Stock Market News for August 18, 2010 - Market News

A slew of better-than-expected economic data and activity on the mergers and acquisitions front boosted investors’ confidence yesterday, sending the Dow industrials into the positive territory for the year, even as Wal-Mart Stores and Home Depot reported upbeat earnings numbers.

Material stocks rose after Potash Corp. POT rejected mining giant BHP Billiton’s BHP unsolicited $38 billion takeover bid. Potash’s shares soared 27.7% while shares in Mosaic MOS and Agrium AGU, the companies that compete with Potash, jumped 8.7% and 4.6%, respectively. Earlier in the week, technology shares had strengthened after Dell DELL said it had agreed to acquire data-storage firm 3Par PAR.

This morning’s stock futures suggest stocks would open with moderate gains, helped by Target Corp.’s better-than-expected earnings report. Ahead of the opening bell, the Dow futures were up 14 at 10,372. Standard & Poor's 500 index futures fell 1.20 to 1,090.20. Nasdaq 100 futures fell 3.20 to 1,836.20.

Gains were broad based yesterday, with only two of the thirty Dow components closing the day in the red. The average, now up 0.21% year-to-date, gained 104-points, or 1.01%, to finish at 10405.85. The tech-heavy Nasdaq Composite index climbed 1.3% to 2209.44 and the broader S&P 500 index gained 1.2% to 1092.54. The S&P’s move beyond its 50-day moving average suggested some optimism was returning to the stock market.

Home Depot HD led the gainers on the DJIA, up 3.4%. The company reported second-quarter earnings that inched above estimates. However, sales were below projections. The miss was, however, slight. Nevertheless, Home Depot and Wal-Mart’s WMT decent earnings were seen as signs of normalcy returning to the economy. Wal-Mart WMT which reported slightly better earnings and a modest revenue miss saw strength in its shares as it increased guidance for the year.

Companies that derive a fair share of revenues from overseas operations saw strength in their stocks as the euro strengthened against the dollar. Shares in Alcoa AA jumped 3.3%, DuPont DD rose 2.6% and Boeing BA were up 2.5%. The strength in euro was built on well-received bond auctions in Spain and Ireland.

All ten S&P500 industry sectors managed gains on the day, with nine registering gains of more than 1% on the day. BHP Billiton’s BHP unsolicited bid for Potash sent the basic materials shares (+2.5%) to the top of the gainers list. Industrials (+1.9%) gained on a favorable industrial production data. Oil and gas shares (+1.5%) gained as crude prices rose 53 cents to $75.77, but prices remained below the $80 level on growth concerns in the US and China.

Hopes that the housing market was slowly moving toward stabilization sent shares in Beazer Homes BZH up 4.1%, Pulte Group PHM 3.8%, and Hovnanian HOV 3.4%.

Firms reporting their results today include Target TGT, Deere DE, Applied Materials AMAT, Limited LTD, and BJ Wholesale BJ.

 
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