Major U.S. stock indexes closed slightly higher Wednesday, overcoming some earlier bouts of profit taking in the final moments of trading.
For most of the day, the market seesawed within a narrow range as investors contemplated whether to buy or take profits on recent gains. The caution came despite stronger-than-expected news concerning durable goods orders and home sales.
On Wednesday, the 30-stock Dow Jones industrial average finished higher by 4.23 points, or 0.04%, at 9,543.42. The broad Standard & Poor's 500-stock index edged higher by 0.12 points, or 0.01%, at 1,028.12. The tech-heavy Nasdaq composite index added 0.20 points, or 0.01%, to 2,024.43.
Activity in the broader market was mixed. On the New York Stock Exchange, 16 stocks were lower in price for every 14 that gained. Breadth on the Nasdaq was 14-13 positive.
While Wednesday's data suggest the housing industry is stabilizing, and the recession is ending, stock-market action indicates that equity investors "have discounted a V-shaped economic recovery", according to S&P MarketScope.
Among sectors on the move Wednesday, the S&P Homebuilding index gained 2.87% after the much better than expected news on new home sales.
The S&P General Merchandise Stores index rose 2.56% after Dollar Tree raised its fiscal 2010 guidance.
Treasuries were mixed after a successful auction of $39 billion in five-year notes. The dollar index was higher. Gold futures were lower. Crude oil futures were lower following the weekly U.S. inventory report from the Energy Dept. that showed crude oil stocks rose 200,000 barrels, gasoline fell 1.7 million barrels, and distillates rose 800,000 barrels.
On Thursday, traders will focus on the release of revised second-quarter U.S. gross domestic product (GDP) figures at 8:30 a.m. ET. S&P sees growth falling 1.5%, vs. the 1.0% decline originally reported.
In company news Wednesday, Williams-Sonoma (WSM) posted breakeven second-quarter results, vs. earnings per share (EPS) of $0.17 one year earlier, on 15% lower same-store sales and 18% lower total sales. Wall Street was looking for a loss per share of $0.09. The company sees a 12%-15% fiscal 2010 same-store sales decline, $2.844 billion-$2.944 billion in revenue, and $0.06-$0.18 GAAP EPS.
New York & Company (NWY) posted a second-quarter loss of $0.08 per share, vs. $0.14 EPS, on a 16% drop in same-store sales and a 16% total sales drop. The company said it will no longer provide specific sales and EPS guidance, but will provide meaningful trend information on business fundamentals, key metrics, and strategic initiatives. The company sees the same-store sales trend for the third and fourth quarters improving vs. the first half, with increased gross margins vs. the same periods last year.
Hain Celestial Group (HAIN) posted fourth-quarter adjusted EPS of $0.28, vs. $0.34, on a 5.5% net sales decline. Hain said foreign exchange rates negatively impacted sales by $10.7 million. Wall Street was looking for EPS of $0.30. The company sees $1.19-$1.28 fiscal 2010 EPS on sales of $1.01 billion-$1.03 billion.
Myriad Genetics (MYGN) posted $0.37 fourth quarter EPS from continuing operations, vs. $0.23, on a 33% revenue rise. The company said it is comfortable with current consensus estimate for fiscal 2010.
Dollar Tree (DLTR) reported second-quarter EPS of $0.63, vs. $0.42, on a 6.8% same-store sales rise and a 12% total sales rise. The discount retailer sees third-quarter sales of $1.19 billion-$1.23 billion, based on low to mid-single-digit positive same-store sales, and EPS of $0.58-$0.64. The company raised its fiscal 2010 guidance, and now sees sales of $5.09 billion-$5.19 billion, and EPS of $3.10-$3.25.
CNOOC Ltd. (CEO) posted first-half EPS of 0.28 renminbi, vs. 0.62 renminbi, on a 40% drop in oil and gas sales. French President Nicolas Sarkozy's plan to shun bankers who don't accept pay limits was met with alarm by analysts and investors in the U.S., where Citigroup and six other bailed-out companies are being grilled by the government on how they compensate top-paid executives, Bloomberg News reports. "I find Sarkozy's statements threatening," said Bruce Foerster, president of South Beach Capital Markets in Miami and a former Lehman Brothers Holdings Inc. executive. France won't hire financial firms unless they apply rules agreed to by French bankers that include a three-year deferral on two-thirds of bonus payments, Sarkozy said yesterday. He aims to bring his proposals to the Group of 20 summit in Pittsburgh next month, which President Barack Obama is scheduled to attend.
The German Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 90.5 from 87.4 in July-- the highest reading since September last year and the fifth consecutive gain. Economists expected a gain to 89, the median of 41 forecasts in a Bloomberg News survey showed.
In economic news Wednesday, U.S. new home sales jumped 9.6% to a 0.433 million unit annual pace in July, from a revised 0.395 million in June (was 0.384). May's 0.346 million was revised up to 0.362 million, for a net 0.034 million upward revision. That is the largest increase since February 2005, is a fourth consecutive monthly increase. Gains were seen across three of the four regions. The months' supply of homes fell to 7.5 after falling to 8.5 in June (revised from 8.8). There were 271,000 homes on the market, the lowest since 1993, compared to 280,000 (revised from 281,000) in June. The median sales price was little changed at $210,100 from $210,400 (revised from $206,200). That's down only 0.1% year-over-year.
These data are better than expected, but may have been boosted by the first time home buyer tax credit, says Action Economics.
U.S. durable goods orders rebounded 4.9% in July after a revised higher to a 1.3% decline in June (was -2.5%). The headline is hotter than expected and the best since 2007, but this is a very volatile report. Excluding transportation, orders edged up 0.8%, a third consecutive monthly gain, with June's 1.1% print revised up to 2.5% in July. Transportation orders surged 18.4% after a revised 12.0% June drop (was -12.8%). Nondefense capital goods orders, excluding aircraft dipped 0.3%. Shipments rose 2.0% after rising 0.7% in June (revised from -0.2%). Inventories fell 0.8%. The inventory-shipment ratio dropped to 1.81 from 1.89 (revised from 1.89).
U.S. MBA mortgage market index rose 7.5% in data released earlier, while the purchase index climbed 1.0% and the refinancing index surged 12.7% for the week ended Aug-21. Average mortgage rates actually climbed slightly, so it's not clear what exactly was driving the refinancing flurry, though major banks have reportedly been stepping up their foreclosure mitigation efforts, says Action Economics.