US stocks manage to shake off early weakness

Second quarter GDP data checks in lower than expected

US stocks ended mixed with little changes for the week that ended on Friday, 30 July 2010. Majority of the companies finished announcing their earnings by the end of this week. Though Dow and S&P 500 managed to eke out minor gains, Nasdaq ended with little losses. Economic data also dominated the week. The second quarter GDP reading was the most important economic data for the week, which disappointed on the last day of the week.



For the week, that ended on Friday, 30 July 2010, Dow ended higher by 47.23 points (0.5%) at 10,471.85. Nasdaq ended lower by 9.77 points (0.4%) at 2,259.7. S&P 500 ended higher by 0.68 points (0.1%) at 1,103.34.

For the month of July, Dow ended higher by 7.1%. S&P 500 and Nasdaq both ended higher by 6.9%. The gains have came as a strong set of second-quarter earnings provided a big source of encouragement to investors after they spent much of May and June fretting over the impact of euro-zone debt troubles and China's efforts to put the brakes on its growth.

On Friday, 30 July, 2010 disappointing GDP data had stocks down more than 1% in the early going, but for the second straight session they fought their way higher only to struggle near the neutral line. On that day, the Dow Jones Industrial Average ended lower by 1.22 points at 10,465.94. Nasdaq ended higher by 3.01 points at 2254.07. S&P 500 ended higher by 0.07 points at 1,101.60. Dow was trading lower by 120 points earlier during the day.

At the end, five economic sectors ended higher for the day led by consumer discretionary, healthcare and materials sectors. Utilities, technology and energy sectors remained laggards while financials sector remained unchanged. Boeing and Home Depot led the group of Dow gainers.

Stocks dropped earlier during the day following worse than expected second quarter GDP reading.

The Commerce Department in US reported on Friday that U.S. economy expanded at an annualized rate of 2.4% in the second quarter, but that was a bit below the 2.5% that had been widely expected and down from the first quarter's upwardly revised 3.7% growth rate. It was also well below the average 4.4% increase over the past six months. Additionally, personal consumption for the second quarter increased 1.6% after a 1.9% increase in the first quarter.

But then, stocks successfully worked their way off of their lows with help from a better-than-expected Chicago PMI figure and a higher-than-expected consumer sentiment survey from the University of Michigan. Better-than-expected Chicago PMI figure, which came in at 62.3, and the final July Consumer Sentiment Survey, which was stronger-than-expected at 67.8 helped stocks shed most of their earlier losses.

Among the major earning reports expected for the day on Friday, better-than-expected bottom lines came from Dow component Chevron. On the other hand, Merck's second-quarter earnings fell 52%. Merck's revenue missed expectations, and the company narrowed its 2010 earnings forecast while trimming the top end of its sales view for the year.

In the currency market on Friday, the euro pulled back from the two-month high that it set in the prior session. It finished the session 0.3% lower, but still booked a 6.5% gain for July.

Crude oil prices managed to pare their earlier losses on Friday, 30 July 010 at Nymex and ended higher for the day. Prices rose in tandem with US equities which managed to shed most of their earlier losses in the course of the day and finish near the unchanged mark at the end.

On Friday, crude oil futures for light sweet crude for September delivery closed at $78.95/barrel (higher by $0.59 or 0.8%). For the week, crude ended marginally higher. For the month of July, crude ended higher by 4.5%.

Among other energy products on Friday, reformulated gasoline for September delivery added 2 cents, or 1%, to settle at $2.12 a gallon. Gasoline prices rose 3% in July. Also, on Friday, natural gas for September delivery added 10 cents, or 2%, to settle at $4.92 per million British thermal units. Natural-gas futures had a winning July, hitting a 6.5% gain for the month.

Bullion metal prices ended higher on Friday, 30 July 2010 at Comex. A weaker than expected second quarter GDP report increased the appeal of precious metals as an alternate investment. On Friday, gold for December delivery ended at $1,183.9 an ounce, higher by $12.7 (1.1%) on the New York Mercantile Exchange. For the week, gold ended lower by a mere 0.3%. Gold ended the month of July lower by 5%. It was the worst monthly loss for gold since December 2009. On Friday, September Comex silver futures ended higher by 39 cents (2.2%) at $18 an ounce. For the week, silver ended almost unchanged. For the month of July 2010, silver shed 3.7%.

Indian ADRs ended mixed on Friday. HDFC Bank and MTNL were the main gainers soaring 2.5% and 4.9% respectively. WNS and Tata Motors were the main losers shedding 2.5% and 1% respectively.

For the year, Dow is higher by 0.4%. Nasdaq is lower by 0.4% and S&P 500 is lower by 1.1%. The upcoming week has plenty on the docket. The number of companies reporting second quarter earnings will include big names like Procter & Gamble, Pfizer and Kraft. The biggest report of the week, though, will be deferred until Friday, which is when the July employment report will be released.