News out of Iraq spurs buying in U.S. stock markets after weak open. The Dow ($INDU) tacked on 61.76 points, or 0.68 percent, to close at 9,158.45. The S&P 500 ($SPX) gained 0.95 percent to 988.11, with the Nasdaq ($COMPQ) rising 1.46 percent to 1,706.02. Volume was a bit light, with the NYSE trading 1.4 billion shares and the Naz turning over 1.7 billion shares. Market breadth was positive by an 18-to-14 and 20-to-11 margin on the Big Board and Naz respectively.
Earnings news continued to be a major focus on Tuesday, but reports about the death of Saddam Hussein’s sons took the spotlight. Earlier in the session, rumors came across the wires that Uday and Qusay might have been killed and this led to the immediate buying of stocks. However, the confirmation of this news didn’t occur until right before the market closed
Tech stocks led the advance on Tuesday, with the AMEX Networking Index ($NWX) 4.17 percent and the Philly Semiconductor Index ($SOX) adding 3.25 percent. Shares of Tellabs (TLAB) gained 16.64 percent after the announcing second quarter earnings. The company net EPS estimates and revenues were better than expected. Nonetheless, the company stated that previously announced job cuts would continue. Shares of Texas Instruments (TXN) also gained ground after besting estimates by a penny a share. Revenues were also slightly ahead of expectations. Nonetheless, the company remains cautious about the future, though executives do see a bottom forming.
On the downside, shares of biotech firm Millennium Pharmaceuticals (MLNM) fell five percent after warning about full-year revenues and missing current quarter projections. Overall, the Biotechnology Index ($BTK) rose 1.34 percent, led by nearly six percent gains in shares of Genzyme (GENZ) and Protein Design Labs (PDLI).
Retail stocks saw minor advances on Tuesday with the S&P Retail Index ($RLX) up 0.43 percent. Chain store sales rose 0.3 percent during the week ending July 19, marking the third consecutive week of gains for this report. However, economists point out that sales have been strong partly due to high inventories that have resulted in promotional activity.
Overall, earnings season has created volatility for the stock market and this is likely to continue in the next few weeks. Though stocks have not fallen sharply, it is unlikely the bulls will have the strength to push the major market indices through resistance either.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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