Economic data keep US stocks steady

Stocks register little losses for the week

US stocks ended with little losses for the week that ended on Friday, 01 October 2010. Corporate news was light and economic data came in mixed, with an upside surprise to consumer spending and disappointing consumer sentiment reading. The last day of the week, registered modest gains though.



For the week, that ended on October, 01 October 2010, Dow ended lower by 30.58 points (0.3%) at 10,829.68. Nasdaq ended lower by 10.47 points (0.4%) at 2,370.75. S&P 500 ended lower by 2.43 points (0.2%) at 1,146.24.

Seven out of ten economic sectors ended lower led by consumer discretionary sector and financial sector. Energy sector outperformed with crude prices galloping to register healthy weekly gains.

During the week, H-P said revenue for the fiscal year would be between $131.5 billion and $133.5 billion, a range that compared favorably with the consensus forecast of $131.6 billion. Walgreen outperformed after it reported better-than-expected earnings on strong prescription drug sales.

Among economic data expected for the week, the third estimate on second quarter GDP, showed an annualized growth rate of 1.7%, up from 1.6%, and a 2.2% increase in personal consumption, up from the 2.0% that had been previously reported. Initial jobless claims for the week ending 25 September totaled 453,000, surpassing expectations. The latest tally is down 16,000 week-over-week. Continuing claims fell 83,000 week-over-week to 4.46 million.

In M&A news, Southwest Airlines reportedly will acquire Air Tran Holdings for $7.69 per share, a 69% premium over AAI's closing price from Friday. Alberto-Culver also made merger and acquisition news with word that Unilever will acquire it for $37 per share, which represents a premium of about 17% over its closing price from the previous week.

On Friday, 01 October 2010, stocks ended the day with modest gains. Despite a large dose of generally upbeat data, stocks only managed to muster modest gains in the first session of the fourth quarter. Nine out of ten economic sectors ended higher led by energy, materials, and financial sectors. Technology sector was the sole loser.

On that day, the Dow Jones Industrial Average ended higher by 41.63 points at 10,829.68. Nasdaq ended higher by 2.13 points at 2370.75. S&P 500 ended higher by 5.04 points at 1,146.24.

An industry survey released on Friday, 01 October 2010 showed that business at the nation's manufacturers was still expanding in September, but activity tapered off and signs pointed to a further slowdown in the final three months of 2010. The Institute for Supply Management said its index of factory activity fell to 54.4% in September from 56.3% in August. ISM was expected to decline to 54.0%. Readings over 50% indicate that more firms are growing than contracting.

The Reuters/University of Michigan's final gauge of consumer sentiment was upwardly revised to 68.2 in September from an initial reading of 66.6, beating expectations of 67.2.

Additionally, the Commerce Department reported on Friday, 01 October 2010 that incomes grew faster than spending in August 2010, pushing up the nation's personal savings rate. As per the report, real consumer spending increased by a seasonally adjusted 0.2% for a second straight month. In nominal terms, income rose 0.5% in August, after a 0.2% gain in July. Nominal spending rose 0.4% in August for the second straight month. Real after-tax incomes rose 0.2% in August, after falling 0.2% in July. With income rising faster than spending, the personal savings rate rose to 5.8% of disposable income from 5.7% in July.

Construction spending proved pleasing. It increased 0.4% in August after a 1.4% drop in the prior month. A 0.5% decrease had been widely anticipated.

Stocks slid following the release of the data and spent the rest of the morning and early afternoon struggling to find direction. Some light afternoon buying helped the major averages muster modest gains, though.

In the commodities market, Nov crude oil finished 2.2% higher at $81.58 per barrel. It rallied for over 6.6% on the week, marking its best weekly advance since mid February. Global economic data helped crude oil extend its recent rally to a seventh consecutive session and to its best levels in seven weeks. Nov natural gas finished lower by 2% to $3.80 per MMBtu, marking its second straight day of losses.

The continuous gold contract traded to a new all-time high, at $1320.00 per ounce, in mid morning trade, while the continuous silver contract notched a fresh 30 yr high at $22.17 per ounce. Dec gold ended higher by 0.6% to $1317.80 per ounce while Dec silver finished up 1.2% to $22.06 per ounce.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies dropped by 0.7%. The dollar dropped as traders mulled over the fact that Federal Reserve might pump more money into the system. The dollar index shed 1.7% for the week.

Indian ADRs ended mostly higher on Friday. Wipro Technologies and Infosys were the main gainers soaring 8.2% and 4.8% respectively.

For the year, Dow is higher by 3.9%. Nasdaq is higher by 4.5% and S&P 500 is higher by 2.8%.