|Market Commentary||Tuesday, July 31, 2012 09:56 Hrs IST|
Flat finish for US stocks ahead of Central Banks' meet
US stocks finished flat on Monday, 30 July 2012. Stocks kicked off the week in the red and struggled ahead of anticipated central-bank moves and the monthly jobs report later in the week. With the lack of a catalyst, equities continued to struggle for direction. After slipping into the red as a result of a negative Dallas Federal Reserve report, stocks managed to come off session lows.
For the day, that ended on Monday, 30 July 2012, Dow ended lower by 2.65 points or 0.02% to end at 13,073.05. The Nasdaq lost 12.25 points or 0.41% to end at 2,945.84. The S&P 500 lost 0.67 points or 0.05% to end at 1,385.3.
All of the ten economic sectors had a mixed finish. Telecommunications paced gains and consumer discretionary was the weakest performer among its 10 sectors. Majority of Dow components ended lower led by JP Morgan Chase.
Markets were relatively quiet as traders were waiting to see whether the U.S. Federal Reserve and the European Central Bank will announce any measures when they meet this week.
Focus of the market place this week is on the two-day FOMC meeting of the U.S. Federal Reserve, which starts Tuesday and ends early Wednesday afternoon. Also, the European Central Bank's policy meeting and press conference are on Thursday. The Bank of England also meets to discuss its monetary policy, with results on Thursday. Market watchers will be closely scrutinizing these central bank meetings for any fresh clues on the implementation of quantitative easing of monetary policies. Then on Friday comes the all-important U.S. jobs report.
The head of the Eurogroup, Jean-Claude Juncker, reportedly said over the weekend that the euro-zone members and the European Central Bank will soon act to save the euro.
Earlier during the day, the European close indicated an extension of last week's rally. Major indices finished on their respective session highs as final hour buying pushed Germany's DAX to a gain of nearly 1.3%, while France's CAC and Britain's FTSE both closed up 1.2%. Elsewhere, Italy's MIB and Spain's IBEX gained 2.8% each.
The European rally failed to extend into the U.S. session. Disappointing report from the Dallas Federal Reserve pushed all three indices into negative territory. The Dallas Federal Reserve released its monthly manufacturing survey which showed a business activity index of -13.2 when a reading of 2.5 was widely expected. The production index came in at 12 versus 15.5 last month.
JPMorgan Chase fell after being downgraded from ‘Buy' to ‘Hold' by Deutsche Bank.
Among major stocks under focus, Apple was up 2% as the company begins its patent trial against Samsung. Insurer Loews was trading 5% lower following a disappointing earnings report. Shaw Group was up 53% after the firm was acquired by Chicago Bridge & Iron Company. CB&I will pay a total of $3 billion or $46 per share of Shaw. Shares of CB&I were down 15% in the wake of acquisition news.
Crude prices ended modesty lower on Monday, 30 July 2012 at Nymex. Prices dropped as the dollar rose modestly higher. Prices also tried to stay steady as traders anticipated that Central banks will take some action in both US and Europe as a step to solve their respective problems. Light and sweet crude for September delivery fell $0.39 (0.4%) to $89.78 a barrel on the New York Mercantile Exchange on Monday.
In the currency market on Monday, the dollar index, whish weighs the strength of the dollar against a basket of six other currencies, rose by 0.2% and stayed modestly higher throughout the day.
Gold for August delivery ended higher by $0.7 or 0.04%, to end at $1,618 an ounce on the Comex division of the New York Mercantile Exchange on Monday. Prices rose for fourth straight session. On Monday, silver prices for September delivery ended higher by54 cents or 2% at $28.03.
Decliners pulled just ahead of advancers on the New York Stock Exchange. The volume of NYSE-listed stocks was 3.18 billion. Nasdaq composite volume of 1.5 billion was the lowest in two weeks.
Indian ADRs ended mixed on Monday. Tata Motors gained 1.4%. ICICI Bank gained 1.1%. Wipro Technologies, Infosys and HDFC Bank lost 0.8%, 0.2% and 0.6% respectively. MTNL gained 1.9%. Dr Reddys gained 0.9%.
For tomorrow, earnings season will dominate the headlines. Tuesday will also bring a full slate of economic data. Personal income and spending will be released at 8:30 AM ET while the S&P Case-Shiller 20-city Index will hit the wires at 9 AM ET. In addition, Chicago PMI will be reported at 9:45 AM ET and consumer confidence at 10 AM ET.