Dow ($INDU) ends five day winning streak, with stocks falling despite positive economic news. The Dow fell 38.30 points, closing the session at 9,271.76. The S&P 500 ($SPX) declined 0.64 percent to 984.03. The Nasdaq ($COMPQ) finished near the flat line at 1,686.59, a loss of just 0.42 points. Volume continued to be light, with the NYSE trading 1.20 billion shares and the Naz turning over just 1.44 billion. Market breadth was negative on the Big Board by an 18-to-14 margin, though the Naz saw winners best losers by a 16-to-15 margin.
Economic and earnings news garnered most the attention on Wednesday, though this mostly positive news was unable to rally stocks. Retail sales rose 1.4 percent in July, well above estimates for a gain of 0.9 percent. Most segments of the retailing sector gained ground, with year over year growth rising 5.6 percent. At the same time, Wal-Mart (WMT) was able to match raised earnings expectations. However, the company forecasted earnings that were slightly below current estimates. As a result, the stock fell 1.24 percent to close at $58.07. Nonetheless, the stock did reach a new 52-week high on Tuesday. Overall, the S&P Retail Index ($RLX) fell a minor 0.09 percent.
One sector bucking the downtrend in stocks Wednesday was the chip sector. The Philly Semiconductor Index ($SOX) added 1.86 percent on strength in shares of Applied Materials (AMAT) following its quarterly earnings announcement. The chip equipment maker beat analysts’ estimates, but warned that current quarter earnings were tracking at the low end of estimates. Nonetheless, the stock rose 3.36 percent. KLA-Tencor (KLAC) shares led SOX components, gaining 5.26 percent. The sector is likely to be impacted by Dell’s (DELL) earnings announcement Thursday afternoon.
Bond prices continued their losing ways on Wednesday, with strong economic numbers leading to higher yields on Treasury’s. If bond yields continue to rise, investors might be more apt to put cash into fixed income rather than stocks. Only time will tell, but it seems like the bulls just don’t have the strength to push the major market indices to new highs in the near term. This means that stocks will either lose ground or continue to trade in a range. With volume so low, it is hard to get a good reading on the stock market, so make sure you understand the risks of each trade and have an exit strategy in place.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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