YAHOO [BRIEFING.COM]: Whipsaw
trade followed a flurry of headlines in the early going, but buyers soon
surfaced to drive down volatility and give stocks their best gain in three
weeks.
Sellers controlled the stock
market in recent sessions and, as a result, sent the S&P 500 lower in five
of the six sessions leading up to Friday for a cumulative loss of more than 4%.
Such a slide prompted many participants to bet against the market with short
positions.
Despite pessimistic trade
ahead of Friday, stocks started the week's final session on a strong note. The
mood was helped by news that second quarter GDP increased at an annualized rate
of 1.6%. That was down from the preliminary rate of 2.4%, but it wasn't as poor
as the 1.4% growth that had been widely expected. Participants also got a
positive surprise with news that personal consumption for the second quarter
was revised upward to reflect 2.0% growth after it had been expected to remain
at 1.6%.
Early gains began to fade
ahead of the final Consumer Sentiment Survey for August from the University of
Michigan. The Survey was revised down slightly to 68.9 from 69.6 and was also
below the reading of 70.0 that had been widely expected, but it was actually
met with a bit of a positive response.
The market's attention was
quickly diverted by a disappointing announcement from Intel
(INTC 18.37, +0.19). The chip bellwether forecast third quarter revenue in the
range $10.8 billion to $11.2 billion, but Wall Street had something closer to
$11.5 billion in mind.
A knee-jerk response to
Intel's announcement dropped the Dow 100 points into the red and put the
S&P 500 back in touch with its August low of 1040. Support there helped
stocks stage a sharp rebound that gained momentum by squeezing short sellers
out of their positions.
Buyers were also encouraged by
Fed Chairman Bernanke's comment that it is reasonable to expect some pickup in
growth in 2011 and subsequent years, even though the recovery in output and
employment has slowed. Bernanke also stated that policy options are available to
provide additional stimulus, if needed.
Though the stock market
attracted a broad bid, it initially had trouble pushing through the 1058 to
1060 zone. It eventually overcame resistance to settle at a session high just
below 1065. Despite such a strong close, the S&P 500 still logged its
second straight weekly loss of 0.7%. With that, the stock market is down more
than 3% month-to-date.
Nonetheless, the improved tone
among traders caused volatility to cool considerably. In fact, the Volatility
Index dropped more than 10% in its sharpest single-session slide in more than
two months.
Strong gains among stocks and
a drop in volatility drove many out of Treasuries. Specifically, the benchmark
10-year Note gave up more than a point so that its yield moved back above 2.60%
for the first time since Monday.
The dollar had a lackluster
session. It finished flat, though the Japanese yen dove almost 1% amid news
that Japan's central bank will hold an emergency meeting next week. Many
presume that the meeting's purpose is to discuss the yen's appreciation -
earlier this week the yen hit a 15-year high against the dollar.
Overall strength among
commodities helped the CRB Commodity Index advance 1.2%. Not only was that its
best single-session move of the month, but it also gave the CRB its first set
of back-to-back gains for August.
As an aside, the bidding
battle between Dell (DELL 11.89, +0.14) and Hewlett-Packard
(HPQ 38.00, -0.22) for 3Par (PAR 32.46, +6.43) continues,
though 3Par had already accepted an offer from Dell just yesterday. Dell upped
its offer this morning to $27 per share of PAR in order to match a new offer
from HP, but HP then raised its offer to $30 per share.
Overall strength among
commodities helped the CRB Commodity Index advance 1.2%. Not only was that its
best single-session move of the month, but it also gave the CRB its first set
of back-to-back gains for August. Oil prices climbed 2.5% to settle at $75.19
per barrel. That move extended the commodity's upturn from the two-month low of
$70.76 per barrel that it set earlier this week. Natural gas prices fell
another 4.7% to close pit trade at $3.64 per MMBtu, which marks a new 11-month
closing low for the energy component. Natural gas prices are now down more than
25% from their August high. Precious metals made modest gains. Specifically,
gold and silver prices both advanced 0.4%. They settled at $1242.50 per ounce
and $19.06 per ounce, respectively. Silver prices on the continuous future
contract had been as high as $19.34 per ounce, which marked their best level in
two months. Gold prices on the continuous contract set a near-two month high of
$1243.30 per ounce in the prior session.
Advancing Sectors: Materials (+2.9%), Energy (+2.8%),
Financials (+2.3%), Industrials (+2.1%), Utilities (+1.9%), Consumer
Discretionary (+1.6%), Tech (+1.2%), Health Care (+1.0%), Telecom (+0.8%),
Consumer Staples (+0.7%)
Declining Sectors: (None)DJ30 +164.84 NASDAQ +34.94 NQ100
+1.3% R2K +2.8% SP400 +2.2% SP500 +17.37 NASDAQ Adv/Vol/Dec 2165/2.16 bln/470
NYSE Adv/Vol/Dec 2608/1.09 bln/392