The market looked down on Wednesday following the statement by the Fed Chairman that the economic outlook is “unusually uncertain." However, optimism returned yesterday riding on favorable corporate earnings and forecasts, better than expected news from the housing market and an upward move in European bourses. Market mavens observed that many companies that have reported positive results, thus far, enjoyed diversification from overseas sales. However, some observers believe that trading volumes need to improve for the market to break out of a trading range.
The Dow moved up 2% to 10,322, while the S&P 500 and Nasdaq rose 2.3% and 2.7% respectively. Also, for the fourth time in July, the S&P 500 came close to, but failed to cross the 1,100 hurdle. Mid and Small cap stocks did well bolstered by favorable earnings and M&A activity. The S&P MidCap 400 index moved up 2.9% while the S&P SmallCap 600 gained 3.5%. The breadth was positive and, on the NYSE, winning shares beat losing ones by over 6 to 1. Volume amounted to 1.18 billion shares.
After the closing bell, Microsoft MSFT reported stronger-than-expected results benefiting from demand for Windows 7. Its shares were, however, little changed in the end. Also after the close, American Express AXP turned in a good performance, but on-going concerns about the direction of the economy, led to a 1% drop. Amazon.com AMZN dropped sharply 15.1%, in after-hours trading, subsequent to poor results.
AT&T T beat expectations for bottomline performance but missed expectations for its topline. The company raised estimates for 2010 citing cost containment combined with growth in its wireless segment. It moved up 2.4%.
Heavy equipment-maker, Caterpillar CAT beat estimates riding on improved demand from the infrastructure and energy sectors, as well as in emerging markets. It stated that its latest sequential increase in quarterly sales was the “most significant" in history and added that orders had outpaced shipments. Caterpillar increased profit forecast for 2010 and its shares moved up 1.7%. 3M MMM, another Dow-component, reported that its profits for the current year would beat guidance. Its share price moved up 3%. UPS UPS, which like 3M may be taken as a kind of proxy for the economy, gained over 5%, after reporting higher revenue. The company raised its outlook based on confidence of higher international shipments.
Financial stocks did well on Thursday after several regional banks reported favorable results, such as KeyCorp KEY and PNC Financial Services PNC.
Sales of existing homes dropped 5.1% on a sequential basis in June. The decline was, however, less than expected. Among home-builders, KB Home KBH and Lennar Corp. LEN rose 3.9% and 3.1% respectively.
General Motors GM will purchase AmeriCredit, an auto financing firm, for $3.5 billion, in a cash deal. The acquisition of a new financing arm is expected to pave the way for GM to mobilize funds through a public offering later in 2010. In another corporate development, DELL DELL will settle fraud charges, with the SEC, for $100 million. Its Chairman and CEO will each pay $4 million each. Dell shares ended up 2.5%.
As for news from the IPO space, shares of energy efficiency consultant Ameresco and Green Dot, a prepaid debit card firm, both rose on their debut.
Zacks Investment Research© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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