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Broadgate: Market News 26/7

26 July 2012

The S&P 500 fell for a fourth day and the Nasdaq dropped on Wednesday after a rare earnings stumble from Apple, while strong results from Boeing and Caterpillar lifted the Dow.

Apple Inc, the most valuable U.S. company by market capitalization, reported sales late on Tuesday that fell short of Wall Street’s expectations as the European economy sagged and consumers held off buying iPhones before a new version expected in the autumn.

Shares fell 4.3 percent to $574.97. Without Apple’s losses, the S&P would have ended higher.

The price-weighted Dow industrials managed gains thanks to Caterpillar and Boeing. Caterpillar rose 1.4 percent to $82.60 after its quarterly profit easily beat Wall Street’s expectations.

The world’s largest maker of construction machines also raised its 2012 forecast.

“Expectations have been very low and this is a huge positive for the market,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Hope that the Federal Reserve will act soon to provide more stimulus to the economy also supported stocks. A report in The Wall Street Journal on Tuesday said Fed officials may be moving closer to taking more steps to aid the flagging economy.

Because of those expectations “bank stocks are performing relatively well,” said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas. The KBW bank index was up 0.5 percent.

The Dow Jones industrial average rose 58.73 points, or 0.47 percent, at 12,676.05. The Standard & Poor’s 500 Index was down 0.42 point, or 0.03 percent, at 1,337.89. The Nasdaq Composite Index was down 8.75 points, or 0.31 percent, at 2,854.24.

Housing stocks ranked among the worst performers on data for June showed the biggest drop in U.S. single-family home sales in more than a year. The PHLX housing sector index tumbled 3 percent, pulled lower by a 3.7 percent drop in D.R. Horton shares to $17.98.

The S&P 500 once again tested its 50-day moving average around 1,332. The benchmark index broke through that level on Tuesday but rebounded above it after reports the Fed was likely to provide more stimulus.

Boeing also helped the Dow when it reported a larger-than-expected increase in second-quarter profit and raised its full-year earnings forecast. The company said rising airplane deliveries offset higher pension costs. Boeing’s stock gained 2.8 percent to $74.03.

Sixty-three percent of S&P 500 companies have surpassed earnings expectations so far, just a touch above the 62 percent long-term average, Thomson Reuters data showed.

Ford Motor Co reported a better-than-expected second-quarter profit but roughly doubled its forecast for losses in Europe where a deepening economic crisis pushed the auto industry’s sales to their lowest level in nearly 20 years. Ford shares edged down 1 percent to $8.97.

After the closing bell, shares of Internet company Zynga, a game publisher, dropped 37.6 percent to $3.17. The company cut its 2012 earnings outlook and reported results below expectations. Shares of Facebook, which relies on Zynga for some 15 percent of its revenue, fell 7.5 percent to $27.15.

Shares of Visa rose 1.1 percent to $123.58 in extended-hours trading after the credit card company reported an adjusted profit that topped Wall Street estimates and raised its full-year earnings forecast for the second time this year.

Volume was about 6.43 billion shares on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.74 billion shares.

Advancers beat decliners on the NYSE by about 16 to 13 and on the Nasdaq by about 7 to 5.

Commodities

Brent hovered above $104 per barrel on Thursday, with investors anticipating more U.S. stimulus measures to support growth and on fears that tensions in the Middle East could escalate causing supply concerns.

Brent crude had slipped 24 cents to $104.14 per barrel by 10.55 a.m. EDT, while U.S. crude was down 24 cents at $88.73.

Gold struggled to extend gains from the previous session and stood steady above $1,600 an ounce on Thursday, as investors pondered the possibility of more stimulus measures from central banks to revive a flagging global economy.

Spot gold was flat at $1,603.81 an ounce by 0326 GMT, after rallying nearly 1.5 percent to $1,609.91 on Wednesday.

U.S. gold futures contract for August delivery lost 0.3 percent to $1,603.

Currencies

The euro gave back some gains on Thursday from a short-covering rally the previous day, as persistent worries about Spain’s debt woes cloud the outlook for the single currency.

The euro dipped 0.2 percent to $1.2134, but stayed above a two-year low of $1.2042 hit on trading platform EBS earlier this week.

The dollar eased 0.1 percent to 78.11 yen, hovering near a seven-week low of 77.94 yen set this 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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