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Broadgate: Market News 1/8

1 August 2012

Stocks fell on Tuesday with traders’ sights set again on Wednesday’s Federal Reserve statement on the economy and a possible new round of stimulus.

The Nasdaq Composite, which underperformed on Monday, was the smallest decliner among the three major U.S. stock indexes in Tuesday’s session, thanks in part to Apple shares’ gain of 2.6 percent after a source said a new product will makes its debut at an event in September.

Volume was below average as Wall Street wrapped up its second consecutive positive month, with most of the monthly gains accumulated last week on hopes for more action from both the Fed and the European Central Bank. The ECB will meet on Thursday.

“Markets seem to be moving on talk, but I don’t think that’s going to be enough in the next few days,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto. “I think the market risks being disappointed in terms of substance.”

Coach slid 18.6 percent to $49.33 after the upscale handbag and leather goods maker reported lower-than-expected fourth-quarter sales. That drop was the worst single-day percentage drop for Coach’s stock since September 17, 2001, which was the first trading day after the September 11 attacks on the World Trade Center and the Pentagon. Coach was the S&P 500’s biggest loser in Tuesday’s session.

For the month of July, the Dow rose 1 percent, while the S&P 500 climbed 1.3 percent and the Nasdaq added 0.2 percent. After seven months, the S&P 500 has gained nearly 10 percent for the year, despite a slowing world economy.

In Tuesday’s session, the Dow Jones industrial average fell 64.33 points, or 0.49 percent, to 13,008.68 at the close. The S&P 500 Index dropped 5.98 points, or 0.43 percent, to 1,379.32. The Nasdaq Composite lost 6.32 points, or 0.21 percent, to 2,939.52.

About 6.5 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, below the 2012 daily average of 6.74 billion through Monday’s close.

Roughly seven issues fell for every five that rose on both the New York Stock Exchange and the Nasdaq.

Cirrus Logic was also one of the Nasdaq’s top gainers a day after the maker of integrated circuits posted a better-than-expected quarterly profit. Its shares shot up 23.2 percent to close at $36.77.

Facebook shares slid 6.2 percent to $21.71, their third consecutive record closing low, after a lackluster quarterly report last week showed decelerating user growth.

Pfizer Inc stock rose 1.4 percent to $24.04 after earlier hitting $24.48, its highest level since December 2007. The largest U.S. drugmaker reported higher-than-expected quarterly earnings and affirmed its 2012 profit forecast.

According to Thomson Reuters data through Tuesday morning, of the 321 companies in the S&P 500 that have reported second-quarter earnings to date, 67.3 percent have reported earnings above analysts’ expectations. Over the past four quarters, the average beat rate is 68 percent.

U.S. home prices rose for the fourth month in a row in May, suggesting the housing market’s recovery kept gaining traction, even as the broader economy is still struggling. Other data showed consumer confidence unexpectedly rose in July but spending fell in June for the first time in nearly a year as Americans saved more.

Commodities

Brent crude slipped toward $104 per barrel on Wednesday after softer official manufacturing data from top energy consumer China chipped away at a fragile market sentiment, while fading hopes for U.S. stimulus measures also weighed on prices.

Brent crude fell 51 cents to $104.41 a barrel by 0440 GMT, recovering from an earlier drop to a near one-week low of $104.06. U.S. crude dipped 24 cents to $87.82 per barrel, up from a low of $87.51 hit earlier in the session.

Gold was locked in a tight range on Wednesday, as investors watched the U.S. Federal Reserve and the European Central Bank, whose monetary policy decisions could determine the direction of markets.

Spot gold was little changed at $1,613.96 an ounce by 0340 GMT, after finishing July up nearly 1 percent — its second straight month of gains.

U.S. gold futures contract for December delivery edged up 0.4 percent to $1,617.40.

Currencies

The dollar dipped to a two-month low against the Japanese yen on Wednesday after China’s official manufacturing data poured water on hopes increased policy support may be helping to stem a slowdown in the world’s second-largest economy.

The dollar fell to as low as 77.90 yen, its lowest in two months, and last stood at 77.99 yen, down 0.2 percent, while the euro fell 0.3 percent to 95.85 yen.

The euro fell 0.1 percent against the dollar to $1.2297 , down almost a full cent from its three-week high of $1.2390 hit last week.

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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