(COP) Stock Market News for August 24, 2011 – Market News

Neither the East Coast earthquake nor weaker-than-expected domestic economic reports could prevent the markets from staging a strong rally that also saw the Dow posting its best gains in two weeks. Encouraging global economic reports helped to boost the mood of the investors, who were already tempted by the cheap prices of beaten-down bellwether stocks.

The Dow Jones Industrial Average (DJIA) sprung 322.11 points or 3% to settle at 11,176.76. The Standard & Poor 500 (S&P 500) jumped 3.4% and finished the day at 1,162.35. The Nasdaq Composite Index moved up 4.3% to wrap up at 2,446.06. The fear-gauge CBOE Volatility Index (VIX) moved down by 15% to hover around 36. The fear-gauge index is still over the key level of 30, which is considered a high degree of fear, but has substantively come down from its recent high of 48. On the New York Stock Exchange, consolidated volumes were above the average at 5.2 billion shares and for every one stock that moved down, there were five stocks which gained. The indices are holding on to their gains until now this week and the Dow, S&P 500 and Nasdaq are up 3.3%, 3.5% and 4.5%, respectively.

It was a strong rally throughout the day for the benchmarks, but for when East Coast tremors dampened the mood temporarily. The earthquake that began in Virginia and had its tremors being felt also in Boston looked set to reverse the sentiments, but fortunately the benchmarks shrugged off any concerns arising from it and were soon back on a firm footing. At around 1:51 p.m. Eastern Time (ET) the quake shook the Dow down by 60 points, but within half an hour the Dow was up and soaring. The quake brought back memories of the March 11 Japanese earthquake and the following nuclear-crisis, but luckily media reports confirmed that no nuclear plant was damaged by the largest earthquake to hit the East Coast in 67 years. However, two Virginia based nuclear reactors at operated by North Anna Power Station Dominion Resources, Inc. (NYSE:D) were taken off-line automatically by safety systems. Shares of the company dropped by a percentage point moments after the news broke out, but recouped losses to end up 1.8% at $49.10. Also, parts of Capitol, White House and Pentagon were evacuated.

Meanwhile, investors remained hopeful of the possibility for a third round of quantitative easing that might be announced by Federal Reserve Chairman Ben Bernanke this Friday in his speech at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. Investors are hopeful that the bond-buying plan will give a boost to faltering financial markets. It was August last year when Bernanke had actually laid the foundation for the $600 billion bond-buying plan known as the QE2. However, a few market watchers opined that Bernanke may not hint at any asset-purchase plan on Friday. Whatever the case, the speech will most likely provide direction to the markets for the next few days.

Economic reports on the domestic front were far from encouraging and the Commerce Department reported new home sales had dipped to a five-month low in July. According to the U.S. Census Bureau and the Department of Housing and Urban Development: “Sales of new single-family houses in July 2011 were at a seasonally adjusted annual rate of 298,000,” and “This is 0.7 percent (±12.9%)* below the revised June rate of 300,000, but is 6.8 percent (±13.5%)* above the July 2010 estimate of 279,000”. The consensus for the current period had projected sales of new homes to come in at 311,000. To add to these woes, the Richmond Federal Reserve reported the index of factory activity sank in July with receding growth in new orders and shipments.

However, encouraging reports from the international sector swept away these negatives. The preliminary HSBC China Manufacturing Purchasing Managers Index showed that manufacturing activity in China contracted at a slower-than-expected rate. The index declined for a second month in July and the reading came in at 49.8, but was higher than what analysts had projected. Additionally, manufacturing activity also came in better-than-expected in Germany with a reading of 52.0 in August, against expectations that the index might fall below 50.

Among the sectors, the energy sector was a clear gainer as it surged following a $1.02 hike in oil price. Gainers in the sector included Exxon Mobil Corporation (NYSE:XOM), Chevron Corp. (NYSE:CVX), Marathon Oil Corporation (NYSE:MRO), Murphy Oil Corporation (NYSE:MUR), Occidental Petroleum Corporation (NYSE:OXY), Hess Corporation (NYSE:HES) and ConocoPhillips (NYSE:COP) and they gained 5.0%, 4.3%, 2.7%, 4.5%, 2.8%, 2.7% and 3.8%, respectively. Exxon Mobil Corporation was also among the leading gainers in the Dow.

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

DOMINION RES VA (D): Free Stock Analysis Report

HESS CORP (HES): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

MURPHY OIL (MUR): Free Stock Analysis Report

OCCIDENTAL PET (OXY): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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