The market finished the last trading session of the week in a mixed fashion. The Dow, after an eye-popping 484 points rally in the past two sessions, advanced another 50 points. The Nasdaq, on the other hand, lost 30 points due to disappointing earnings reports from Google and Microsoft. The S&P 500 was little changed in today’s trading and gained 1.7% for the week, which was the first gain in seven weeks. It was a light day in terms of economic news but several important earnings reports kept traders busy on this option expiry date. Another drop in crude price also provided some support to the broad market.
Financials were again among the best performers for the session. What a difference one week can make! After falling relentlessly in the past few weeks, financials snapped back strongly. Many biggest US banks, including JP Morgan, Citigroup, Bank of America, advanced more than 20% for the week. Of course, on a year-to-date basis, the sector was still down over 25%. Some of the year’s biggest winners, including oil producers, steels, coals, agricultures, however, started to lose steam heading into the second half of this year and the trend became more obviously this week. Crude oil posted the record loss in the week and closed at the lowest level since June 6th. The CRB commodity ended lower for the fifth consecutive session as strength in industrial metals was offset by weakness in energies, agricultures and precious metals. The index has lost over 7% for the month but year-to-date, it was still up more than 15%. The US dollar was higher against most major currencies. Treasuries continued to tumble as the previously safe-heaven is looking less attractive now. The VIX index ended the session lower by around 1 point. The market breath was positive on NYSE and slightly negative on Nasdaq.

The market continued to rally on this Thursday. The Dow, after gaining 276 points yesterday, added another 207 points. In fact, Dow’s two-day 4.4% gain was the best two-day performance since October 15, 2002. The Nasdaq was not falling behind by adding 1.2% on top of yesterday’s 3%+ gain. Most economic news for the session was on the positive side. Start with the weekly jobless claims. The initial claims for the week ending July 12th came at 366K, slightly less than 380K expected. The number for continuing claims, meanwhile, decreased 81K to 3.122 million. We also received some surprisingly good news on the housing front. Both building permits (1091K actual vs. 965K consensus) and housing starts (1066K vs. 960K) for June surpassed market expectation by a wide margin. However, one month data should not be considered as a trend. In fact, if yesterday’s record low home builder sentiment is any guide, we probably will see worsening housing condition in the months ahead. Finally, the Philadelphia Fed index came at -16.3 while economists were looking for a reading somewhere near -15, indicating contraction of manufacturing activities in that region for the eighth consecutive month.
The three major sectors that finished the session in red were exactly the same as yesterday. For those that missed yesterday’s comments, the names were energies, basic materials and utilities. Energies were dragged by another $5 plunge in crude price. The commodity has lost over 10% during the past sessions. Not surprisingly, the CRB commodity index posted a fourth consecutive decline by losing 2.7% in today’s trading. Financials were again the top performer in today’s trading. The positive earnings report from the largest US bank JP Morgan re-assured investors that yesterday’s Wells Fargo news was not one time wonder and there are still some good apples left in an otherwise rotten sector. The US dollar was mixed against most major currencies while treasuries were sold off as investors were fleeing away from the previously safe heaven. The VIX index was little changed today ahead of several key earnings. As tomorrow is the option expiry date, we should expect to see more volatilities given earnings surprises from Google and Microsoft after the bell.

The market had a huge rally on this Wednesday. All three major indices gained more than 2.5%, making it the best single-day performance since April 1st. The news on the economic front was actually more inclined to the negative side. After yesterday’s hotter than expected PPI figures, the headline CPI increased 1.1% in June. Economists were looking for a number close to 0.6% obtained in May. On a year over year basis, the CPI surged 5% from last June, the biggest jump since 1991. Excluding food and energy, the so-called core CPI advanced 0.3% in June compared with the previous month and 2.4% from a year before. The core CPI reading also exceeded what economists had expected. In a separate note, industrial production rebounded 0.5% in June from a decline of 0.2% in May. The gain is partly due to resolution at plants that had been idled during the American Axle strike. Accordingly, capacity utilization increased to 79.9% from 79.6%. Both measures exceeded market consensus. Finally, the NAHB housing market index fell in July to a record low of 16, down from 18 in June, indicating we may see further weakness in new home sales for the next few months.
Energies, basic materials and utilities were among the only major sectors that finished the session in red. Following yesterday’s $6-plus plunge in crude price, which was the biggest one-day loss in 17 years, crude lost another $4 in today’s trading due to an unexpected built-up in weekly inventory report. On the winners’ list, we had names like financials and transportations. Financials had the biggest one-day rally in its history partly due to a better than expected earnings report from the fifth largest US bank Wells Fargo. However, part of the rally in financials could also be attributed to short covering. Within transportation, airlines had its biggest one-day gain ever but year-to-day, the index still lost over 50%. The CRB commodity index continued to slide due to weakness in energies and metals. Treasuries were sold off partly due to reverse of flight to quality trade and partly due to rising CPI. The US dollar was stronger against most major currencies after a weak open. The VIX index plunged more than 3 points and closed at 25.1. The market breath was decisively positive.

The market continued to trade in a volatile fashion on this Tuesday. The Dow, down as much as 223 points earlier, finished the session lower by 0.8%. The Nasdaq was the only major index that ended the day in green. The S&P 500 lost more than 1% after falling as much as 2.2% earlier. The news on the economic front was mostly on the negative side. The headline PPI increased 1.8% in June following a 1.4% jump in the previous month. Economists were looking for an increase of 1.3%. Year-over-year, PPI increased 9.2%, which was the biggest y-o-y jump in 27 years. Excluding food and energy, the so-called core PPI rose 0.2% compared to 0.3% expected. In a separate report, retail sales rose 0.1% in June while economists called for an increase of 0.4%. Excluding auto sales, retail sales increased 0.8% vs. 0.9% expected. However, most of that 0.8% should be attributed to rising gasoline sales, which increased 4.6% in June. Finally, the NY Empire State Index, a regional manufacturing index, came at -4.9, slightly better than -8.0 expected.
Energies, basic materials and financials were among the biggest losers for the session. Financials suffered one of its steepest losses yesterday and dropped a further 5% earlier today before a temporary rebound. Energies, on the other hand, were mainly victims of a sharp drop in crude price, which plunged more than $10 in early trading. The CRB commodity index ended the session lower by 2%, mainly driven by weaknesses in energies and agriculture products. The US dollar was lower against most major currencies. Earlier, it hit a new low against the euro. Treasuries rallied due to typical flight to quality. The VIX index was little changed at close after briefly breaking the magic 30 level earlier. The new lows on NYSE and Nasdaq exceeded 1500 issues with unusually heavy volume. The market breath was negative on NYSE and slightly positive on the Nasdaq.

The market started new week in a volatile fashion. The Dow, up more than 130 points during early trading, finished the session down by 45 points. The S&P 500 opened the day higher by more than 1% but ended the day lower by almost 1%. The Nasdaq also lost more than 1% for the session. It was a light day during an otherwise busy week in terms of economic and corporate earnings news. But several headline news did hit the wire over the weekend. Start with the failure of IndyMac Bank. With more than $32 billion assets under its management, IndyMac became the second largest financial institution to fail in US history. The news created ripple effect to other regional banks. Washington Mutual, for instance, posted its biggest drop ever today by losing 35% despite the company insisted it saw no unusual depositor activity. Clearly, investors are concerned that their money will be the first to go in cases of banking failures. The other important announcement over the weekend came from Treasury Secretary Paulson, who outlined a plan to ensure that the GSEs will not be short of funds. The market initially took the news positively by bidding up financial stocks but quickly resumed its selling activities.
Financials and technologies were among the biggest losers for the session. On the winners’ list, we had names like basic materials and energies. The CRB commodity index lost less than 1% as strengths in energies and precious metals were offset by weaknesses in agriculture products. The US dollar was mixed against most major currencies. Treasuries reversed losses from last Friday as typical flight to quality trade resumed during turmoil times in equity market. The VIX index jumped more than 3% and closed 28.48. The market breath was negative with more 1000 issues hitting fresh 52-week lows.