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Market Commentary - July 28
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Jul 28, 2010

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Larry Swing

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DJIA Industrial Average

 

July 27

 

Open: 10525.28

 

High: 10578.33

Low: 10494.86

 

Close: 10537.69

Change: 12.26 (0.12%)

RSI: 48

MACD (Delta): -0.33

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Strategy: The US stocks closed Tuesday with nominal gains after a rally was initially prompted by better than expected earnings from a couple of blue chips. The fall in consumer confidence led to a subsequent profit taking in the US markets. The stocks are willing to move higher from these levels, if the remaining Q2 earning from majors beat the expectations.

Commentary

Stocks lost steam in the second half of the day, after a big drop in consumer confidence offset better-than-expected profit growth from DuPont, UBS and others. After a positive start to Tuesday, technology and consumer stocks were hit the most after the release of economic data on CCI.

The Dow Jones industrial average added 12 points, or 0.1%. The S&P 500  lost just over 1 point. The Nasdaq composite lost 8 points, or 0.4%.

BP posted a huge quarterly loss of $17.2 billion due to costs connected to the Gulf of Mexico oil spill. The company also said that British CEO Tony Hayward will be replaced by American Robert Dudley Oct. 1. BP  shares fell 1.7%.

Dow component DuPont reported higher quarterly sales and earnings that beat the estimates, due to higher prices and increased demand. The chemical maker boost its earnings forecast for the year. Shares gained 3.6%.

However, an earnings miss by U.S. Steel sent its shares to their worst loss of over 4.1% in more than a month. The slide was exacerbated by profit taking, given that the stock had climbed more than 30% from its July low.

17 out of the 30 Dow constituents gained in the session, although the advances were not huge. The other 13 stock shed some weight in the day, and main laggards were American Express, Caterpillar, Cisco, Home Depot and McDonad’s.  The advances were mainly led by AT&T, Chevron and Du Pont.

Advancing Sectors included Utilities (+1.6%), Consumer Staples (+0.4%), Telecom (+0.4%), Financials (+0.1%), Tech (+0.1%).

Retailers traded with outsized losses for almost the entire session. The group dropped 1.9%.

According to the economic data released on Tuesday, the consumer confidence released for July fell to 50.4 from a revised 54.3 in June. A decline was expected by economists, but the extent of same was not that much. The much lower consumer confidence gives an account of the weaker weak outlook for consumer spending in the coming season and caused stocks to erase early gains.

However, the Case-Shiller 20-city home price index rose 1.3% in May vs April and up 4.6% from a year earlier, suggesting that home pricing had started to stabilize.

The euro fell against the dollar, while the U.S. currency gained versus the Japanese yen.

U.S. light crude oil for September delivery settled down $1.48 to $77.50 a barrel on the New York Mercantile Exchange.

COMEX gold's August contract fell $25.10 to $1,158 per ounce.

The Day Ahead

 

Wednesday

EIA Petroleum Status Report

Durable goods order for June

 

 


...thanks for the trust you've shown in me and my business.

by Larry Swing
larry@mrswing.com
May the swing be with you...

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