Although the expectations remain for a V-shaped recovery, in the absence of any catalyst and mounting worries over the economic situation investors are increasingly heading towards risk aversion.Sentiments are more cautious as last week’s employment scare is still fresh in the minds of investors.Perhaps, the wait-and-watch stance is likely to continue before the earnings start to peak next week.Therefore, in an economy that is reeling under unprecedented pressures of unemployment and dwindling consumer spending, prospects for a second stimulus package are gaining traction. In an interview Thursday, Warren Buffett joined those advocating a second stimulus package.Nevertheless, Wall Street will now turn its focus to companies as they report quarterly numbers.
Traders were in the pause mode yesterday but indexes managed to end the day in positive territory.The Dow Jones industrial average edged up 4.76 points, or 0.06%, to 8,183.17 points.The S&P 500 index added 3.12 points, or 0.35%, at 882.68 and the tech-heavy Nasdaq was up 5.38 points, or 0.31%, at 1,752.55.Trading was light with only 1.01 billion shares on the NYSE exchanging hands and advancing shares ahead of declining issues by a three-to-two margin.Treasuries declined with the 2-year off 1/32 and the 10-year down 28/32 despite signs of strength in a 30-year debt auction.
Consumer spending remains a cause for concern as evidenced by June same-store sales report.For the month, comparable sales declined 5.1% versus the 4.8% expected.However, Wal-Mart (NYSE:WMT) numbers, which previously represented a 50% monthly weighting, were absent this time.Costco (NASDAQ:COST) reported sales declined 6% while Target’s (NYSE:TGT) comparable sales were off 6.2%; however, Target (NYSE:TGT) said second quarter earnings will equal or exceed estimates of 64 cents.Abercrombie & Fitch (NYSE:ANF) said same-store sales fell 32% versus a year ago.
Among S&P 500 industry groups, eight moved higher.Financials rose 1.1% after Bank of America/Merrill (NYSE:BAC) noted strength in Goldman Sachs (NYSE:GS) shares, adding the firm may post record trading revenues.Goldman Sachs (NYSE:GS) rose 3.9%.Healthcare shares dropped 0.9%, with Merck (NYSE:MRK) declining 3.7% and leading the decliners on the DJIA.Merck (NYSE:MRK) shares suffered from news that a clinical trial of its cholesterol drug Zetia had been halted. Natixis Bleichroeder downgraded the shares to “buy.”
Yesterday crude prices hovered above the $60 level.Chevron (NYSE:CVX), which reports its quarterly results on July 31, warned of a second quarter profits dampened by sharply lower US refining margins and currency losses from the weak dollar.