Stock Market Today 2/1/10
US Market
Stocks Look to Data as They Attempt to Shake off Negative Sentiment
The major U.S. index futures are pointing to a higher opening on Monday, with sentiment getting a lift from the personal income and outlays report released earlier in the day. Personal income rose at a better than expected rate, while personal spending growth was a tad below what economists had expected, although it represented the third straight month of gains.
Commodities are rebounding from oversold levels and if the gains are sustained, they could lend support to the commodity space. Talks of additional stimulus spending should also remove some anxiety over the feeble nascent growth tapering off. All said and done, the direction of the day’s trading largely hinges on the results of the Institute for Supply Management’s purchasing managers’ index.
U.S. stocks extended their losses in the week ended January 29th, as economic data remained mixed. In the process, traders ignored some promising earnings numbers and harped on the intensifying uncertainty.
Last Monday, the major U.S. averages closed modestly higher following some bargain hunting, although the optimism was trimmed by the release of a disappointing housing market report. However, underlying fears came to the fore on Tuesday, as stocks ignored some fairly encouraging economic reports and declined in late trading to close modestly lower.
The Fed’s upbeat assessment relayed via the Federal Open Market Committee’s post-meeting policy statement helped the major averaged end a volatile session on a positive note on Wednesday. On Thursday, selling pressure re-emerged, as traders focused on a feeble increase in durable goods orders and disappointing forecasts from technology firms and sent stocks sharply lower. Consequently, the major averages closed notably lower.
After seeing strength for much of Friday’s session following the release of better-than fourth quarter GDP data, stocks declined in the afternoon. Anxiety triggered by poor state of fiscal affairs in some of the European nations made investors overlook some encouraging economic reports on the domestic front.
Consequently, the Dow Industrials ended down 1.04% and the S&P 500 Index receded 1.64%, while the Nasdaq Composite closed at its lowest level since November 27th at 2,147, down 2.63%. For the month, the Dow Industrials lost 3.46%, the S&P 500 Index receded 3.70% and the Nasdaq Composite Index ended off 5.37%.
Equities have undergone some degree of correction for the past two weeks and have pulled back between 3%-6% during the period. Danske Bank believes that there is still some way to go before risk appetite truly returns. The recent lackluster phase is mainly due to the markets already discounting healthy corporate profit growth.
Among the sector indexes, the Philadelphia Semiconductor Index lost 4.07% for the week, the NYSE Arca Airline Index slipped 6.23% and the NYSE Arca Gold Bug Index declined 7.39%. While the NYSE Arca Securities Broker/Dealer Index receded 3.05%, the NYSE Arca Oil Index and the Philadelphia Oil Service Index fell over 2% each.
(Source: iHub World Daily Briefing)
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