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Broadgate: Market News 31/7

31 July 2012

Stocks finished mostly flat on Monday as investors paused following the best two-day run this year, with central bank meetings and a full load of U.S. economic data looming.

Traders have bet that the Federal Reserve and the European Central Bank will suggest further action to stimulate their economies is on the way when each meets later this week.

The sectors least sensitive to economic growth – telecoms, consumer staples and utilities – posted healthy gains, suggesting a cautious move to defensive plays.

Blue chips like Wal-Mart Stores and AT&T hit new 52-week highs. Wal-Mart rose 0.6 percent to end at $74.98 after hitting $75.24 earlier. AT&T added 0.8 percent to close at $37.43 after hitting $37.69.

Last week, a strong statement from ECB President Mario Draghi drove the Dow above 13,000 for the first time since early May, and gave the S&P 500 its biggest two-day rally since December.

“With all that news later in the week and after the big run, I think there’s probably a little bit of hesitation to run ahead of these numbers,” said Janna Sampson, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

The Fed begins a two-day meeting on Tuesday while the ECB will meet on Thursday. The U.S. economic calendar is heavy this week, including Friday’s payrolls report for July.

The Nasdaq Composite underperformed the other major indexes, weighed down by a 5.9 percent drop in shares of Citrix Systems and a 1 percent fall in Intel.

The Dow Jones industrial average dipped 2.65 points, or 0.02 percent, to 13,073.01 at the close. The Standard & Poor’s 500 Index edged down just 0.67 of a point, or 0.05 percent, to 1,385.30. The Nasdaq Composite Index fell 12.25 points, or 0.41 percent, to end at 2,945.84.

About 5.5 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the Amex – 18.5 percent below the year-to-date daily average of 6.75 billion shares through last Friday.

On the NYSE, decliners slightly outnumbered advancers by 1,520 to 1,460. On the Nasdaq, 1,586 issues fell while 883 shares rose.

Apple Inc climbed 1.7 percent to $595.03. Jury selection began on Monday in a high-stakes patent battle between the iPad maker and Samsung Electronics, the culmination of over a year of pre-trial jousting with billions of dollars in the balance.

According to Thomson Reuters data, of the 294 companies in the S&P 500 that have reported second-quarter earnings to date, 67 percent have posted earnings above analysts’ expectations. Over the past four quarters, the average is a 68 percent beat rate.

Shaw Group surged 55.5 percent to $41.49 after the engineering company agreed to be acquired by Chicago Bridge & Iron Co for about $3 billion in cash and stock.

Progenics Pharmaceuticals Inc plunged 50.1 percent to $5.39 and Salix Pharmaceuticals Ltd tumbled 13 percent to $46.25 after the U.S. Food and Drug Administration declined to approve wider use of one of their drugs and asked for more data.

Commodities

Brent crude oil fell to near $106 per barrel on Monday as worries that expected stimulus from the United States and Europe may not be enough to lift their slowing economies overshadowed signs of lower production from OPEC in July.

Brent crude for September delivery traded in London down 36 cents at $106.11 a barrel by 2:40 p.m. EDT (1840 GMT), poised to end gains in the four previous sessions.

U.S. September crude settled at $89.79 a barrel, falling 35 cents, ending a four-day winning streak.

Gold edged up on Tuesday ahead of the U.S. Federal Reserve’s policy meeting later in the day, which is expected to shed light on the bank’s stance on monetary stimulus, a key factor driving bullion prices.

Spot gold inched up 0.2 percent to $1,623.56 an ounce by 0322 GMT.

U.S. gold futures contract for August delivery traded up 0.2 percent to $1,622.80.

The euro edged higher against the dollar on Tuesday but stayed off a recent three-week high, while the Australian dollar hit a four-month high, supported by expectations that major central banks may add more stimulus.

The single currency moved up 0.2 percent from late U.S. trade on Monday to $1.2288, but remained stuck below the high of $1.2390 hit last Friday.

Currencies

The euro eased 0.1 percent against the high-flying Australian dollar to A$1.1666, after having hit a record low around A$1.1646 the previous day.

The Aussie rose 0.4 percent to $1.0532, having hit a four-month high of $1.0537 earlier on Tuesday.

Against the yen, the dollar edged up 0.1 percent to 78.20 yen.

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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