Posted on July - 26 - 2011
Indecision May Continue On Wall Street
– The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment continuing to remain subdued due to the impasse on the U.S. debt deal. Earnings news continues to be mixed. An economic report released earlier in the day showed that durable goods orders unexpectedly fell. However, excluding the volatile transportation category, orders were up modestly.
A gauge of capital spending showed mixed results, with shipments of the category rising, while orders fell. Global cues are negative, with Asian stocks closing mostly lower, while the European averages are seeing weakness. Oil is slipping amid mixed trend shown by the dollar.
U.S. stocks declined yet again on Tuesday, as U.S. debt talks stuck in a limbo and a batch of mixed earnings and mixed economic data left traders unsettled. The major averages opened lower, with the Dow Industrials remaining below the unchanged line throughout the session, while the S&P 500 Index also traded lower for much of the session except for a short recovery in late afternoon trading, which proved unsustainable.
The Nasdaq Composite Index moved back and forth across the unchanged line before ending down 2.84 points or 0.10 percent at 2,840. Meanwhile, the Dow declined 91.50 points or 0.73 percent to 12,501 and the S&P 500 Index ended down 5.49 points or 0.41 percent at 1,332.
Twenty-four of the thirty Dow components closed lower, with 3M Co. (MMM) (down 5.41 percent), Boeing (BA) (down 1.61 percent) and General Electric (GE) (down 2.11 percent) leading the slide. On the other hand, Hewlett-Packard (HPQ) rose over 1 percent.
Among the sector indexes, the Dow Jones Transportation Average fell 1.34 percent, the NYSE Arca Biotechnology Index declined 1.98 percent, the Dow Jones U.S. Basic Materials Average moved down about 1 percent and the Philadelphia Housing Sector Index slipped 1.46 percent. In the tech space, the NYSE Arca Disk Drive Index lost about a percent, while the NYSE Arca Computer Hardware Index rose 2.09 percent and the NYSE Arca Software Index gained 1.33 percent.
The Dow has been resiliently holding onto its recent trading range despite the raging debt turmoil and recent soft data points. Violation of the 12,499-12,733 trading range on either side may generate additional selling pressure or buying interest depending on the bound it is violating.
On the economic front, the Conference Board’s consumer confidence index rose 1.9 points to 59.5 in July. The present situation index declined for the third straight month to 35.7, a 5-month low, while the expectations index rose 3.8 points to 75.4, the first increase since April.
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