items via e-mail from Schaeffers at market close:
<<After spending two consecutive sessions in negative territory, the U.S. equity market tacked on some modest gains on Friday, driven by a continued downtrend in energy prices and positive news out of the Bank of Japan. Early this morning, the Bank decided to hold interest rates steady, which helped power stock futures forward in the U.S.. A mid-morning speech from a Federal-Reserve official helped curb some concerns about future interest-rate hikes, keeping stocks solidly in the black for the remainder of the session.
The Dow Jones Industrial Average (DJIA - 11,392.1) fell short of the 11,400 mark but ended the day with a gain of 61 points, muscling back above its 10-day moving average. All but eight of the 30 Dow components finished in positive territory. Some of the index's strongest members on Friday included IBM (IBM), Wal-Mart Stores (WMT), and 3M (MMM). Among the losing names were Procter & Gamble (PG), Alcoa (AA), and Caterpillar (CAT). The S&P 500 Index (SPX - 1,298.92) closed up nearly five points and the Nasdaq Composite (COMP - 2,165.8) gained 10 points on the day. Both the SPX and the COMP were unable to overtake their respective 10-day trendlines. For the week, the Dow dropped 0.63 percent, the SPX was off 0.92 percent, and the COMP declined 1.25 percent.>>
also from Schaeffers today
<< Economic News
There was a notable lack of economic news on Friday until 3:00 p.m., when consumer credit figures for July were released. The figure rose $5.5 billion in July to $2.350 trillion, following a $14.1-billion increase in June. The latest reading was in line with economists' consensus estimate for a $6.0-billion expansion during the month. Non-revolving credit, such as car and boat loans, rose by $3.1 billion to $1.509 trillion. Revolving debt, which is mostly from credit cards, grew by $2.4 billion to $840.8 billion.
A House Divided
For the second day in a row, the housing sector came under fire. Prior to the open, another pair of earnings warnings hit the newswires. Lennar (LEN) cut its earnings estimate for the third quarter to a range of $1.25 to $1.35 per share, citing continuing deterioration in the U.S. housing market. Analysts were expecting a profit of $1.81 per share for the quarter. LEN stated that increased sales incentives along with certain land adjustments were the main factors behind lowering its estimate.
Thursday evening, St. Joe Company (JOE) reported that it plans to dismantle its homebuilding plans in Florida. The move will result in a reduction in the company's workforce and a charge of about $10.7 million to earnings. The charge consists of about $2.3 million for one-time, cash termination benefits to employees and $8.4 million of non-cash charges related to the write-off of capitalized homebuilding costs at several communities. The majority of these charges will affect JOE's third-quarter earnings figures.
Packard Your Bags?
Hewlett-Packard (HPQ) officials confirmed that its Chairwoman, Patricia Dunn, does not plan on tendering her resignation anytime soon, but is prepared to step down if requested by the company's board. Ms. Dunn has been criticized of late for her involvement in the investigation into pretext calls, which were used to obtain the phone records of various HPQ officials and journalists. Dunn, who has said she is "appalled" to learn of this practice, told The Wall Street Journal "I serve entirely at the pleasure of the board … if they determine it no longer is in the interest of shareholders [to serve in this role], I will [step down]." The board has scheduled a special meeting via phone this weekend.
Fed Watch
Friday morning, Sandra Pianalto, president of Cleveland's Federal Reserve Board, told an audience in suburban Chicago that "elevated inflation numbers" remain a concern. She also echoed Janet Yellen's view that the full effect of the central bank's tightening campaign has not yet worked its way through the market. Ms. Pianalto also opined that it will be difficult for the Fed to determine the proper "resting place" for interest rates.
Following these comments (and on the heels of Janet Yellen's moderately hawkish remarks on Thursday), the odds of another rate hike ticked slightly lower. November fed funds futures edged lower and now imply a 12-percent chance that the Fed will raise its target for overnight rates to 5.5 percent from 5.25 percent after one of its next two meetings (September 20 and October 24-25). The December fed funds contract currently reflect a 16-percent chance that the overnight rate will be raised to 5.5 percent after the next three meetings (including the December 12 meeting). Late Thursday, the November contract implied a 14-percent chance and the December contract implied a 20-percent chance that the Fed would hike rates to 5.5 percent.
Commodity Catch-Up
Crude futures stumbled lower on Friday, marking the fifth consecutive losing session for the commodity. The October contract lost $1.07, or 1.6 percent, to settle at $66.25 per barrel. In intraday trading, black gold visited the $66 level, its lowest point since March 24. For the week, crude futures dropped $2.94, or more than four percent. October unleaded gasoline futures slid 3.26 cents lower to $1.6091 per gallon, its lowest level since mid-February. For the week, gasoline futures lost 7.2 percent. Elsewhere, October natural gas futures dropped 4.3 cents to $5.675 per million British Thermal Unites, following an intraday move to its lowest level since August 2004. On the week, natural gas lost 3.4 percent.
December gold futures continued to decline on Friday, settling $7.60 lower at $617.30 an ounce, the lowest close for the yellow metal since late June. For the week, the yellow metal retreated 2.4 percent. December silver finished at $12.295 an ounce, down 40 cents for the day. The metal logged a 5.9-percent loss for the week. December copper lost eight cents to close at $3.568 a pound Friday. However, it closed up 3.1 percent from a week ago.
Dollar Details
The U.S. dollar was upbeat on Friday, rising to six-week highs against the euro, the sterling, and the Swiss franc, as investors enjoyed a renewed hope for the economy. In New York trading, the euro dropped to $1.2667, compared with $1.2732 on Thursday. The greenback changed hands at 116.85 yen, up from 116.44 yen the previous session. The dollar index hit an intraday peak of 86.06, its highest point since July 26.
Treasury Talk
The bond market mustered some gains on Friday, sending yields lower in the wake of Ms. Pianalto's measured remarks. The 10-year Treasury note rose 5/32 to 100-26/3, shifting its yield to 4.77 percent. The 30-year long bond rallied 9/32 to 93-17/32, to yield 4.919 percent. The yield curve remained inverted, as the two-year yield dropped to 4.79 percent while the underlying bond edged 1/32 higher.
Levels to Watch in Trading:
Dow Jones Industrial Average (DJIA - 11,392.1) - support at 11,000; resistance at 11,670.2
S&P 500 (SPX - 1,298.92) - support at 1,200; resistance at 1,322.63
Nasdaq Composite (COMP - 2,165.8) - support at 2,000; resistance at 2,270>>
