News Column

Modest Strength On Wall Street Lifts S&P 500 To Record High - US Commentary

July 24, 2014

WASHINGTON (Alliance News) - While buying interest has remained somewhat subdued, stocks are seeing modest strength in mid-day trading on Thursday. The slim gains on the day have lifted the S&P 500 to a new record intraday high above the 1,990 level.

The major averages have moved roughly sideways in recent trading, hovering above the unchanged line. The Dow is up 11.98 points or 0.2% at 17,098.61, the Nasdaq is up 8.71 points or 0.2% at 4,482.41 and the S&P 500 is up 3.43 points or 0.2% at 1,990.44.

The modest strength on Wall Street is partly due to the release of a report from the Labor Department showing that initial jobless claims unexpectedly fell to an eight-year low in the week ended July 19th.

The Labor Department said initial jobless claims slid to 284,000 from the previous week's revised level of 303,000, while economists had expected claims to climb to 308,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 283,000 in the week ended February 18, 2006.

However, a separate Commerce Department report showing a bigger than expected drop in new home sales in June has helped limit the upside for the markets.

The report said new home sales tumbled 8.1% to an annual rate of 406,000 in June from the revised May rate of 442,000. Economists had been expecting new home sales to pull back by about 5.8%.

Markit Economics also released a report showing an unexpected slowdown in the pace of growth in US manufacturing activity in the month of July. Traders also continue to digest the latest batch of earnings news, leading to significant moves by a number of individual stocks.

Shares of Facebook (FB) have jumped by 7.1% after the social media giant reported better than expected second quarter results on strong mobile ad growth.

Computer accessories maker Logitech (LOGI) is also posting a standout gain after reporting a bigger than expected jump in first quarter earnings on improved margins and sales growth.

On the other hand, shares of Qualcomm (QCOM) have come under pressure after the mobile chip maker reported better than expected third quarter results but provided disappointing fourth quarter guidance.

3M (MMM), Caterpillar (CAT), Ford (F), General Motors (GM), and United Continental (UAL) are also among the big-name companies that released their results before the start of trading.

Sector News

After moving sharply lower over the course of the previous session, networking stocks have shown a strong move back to the upside on the day. The NYSE Arca Networking Index has risen by 1.5% after tumbling by 2.1% on Wednesday.

Polycom (PLCM) has helped lead the networking sector higher after reporting better than expected second quarter earnings and announcing a new USD200 million share repurchase authorization.

Internet and brokerage stocks are also turning in strong performances on the day, although buying interest has remained somewhat subdued.

On the other hand, housing stocks have come under pressure on the heels of the disappointing new home sales data, dragging the Philadelphia Housing Sector Index down by 2.1%. D.R. Horton (DHI) is posting a steep loss after reporting lower third quarter earnings.

Gold, oil service, and biotech stocks are also seeing notable weakness, helping to limit the upside for the broader markets.

Other Markets

In overseas trading, stocks across the Asia-Pacific region moved mostly higher on Thursday, but Japanese stocks bucked the uptrend once again. While Japan'sNikkei 225 Index dipped 0.3%, Hong Kong'sHang Seng Index advanced by 0.7% and Australia's All Ordinaries Index rose by 0.3%.

The major European markets also moved to the upside on the day. The French CAC 40 Index climbed by 0.8%, while the German DAX Index and UK'sFTSE 100 Index ended the day up by 0.4% and 0.3%, respectively.

In the bond market, treasuries have come under pressure after creeping slightly higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.3 basis points at 2.507%.

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Source: Alliance News

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