Selective buying helped propel stocks higher Tuesday after seven days of losses, but the advance was tepid as concerns about the durability of the economic recovery kept sentiments jittery. After recording hefty gains in the morning, markets slipped into the red in the afternoon as traders, worried about patchy consumer spending and prospects of a double-dip recession, cut positions. But stocks managed to reverse course in the final ten minutes of trading as bargain hunters came back into the picture.
The Dow average, after rising as much as 172 points in the morning session, closed up 57.14 points, or 0.6%, at 9,743.62. The Dow had closed at an 8-month low yesterday. The broader Standard & Poor’s 500 index advanced 5.48 points, or 0.5%, to 1,028.06; the tech-heavy Nasdaq composite index rose 2.09 points, or 0.1%, to 2,093.88. On the New York Stock Exchange, declining issues narrowly edged ahead of those that rose in price on a volume of 1.32 billion shares. The Vix fear factor, meanwhile, declined 1.6% to 29.65.
Gold prices continued their downward move, dropping $13.20 to end the day at $1,195, its lowest settlement price since May 24. Bond prices rose, sending corresponding yields lower. The benchmark 10-year note rose 12/32 in price with its yield dropping to 2.936%. Nevertheless, crude prices, viewed as a sign of economic recovery, eased to $71.98, for an 8.72% decline over the past six days.
Asian markets fell today, despite the overnight gains in the U.S. markets. In Tokyo, the Nikkei 225 stock average dropped 0.6% and the Hang Seng index in Hong Kong fell 1.1%. However, the Shanghai Composite index in Mainland China showed strength as the AgBank IPO mopped up $19.21 billion from the market. In a sign of confidence, investors heavily oversubscribed the offering in both Shanghai and Hong Kong. Meanwhile, amid talks of stress tests of European banks, most European bourses are moving lower this morning, with the FTSE, CAC and DAX showing declines of more than 1%.
Yesterday, all ten S&P500 industry sectors recorded gains on the day, led by a 1.1% rise in utility shares. Oil and gas (+1.0%), technology (+0.8%), financials (+0.3%), health care (+0.3%), basic materials (+0.2%), telecommunications (+0.2%), industrials (+0.1%), consumer goods (+0.1%), and consumer services (+0.02%) helped send the index higher.
Those leading the gainers on the DJIA were Microsoft (NASDAQ:MSFT), up 2.4%, and Alcoa (NYSE:AA), up 2.1%, with Bank of America (NYSE:BAC), ExxonMobil (NYSE:XOM) and Kraft (NYSE:KFT) registering advances of over 1%. Shares in Intel (NASDAQ:INTC) added 1.5%, JP Morgan (NYSE:JPM) 1.4%, and IBM (NYSE:IBM) and Merck (NYSE:MRK) 1.3%.
A Citigroup (NYSE:C) downgrade of retailers sent shares in the sector lower. The Citigroup analysts lowered the earnings estimates and twelve-month price targets on Home Depot (NYSE:HD), JC Penney (NYSE:JCP), Lowe’s (NYSE:LOW), Nordstrom (NYSE:JWN), Kohl’s (NYSE:KSS), Macy’s (NYSE:M), Saks (NYSE:SKS), Target (NYSE:TGT), and Wal-Mart (NYSE:WMT). Goldman Sachs (NYSE:GS) also cut its price target for Ford (NYSE:F) shares to $14 from $16, citing dismal 2010 auto sales prospects. Walgreen (NYSE:WAG), meanwhile, reported an 8.4% jump in June sales.
While retailers felt the heat of a weak consumer demand, the semiconductor industry had some positive news in its kitty. According to the Semiconductor Industry Association, May global sales rose 48% from a not-so-impressive year-ago levels and 4.5% from April as demand increased from makers of computers and mobile phones. Samsung this morning said it sees a record second quarter operating profit as demand for smart phones and tablet PCs outstrip supply.
