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Stocks edge higher on mixed signs about economy
Source: Agencies |
July 28, 2009, Tuesday
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Online Edition
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STOCKS edged higher after zigzagging in subdued trading yesterday on mixed reports about the U.S. economy and corporate earnings.
The Dow Jones industrial average rose only 15 points. But modest moves in the market's major indicators belie larger forces at work: Investors aren't dumping stocks, even in the face of downbeat news.
Poor earnings news from Verizon Communications Inc., Aetna Inc. and Corning Inc. kept the market's gains in check, adding another pause to a powerful rally that has sent major indicators rocketing 11 percent in just two weeks.
Stocks are steady in part because many investors aren't retreating for fear of missing another rally. Even earlier this month, when a spring rally was still stalled, investors likely would have looked to the news out yesterday as reason to sell.
RadioShack Corp. reported higher second-quarter earnings that beat forecasts, but mainly from cost-cutting - a theme that has become familiar this earnings season and has left many investors disappointed.
On the plus side, a government report showed new home sales posted the fastest increase in June in more than eight years as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. That sent stocks of home builders surging.
Analysts said the small moves were a good sign for the market. Brian F. Reynolds, chief market strategist at WJB Capital Group, said investors were surprised by the strength of corporate earnings reports in the past two weeks and are adjusting their outlooks.
"After a run of any direction stocks take a little break and people kind of catch their breath," Reynolds said. "I think that's especially true now because people were caught off guard. I think so many people were so bearish."
The Dow rose 15.27, or 0.2 percent, to 9,108.51. The broader Standard & Poor's 500 index rose 2.92, or 0.3 percent, to 982.18, while the Nasdaq composite index rose 1.93, or 0.1 percent, to 1,967.89.
Nearly two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1 billion shares, essentially flat with Friday.
Bond prices fell, pushing yields higher, ahead of a busy week of Treasury auctions. The yield on the benchmark 10-year Treasury note rose to 3.73 percent from 3.66 percent late Friday.
In economic news, the Commerce Department said new home sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000. The median sales price of US$206,200 was down 12 percent from a year earlier and off nearly 6 percent from US$219,000 in May. Last week, stocks got a lift from a separate report a better than expected sales of existing homes.
Among companies posting results, RadioShack Corp. fell US$1.06, or 6.6 percent, to US$15 after cost-cutting drove profit growth and sales fell short of analysts' expectations.
Aetna's profit skidded 28 percent on higher medical expenses in its commercial business, and the health insurer cut its profit forecast for the second time in two months. The stock fell 72 cents, or 2.7 percent, to US$25.72.
Corning said its second-quarter earnings tumbled from results inflated by a big one-time gain a year ago. The stock fell 50 cents, or 2.9 percent, to US$16.50.
Among homebuilders, Beazer Homes USA Inc. jumped 36 cents, or 13.9 percent, to US$2.95, while Hovnanian Enterprises Inc. rose 26 cents, or 9.1 percent, to US$3.11.
Investors have been buying stocks as companies from AT&T Inc. to chip maker Intel Corp. post earnings that are far stronger than analysts had predicted.
The reports have given investors the confidence to restart a rally that began in March, sending the S&P 500 soaring 40 percent off a 12-year low before stalling in mid-June.
But some analysts remain cautious because expectations were low for results from the April-June quarter.
"Last week was dubbed as a good earnings week, but good compared to what?" asked David Hefty, CEO of Cornerstone Wealth Management in Auburn, Indiana. "It doesn't take a lot to get the market excited these days."
The Russell 2000 index of smaller companies rose 2.42, or 0.4 percent, to 550.88.
The Dow Jones industrial average rose only 15 points. But modest moves in the market's major indicators belie larger forces at work: Investors aren't dumping stocks, even in the face of downbeat news.
Poor earnings news from Verizon Communications Inc., Aetna Inc. and Corning Inc. kept the market's gains in check, adding another pause to a powerful rally that has sent major indicators rocketing 11 percent in just two weeks.
Stocks are steady in part because many investors aren't retreating for fear of missing another rally. Even earlier this month, when a spring rally was still stalled, investors likely would have looked to the news out yesterday as reason to sell.
RadioShack Corp. reported higher second-quarter earnings that beat forecasts, but mainly from cost-cutting - a theme that has become familiar this earnings season and has left many investors disappointed.
On the plus side, a government report showed new home sales posted the fastest increase in June in more than eight years as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. That sent stocks of home builders surging.
Analysts said the small moves were a good sign for the market. Brian F. Reynolds, chief market strategist at WJB Capital Group, said investors were surprised by the strength of corporate earnings reports in the past two weeks and are adjusting their outlooks.
"After a run of any direction stocks take a little break and people kind of catch their breath," Reynolds said. "I think that's especially true now because people were caught off guard. I think so many people were so bearish."
The Dow rose 15.27, or 0.2 percent, to 9,108.51. The broader Standard & Poor's 500 index rose 2.92, or 0.3 percent, to 982.18, while the Nasdaq composite index rose 1.93, or 0.1 percent, to 1,967.89.
Nearly two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1 billion shares, essentially flat with Friday.
Bond prices fell, pushing yields higher, ahead of a busy week of Treasury auctions. The yield on the benchmark 10-year Treasury note rose to 3.73 percent from 3.66 percent late Friday.
In economic news, the Commerce Department said new home sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000. The median sales price of US$206,200 was down 12 percent from a year earlier and off nearly 6 percent from US$219,000 in May. Last week, stocks got a lift from a separate report a better than expected sales of existing homes.
Among companies posting results, RadioShack Corp. fell US$1.06, or 6.6 percent, to US$15 after cost-cutting drove profit growth and sales fell short of analysts' expectations.
Aetna's profit skidded 28 percent on higher medical expenses in its commercial business, and the health insurer cut its profit forecast for the second time in two months. The stock fell 72 cents, or 2.7 percent, to US$25.72.
Corning said its second-quarter earnings tumbled from results inflated by a big one-time gain a year ago. The stock fell 50 cents, or 2.9 percent, to US$16.50.
Among homebuilders, Beazer Homes USA Inc. jumped 36 cents, or 13.9 percent, to US$2.95, while Hovnanian Enterprises Inc. rose 26 cents, or 9.1 percent, to US$3.11.
Investors have been buying stocks as companies from AT&T Inc. to chip maker Intel Corp. post earnings that are far stronger than analysts had predicted.
The reports have given investors the confidence to restart a rally that began in March, sending the S&P 500 soaring 40 percent off a 12-year low before stalling in mid-June.
But some analysts remain cautious because expectations were low for results from the April-June quarter.
"Last week was dubbed as a good earnings week, but good compared to what?" asked David Hefty, CEO of Cornerstone Wealth Management in Auburn, Indiana. "It doesn't take a lot to get the market excited these days."
The Russell 2000 index of smaller companies rose 2.42, or 0.4 percent, to 550.88.
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