Stock Market News for August 4, 2010 - Market News

After Monday’s strong start to the month, stocks lacked direction and closed mostly lower as deepening worries about the health of the economy kept investors from buying shares. The earnings based enthusiasm was nowhere to be seen Tuesday as big names such as Procter & Gamble and Dow Chemical reported numbers that fell below analysts’ expectations. Economic reports too lacked the luster that would have otherwise provided some boost to sentiments.

The drop appeared to be a result of caution after Monday’s big rally.  However, the growing unease among investors about Friday’s July employment report, given a soft consumer spending outlook, was palpable.  There are concerns the unemployment rate ticked up in July.

A private sector employment report that says employers added more jobs than expected in July has sent this morning’s stock futures slightly higher.

Yesterday, Procter & Gamble PG was the biggest drag on the Dow, dropping 3.4% to $59.94 after its sales and earnings for the quarter fell below expectations.  Procter & Gamble’s fourth quarter earnings of 71 cents a share lagged behind consensus estimates of 73 cents, and its fiscal first quarter earnings outlook of $1.01, ex-items, fell short of consensus projections. Dow Chemical DOW, not a Dow component, dropped 10% to $25.50 after its earnings and sales numbers fell below analysts’ estimates. Only seven of the thirty DJIA components closed in the green Tuesday, with Pfizer PFE leading on the upside.

The Dow Jones industrial average fell 38 points, or 0.4%, to 10,636.38. The broader S&P 500 index dropped 5.40 points, or 0.5%, to 1,120.46, while the tech-heavy Nasdaq fell 12 points, or 0.5%, to 2,283.52. On the New York Stock Exchange, declining issues beat those that advanced in price by a two-to-one margin.

A weak housing data sent shares in Home Depot HD off 2.3%. A report showed pending home sales continued to remain weak, falling 2.6% versus the expected 4% increase.  Shares in ExxonMobil XOM and Chevron CVX gained 1.3% and 1.1%, respectively, as crude prices jumped to a new three-month high of $82.55, up 1.5%. S&P500 oil and gas sector shares rose 0.2% on the session.

Pfizer PFE led the gainers on the Dow after reporting estimate-beating numbers. Shares in the company jumped 5.6% after the firm reported adjusted earnings of 62 cents, versus estimates of 52 cents, on revenues of $17.3 billion, ahead of expectations of $16.6 billion.  The company said it sees full-year earnings of $2.10 to $2.20, in line with consensus estimates. S&P500 health care sector shares rose 0.8% on Pfizer’s upbeat results, even as speculation grew Sanofi-Aventis SNY was readying a bid for Genzyme GENZ.

Dow Chemical DOW swung to profit in the current quarter, but it failed to impress with its numbers. The company reported earnings of 54 cents, ex-items, missing estimates of 57 cents.  Its shares fell 9.3% on the day, and pulled the S&P500's basic material sector down 1.6%.