Stock Market News for July 3, 2012 - Market News
03 Luglio 2012 - 11:06AM
Zacks
A contraction in U.S. manufacturing
activity threatened to dent investor sentiment which had grown
stronger following the European deal. But hopes of economic
stimulus from the central bank lifted most of the benchmarks into
the green. However, the Dow missed out on a closing in positive
territory though it recouped the day’s losses.
The Dow Jones Industrial Average
(DJI) slipped 0.1% to close slightly lower at 12,871.39. The
Standard & Poor 500 (S&P 500) edged up 0.3% and finished
yesterday’s trading session at 1,365.51. The tech-laden Nasdaq
Composite Index gained 0.6% and ended at 2,951.23. The fear-gauge
CBOE Volatility Index (VIX) dropped 1.6% and settled at 16.80.
Consolidated volumes on the New York Stock Exchange, the American
Stock Exchange and Nasdaq, were roughly 6.1 billion shares, well
short of last year's daily average of 7.84 billion shares.
Advancers outpaced the declining stocks on the NYSE; as for 69% of
stocks that gained, 29% stocks closed lower.
The report that figured prominently
in yesterday’s proceedings was the one on economic activity in the
manufacturing sector by the Institute for Supply Management.
According to the report: "The PMI registered 49.7 percent, a
decrease of 3.8 percentage points from May's reading of 53.5
percent, indicating contraction in the manufacturing sector for the
first time since July 2009, when the PMI registered 49.2 percent.
The New Orders Index dropped 12.3 percentage points in June,
registering 47.8 percent and indicating contraction in new orders
for the first time since April 2009, when the New Orders Index
registered 46.8 percent”. The figure was also below consensus
estimates of 52%.
The ISM Manufacturing Index is
based on surveys of 300 purchasing managers nationwide representing
20 industries regarding manufacturing activity. It's considered as
the most important of all manufacturing indices. Therefore,
movement in this index plays an instrumental role and investors do
keep a keen eye on it. Thus, the lower-than-expected reading was
sure to dent sentiment. But the larger concern was that economic
activity in the manufacturing sector recorded its first contraction
since July 2009.
Worried by the contraction in the
manufacturing activity, benchmarks opened in the red and later
swung between small gains and losses. The data seemed to have
unnerved investors initially and threatened to wash out the
positives carried over from Friday, sparked off by the
“breakthrough” deal reached at the European Summit. However, but
for the Dow, benchmarks made a rebound as many market onlookers
grew hopeful about fresh economic stimulus by the central bank. It
is now popularly believed that dismal economic readings will pave
the way for the Federal Reserve to come up with new measures to
bolster the economy.
Thus, hopes for economic stimulus
helped benchmarks rebound from the day’s losses. However,
industrials remained one of the biggest losers with the Industrial
Select Sector SPDR (XLI) losing 0.9%. Among the declining stocks,
Graco Inc. (NYSE:GGG), Deere & Company (NYSE:DE), AGCO
Corporation (NYSE:AGCO), IDEX Corporation (NYSE:IEX), 3M Co
(NYSE:MMM) and Terex Corporation (NYSE:TEX) lost 1.4%, 0.5%, 2.7%,
0.5%, 0.4% and 3.4%, respectively.
Staying with manufacturing, things
were not bright on the European and Chinese front as well.
Financial information services company Markit not only noted
painted a gloomy picture of manufacturing activity in Europe, but
it also warned about factories preparing for the worst. Chris
Williamson, Chief Economist, Markit, said: "Companies are clearly
preparing for worse to come, cutting back on both staff numbers and
stocks of raw materials at the fastest rates for two-and-a-half
years”. As for the manufacturing Purchasing Managers' Index (PMI)
he commented: “The PMI suggests that the goods-producing sector
contracted by around 1 percent in the second quarter, with this
steep rate of decline looking set to accelerate further as we move
into the second half of the year”. China too recorded a dip in
ifactory activity and the HSBC Purchasing Managers' Index (PMI) was
down to 48.2 after seasonal adjustments. The index is now at at its
lowest since November 2011.
Coming back to the domestic arena,
a report on construction spending was much more promising. The U.S.
Census Bureau of the Department of Commerce reported that
construction spending moved up 0.9% from the revised April estimate
of $822.5 billion to a seasonally adjusted annual rate of $830.0
billion in May 2012. The increase was significantly higher than
consensus estimates which had predicted a rise of 0.1%.
AGCO CORP (AGCO): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
GRACO INC (GGG): Free Stock Analysis Report
IDEX CORP (IEX): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
TEREX CORP (TEX): Free Stock Analysis Report
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