(XLY) Stock Market News for July 21, 2011 – Market News

On Wednesday, markets ended almost flat with a marginally negative bias as disappointing home sales data and concerns about the debt ceiling overshadowed Apple’s stellar quarterly results. Volumes remained low as investors chose to take a breather a day after the Dow posted its best rally for the year.

The Dow Jones Industrial Average (DJIA) shed 0.1% to settle at 12,571.91. The Standard & Poor 500 (S&P 500) was down less than 0.1% to close the day at 1,325.84. The Nasdaq Composite Index declined 0.4% and finished the day at 2,814.23. The fear-gauge CBOE Volatility Index slipped to settle below 19. Volumes remained tight on the New York Stock Exchange, NYSE Amex and Nasdaq, and consolidated volumes were 6.38 billion shares, compared with the daily average of 7.48 billion. On the NYSE, advancing stocks outnumbered declining stocks by 1658 to 1314.

The Dow and the S&P 500 may have dropped a few points yesterday, but still look set to post their best weekly gains in three weeks. For the Dow, advancing and the declining stocks maintained a balance as 15 out of the 30 Dow components ended in the green. Among the decliners in the Dow, only Microsoft Corporation (NASDAQ:MSFT) and United Technologies Corp. (NYSE:UTX) inched down by more than a percent as they shed 1.7% and 1.8%, respectively, while the rest of the 13 decliners declined lesser than 1%.

As for the S&P 500, the consumer discretionary sector was a big laggard but financials limited the broader losses as they made considerable gains. The Consumer Discret Select Sector SPDR (XLY) fund traded down 0.5% and declining stocks included Target Corp. (NYSE:TGT), Dollar Tree, Inc. (NASDAQ:DLTR), Costco Wholesale Corporation (NASDAQ:COST), Dollar General Corporation (NYSE:DG) and Wal-Mart Stores Inc. (NYSE:WMT) and they shed 0.7%, 0.6%, 0.2%, 1.8% and 0.2%, respectively.

The Financial Select Sector SPDR (XLF) fund was up 1.1%, and though Bank of America Corporation (NYSE:BAC) and The Goldman Sachs Group, Inc. (NYSE:GS) posted discouraging earnings results, these shares were up 2.9% and 3.3%, respectively. Also, stocks like JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), Citigroup, Inc. (NYSE:C) and UBS AG (NYSE:UBS) gained 1.4%, 3.5%, 1.6% and 3.7%, respectively.

Investors continued to be weighed down by concerns about the impasse over the debt-ceiling deal. On Tuesday, President Obama had sparked a late-rally after he endorsed the Gang of Six’s new $3.75 trillion deficit reduction programme. However, investors were skeptical over the viability of the proposal and the final outcome remains uncertain. Congress and the White House must hurry to reach an agreement over raising the multi-trillion debt-ceiling. On Thursday last week Moody’s Investors Services had put the US’ AAA rating under review for a possible downgrade, citing “the rising possibility” that Congress will fail to pass the debt ceiling by August 2. If Congress does not raise its $14.3 trillion debt ceiling by August 2, the Treasury Department may fail to pay at least 40% of its bills.

In another development, the National Association of Realtors (NAR) reported an unexpected decline in existing home sales which hit a seven-month low. The report stated: “Total existing-home sales, which are completed transactions that include single-family, town homes, condominiums and co-ops, declined 0.8 percent to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8 percent below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit”. NAR’s chief economist Lawrence Yun said: “Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month.” “The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year,” he added.

Coming back to earnings result, Apple Inc.’s (NASDAQ:AAPL) third quarter 2011 came in better than expected and the tech-giant substantially surpassed both earnings and revenue estimates. Total sales soared 82.0% year over year as Apple recorded its highest ever sales numbers. Earnings also surpassed estimates by 34.1% and sky-rocketed 122% on a year-over-year basis.

APPLE INC (AAPL): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

DOLLAR GENERAL (DG): Free Stock Analysis Report

DOLLAR TREE INC (DLTR): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

UBS AG (UBS): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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