The market ended the last trading session of the week in a lackluster fashion. All three major indices were lower for the second day in a row but the loss was limited. As for the week, the market was essentially flat. Given all the volatility early in the week, it was truly amazing to note that the Nasdaq only moved 0.5 point(not %) for the week as a whole. We had some important economic news. Start with the closely watched monthly job report. The nonfarm payrolls fell 51K in July, which was slightly better than consensus. The jobless rate, on the other hand, rose to 5.7%, slightly worse than expectation. The payroll numbers for the previous two months were also revised up by 26K. In a separate report, the ISM index for July came at 50 vs. 49.2 expected. Within the ISM index, the New Orders dropped to 45.0 from 49.6; Production increased to 52.9 from 51.5 while Employment advanced 8.2 points to 51.9. Prices component remained high at 88.5 but was slightly better than 91.5 in the previous month. Finally, construction spending for June dropped 0.4% while economists were looking for a decline of 0.3%.
Financial was the only major sector that ended the session in green. On the losers’ list, we had names like basic materials and transportation. The CRB commodity index was little changed after dropping 10% in July. The US dollar was higher against most major currencies while treasuries continued to move sideways. The VIX index dropped slightly. The market breath was negative on both NYSE and Nasdaq.

The market finished the final session of the month in a downbeat tone. The Dow posted a loss of 206 points, essentially giving up almost half of the gains from the previous two sessions. The Nasdaq fared relatively well and only lost 0.2%. The S&P 500 was somewhere in the middle with a loss of 1.3%. As for the month of July, the S&P 500 lost 1% after rebounding from a 2-year low reached early and the Dow was actually up fractionally for the month. We had a busy day in terms of economic news. But unfortunately, most of them failed to impress investors. Start with the weekly jobless claims. The figure of adjusted initial claims for the week ending July 26 came at 448K, the highest in 3 years. Economists were looking for a number close to 400K. The number for continuing claims, meanwhile, jumped 185K to a seasonally adjusted 3.282 million. The numbers didn’t bode well for tomorrow’s all-important nonfarm payrolls report. Move on, we had a chance to look at the Q2 GDP. Here the picture was not looking rosy either. The initial reading in Q2 GDP indicates that the economy was growing at an annual pace of 1.9% in Q2 vs. 2.3% expected. In fact, if it were not helped by the 2.4% contribution in net exports, which benefited greatly from a weak dollar, the economy would have contracted at a 0.5% pace. Previous quarters’ GDP figures were also revised down. The final quarter of 2007 was revised to -0.2% from the original estimation of 0.6%, confirming the views on Wall Street that the contraction actually started late last year. Finally, the Chicago PMI came at 50.8 vs. 49.0. The prices paid component surpassed 90 for the first time since 1980.
Healthcare was the only major sector that finished the session in green. On the losers’ list, we had names like energies and consumer staples. The huge rally in energies yesterday turned out to be a one-day event. The CRB commodity index ended the session slightly lower as weakness in energies was partially offset by strength in precious metals. The US dollar was little changed. Treasuries rallied with the weak economic news. The VIX index jumped more than 8% and closed at 22.94. For the month, it was actually lower by 1 point. The market breath was negative on both NYSE and Nasdaq.

Bulls are back on Wall Street. For the second session in a row, the market rallied massively with the Dow advancing another 186 points. The S&P 500 had an even better day in percentage terms with a gain of 1.7%. The Nasdaq was the weakest among the three but it also gained 10 points following a 55-point advance yesterday. Interestingly, the market had a very strong rally today despite an almost $5 rally in crude price. But if history is any guide, only one of the two rallies is real. We had some positive news on the job front. The ADP report for July showed a gain of 9K jobs while economists were looking for a decline of 60K. Breaking down into details, today’s ADP report showed a decrease of 65K jobs in goods-producing industries while service providers added 74K. We are going to get more important nonfarm payrolls report this Friday and historically there is little correlation between the government report and the ADP report. In the latest attempt to ease the credit crunch, the Fed extended its emergency lending program to investment banks through January as policy makers judged that “markets are still fragile”. The news had little impact on the market as it was widely anticipated.
Energies and basic materials were among the best performers for the session. The former was helped by a sharp rebound in crude price, which was triggered by a relatively bullish inventory report. On the losers’ list, we had names such as consumer cyclical and healthcare. The CRB commodity index rebounded sharply led by energies. The US dollar was little changed against most major currencies ahead of the advance reading for Q2 GDP that will be released tomorrow morning. Treasuries also had a quiet day ahead of the key economic reports. The VIX index slumped more than 3%. The market breath was positive on both NYSE and Nasdaq with above-average volume.

The market rallied sharply on this Tuesday. All three major indices were higher by more than 2%, essentially erasing all losses from the previous session and then some. The news on the economic front was dismal but still managed to beat expectation. Start with the S&P/Case – Shiller home-price index for May. The index dropped 15.8% from a year earlier, the biggest decline on record. Economists were looking for a drop of 16%. On a month-to-month basis, home prices decreased 0.9% in May from the prior month compared to a drop of 1% in April. Among the 20 areas covered by the index, all of them showed a year-over-year decrease in prices for the second consecutive month and 13 showed a drop in home prices on a month-to-month basis. In a separate note, the Conference Board’s consumer confidence index for July came at 51.9 vs. 50.1 expected. Crude price dropping to the lowest level since May 6th also helped the market sentiment.
Energies were among the only major sector that posted a loss due to lower crude price. Financials and transportations were among the best performers for the session. The latter was of course main beneficiary of falling oil price while the former enjoyed a massive rally despite further write-downs reported by a major brokerage firm. The CRB commodity index continued to slide and closed at the lowest level since early May. The index has lost over 11% for the month but year-to-date, it was still up more than 10%. The US dollar was higher against most major currencies. Treasuries sold off as money fled away from the previously safe heaven. The VIX index tumbled 2 points. The market breath was positive on both NYSE and Nasdaq with decent volume.

The market started the new week in a weak tone. For the second time in the last three sessions, the Dow dropped more than 200 points. The Nasdaq lost 46 points while the S&P 500 gave up 1.9%. There was little economic news scheduled to be released. In late afternoon, Treasury Secretary Paulson along with the largest four banks announced a plan for issuing covered bonds, which are similar to traditional asset-backed securities but would be kept on the issuers’ balance sheet. However, since the details of the plan were not revealed and there is also no clear timetable for implementing the plan, investors more or less ignored the news. A rebound in crude price was not seen as friendly to the market sentiment either.
Financials and consumer cyclicals were among the biggest losers for the session. Apparently investors were still concerned about the health of the financial sector and were unwilling to commit new capital to the beaten down sector. Basic materials and energies, on the other hand, had a rebound today after being beaten down for the most part of the month. The CRB commodity index also rebounded fractionally, avoiding a 5-day losing streak. The US dollar was mixed against the most major currencies. Treasuries rallied across the board due to typical flight to quality trade. The VIX index jumped more than 5% and closed above 24. However, it remained too low to trigger any capitulation rally. The market breath was negative on both NYSE and Nasdaq with moderate volume.