After failing to sustain an early upward move, stocks turned in a relatively lackluster performance over the course of the trading day on Wednesday. The choppy trading came as traders digested some mixed earnings news amid light volume.
The Dow Jones Industrial Average (DJIA – 11,410.21) ended a wishy-washy session with a gain of 4.3 points, or 0.04%, as 17 of its 30 components finished higher. American Express (AXP) led the uptrending blue chips with a gain of about 2.2%, while Hewlett-Packard (HPQ) paced the 12 decliners in sympathy with its sector peers, shedding 3.7%. Meanwhile, Alcoa (AA) split the difference by settling right where it started.
Similarly, the S&P 500 Index (SPX – 1,193.88) found itself 1.1 points, or roughly 0.1%, higher, by the time the dust settled. On the other hand, the Nasdaq Composite (COMP – 2,511.48) gave up almost 12 points, or 0.5%, after exploring a 61-point trading range.
The major averages eventually ended the session mixed, with the Nasdaq posting a moderate loss. While the Nasdaq fell 11.97 points or 0.5 percent to 2,511.48, the Nasdaq edged up 4.28 points or less than a tenth of a percent to 11,410.21 and the S&P 500 rose 1.12 points or 0.1 percent to 1,193.88.
Upbeat earnings news contributed to the initial strength on Wall Street, with discount retailer Target (TGT) showing a notable move to the upside after reporting better than expected second quarter results.
Shares of Target rose by 2.4 percent after the company reported second quarter earnings of $1.03 per share, above analyst estimates for $0.97 per share. The company also forecast full-year earnings of $4.15 to $4.30 per share compared to expectations for $4.12 per share.
Not all the earnings news was positive, however, as Dell (DELL) reported better than expected second quarter earnings but provided disappointing guidance. The news from Dell contributed to notable weakness among technology stocks, resulting in the loss posted by the tech-heavy Nasdaq.
While Dell reported second quarter adjusted earnings of $0.54 per share compared to analyst estimates for $0.49 per share, the computer giant lowered its full-year revenue growth outlook due in part to a more uncertain demand environment. Shares of Dell fell by 10.1 percent on the news.
The lackluster performance that was seen on the day also came as traders seemed reluctant to make any significant moves ahead of the release of a slew of economic data on Thursday.
Before the start of trading, the Labor Department released a report showing an unexpected increase in producer prices in the month of July.
The Labor Department said its producer price index rose by 0.2 percent in July following a 0.4 percent decrease in June. Most economists had predicted no change in the overall level of producer prices.
Excluding food and energy prices, the core producer price index rose by 0.4 percent in July after climbing by 0.3 percent in the previous month. The increase in core prices, which marked the fastest growth since January, exceeded economist estimates for a 0.2 percent increase.
Sector News
With Dell leading the way lower, computer hardware stocks showed a substantial move to the downside over the course of the trading day. Reflecting the weakness in the sector, the NYSE Arca Computer Hardware Index fell by 3 percent.
While housing and trucking stocks also saw significant weakness, tobacco stocks saw notable strength on the day. The NYSE Arca Tobacco Index advanced by 1.4 percent amid strong gains by Lorillard (LO) and Vector Group (VGR).
Strength was also visible among telecom and gold stocks, with gold stocks moving higher as the price of the precious metal reached a new record closing high.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. While Japan's benchmark Nikkei 225 Index fell by 0.6 percent, Hong Kong's Hang Seng Index advanced by 0.4 percent.
The major European markets also turned in a mixed performance on the day. The French CAC 40 Index rose by 0.7 percent, while the U.K.'s FTSE 100 Index and the German DAX Index fell by 0.5 percent and 0.8 percent, respectively.
In the bond trading, treasuries moved higher over the course of the course of the trading day after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.9 basis points to 2.165 percent.
Although data showed an increase in domestic oil inventories last week, a larger-than-expected drop in gasoline supplies -- as well as a softer U.S. dollar -- helped push crude oil futures to a modest gain today. Specifically, the Energy Information Administration (EIA) said crude inventories unexpectedly rose by 4.2 million barrels in the week ended Aug. 12. However, gasoline inventories fell by a steeper-than-expected 3.5 million barrels, though gasoline demand dropped to a 10-year low. By the close, crude oil for September delivery gained $0.93, or 1.1%, to settle at $87.58 a barrel.
Gold futures ended higher again today, as a steeper-than-expected rise in the core PPI amplified the metal's appeal as an inflationary hedge. News that Venezuela will nationalize its gold industry also helped the commodity to secure another record settlement. Against this backdrop, gold for December delivery added $8.80, or 0.5%, to end at $1,793.80 an ounce.
Looking Ahead
As mentioned above, a slew of economic data is due to be released on Thursday, with traders likely to keep a close eye on reports on consumer price inflation and weekly jobless claims.
Reports on existing home sales, Philadelphia-area manufacturing activity, and leading economic indicators may also attract some attention.
Levels to Watch in Trading:
- Dow Jones Industrial Average (DJIA – 11,410.21) - support at 10,500; resistance at 13,000
- S&P 500 Index (SPX – 1,193.88) - support at 1,100; resistance at 1,400
- Nasdaq Composite (COMP – 2,511.48) - support at 2,100; resistance at 2,900
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