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Broadgate: Market News 14/8

14 August 2013

Stocks rose on Tuesday after strong economic data including retail sales, while Apple boosted the Nasdaq after billionaire investor Carl Icahn revealed a long position in the stock.

Rising U.S. retail sales in July, combined with a higher ZEW German sentiment index and euro zone industrial production, painted a rosier picture of the global economy. The data pushed U.S. Treasury yields higher and homebuilder stocks fell in anticipation of higher mortgage rates.

All but one of the 19 components of the PHLX housing index fell, with Ryland Group down 5 percent to $36.04.

Atlanta Fed President Dennis Lockhart said the U.S. central bank could begin reducing its bond-buying stimulus as early as its September meeting, but data has been too mixed to outline a detailed exit strategy from stimulus.

The day’s moves were “a reflection of the better economic data and a growing acceptance by the market that the Fed is going to scale back purchases sooner rather than later,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

Investors have been closely watching for clues about when, and by how much, the Fed will begin to wind down its $85 billion a month in asset purchases, which have helped lift the S&P 500 to a record high while keeping interest rates low.

The Dow Jones industrial average rose 31.33 points or 0.2 percent, to 15,451.01, the S&P 500 gained 4.69 points or 0.28 percent, to 1,694.16 and the Nasdaq Composite added 14.492 points or 0.39 percent, to 3,684.443.

Apple shares shot up 4.8 percent to $489.57, their highest since late January, after activist investor Carl Icahn said via Twitter he has built a “large position” in the stock and had a “nice conversation” with Apple CEO Tim Cook about a larger stock buyback.

Share volume in Apple was near 3 times its recent daily average, as was overall option volume.

US Airways shares lost 13.1 percent to $16.36 after the Justice Department filed an antitrust lawsuit to block its merger with American Airlines parent AMR Corp. Shares of Delta Airlines fell 7.1 percent to $19.55 and United Continental dropped 7.5 percent to $31.11.

J.C. Penney shares fell 3.7 percent to $12.68 after initially rising on news activist investor William Ackman had resigned from its board.

Shares of travel website Orbitz were down 13.1 percent to $10.20 after one of its largest investors, PAR Capital Management, said it sold 8.1 million of its 24.6 million-share stake in the company.

Yum Brands Inc fell 2 percent to $72.97, a day after the fast food chain operator said China sales slid 13 percent in July.

Eli Lilly and Co rose 2.6 percent to $54.96 after it said its experimental lung cancer drug increased survival in a late-stage trial.

About 5.6 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.3 billion shares.

On the NYSE, roughly three issues fell for every two that rose and on Nasdaq decliners and advancers were roughly even on the day.

Source:  Reuters.com

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