit as revenue increased less than expected. Procter & Gamble came out with an earnings miss after the consumer-products maker's results were nicked by lower prices and sales grew less than the company had projected. However, health-care stocks climbed, boosted by Pfizer after the drug maker posted a 9.5% increase in second-quarter earnings, with adjusted earnings and revenue topping estimates.

Automakers were out with their latest monthly sales figures. Ford Motor announced that sales for July increased 5% year-over-year. Honda Motor had a near 6% year-over-year decline in American sales, while Toyota Motor reported a near 7% year-over-year decline in July sales.

In the currency market on Tuesday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, fell by 0.3%.

Crude oil prices ended substantially higher on Tuesday, 03 August 2010. A weak dollar coupled with mixed economic data led to rise in prices. On Tuesday, crude oil futures for light sweet crude for September delivery closed at $82.55/barrel (higher by $1.21 or 1.5%). This was highest close for crude in almost three months time.

Among other energy products on Tuesday, reformulated gasoline for September delivery rose 3 cents, or 1.2%, to settle at $2.19 a gallon. Also, on Tuesday, natural gas reversed direction to close lower, with the September contract declining 6 cents, or 1.3%, to $4.64 per million British thermal units.

Bullion metal prices ended higher on Tuesday, 03 August 2010 at Comex. Gold for December delivery ended at $1,187.5 an ounce, higher by $2.1 (0.2%) on the New York Mercantile Exchange. Prices rose for five consecutive sessions. September Comex silver futures ended higher by 2 cents (0.03%) at $18.42 an ounce.

Indian ADRs ended mostly higher on Tuesday. Infosys and Wipro were the main gainers soaring 2.1% and 0.9% respectively. HDFC Bank and Patni Computers slipped 2.3% each.

Tomorrow, the economic data expected for the day is the ADP Employment report. Other than that, earning reports will continue to pour in.