Inflation Fears Linger
Stronger-than-expected July new home sales cooled the market’s early-session
gains Tuesday, leaving stocks floundering throughout the day and ultimately
closing mixed. With banks, drugs, and airlines under pressure, the Dow and
S&P 500 lost about 0.3% each while the Nasdaq managed a small 0.3% gain.
Volume did pick up a bit from Monday’s light levels, with 787 million shares
trading on the NYSE and 1.46 billion shares changing hands on the Nasdaq.Â
For July, there were 944,000 new home sales, and that was significantly
higher than the 826,000 that analysts had expected. The figure was enough to
raise the level of concern among many analysts who had been expecting to see
the past year’s Fed rate hikes beginning to take a bite out of the ever-charging
U.S. economy.
“I think there’s a bit of concern about some of the
upcoming economic data and how it will be read by the Federal Reserve. Also,
the market continues to watch energy prices, so we have these issues in the background here that may be continuing
to cause some profit-taking and concern,” said Terence Gabriel, Stock Market Strategist,
IDEAglobal.com.
“I still see the
indices moving higher into mid-September, but at that point, I’m concerned we
might start to see some warning signs on the Producer Price Index in September,
and that might ultimately feed into the Consumer Price Index in
October. So, I think that once the market gets up into mid-September, it will
likely then suffer another round of relatively severe profit-taking and decline,”
he added.
According to preliminary numbers, the Dow lost 37.74 to 11,215.10, the
S&P 500 slipped 4.19 to 1509.90, and the Nasdaq gained 11.84 to 4082.42.
Top sectors of the day were broker/dealers
(
$XBD.X |
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PowerRating), up 5.3%,
Internets
(
$GIN.X |
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(
$XCI.X |
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PowerRating), up 0.7%.
On the downside were banks
(
$BIX.X |
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(
$HCX.X |
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PowerRating),
down 1.1%, airlines
(
$XAL.X |
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PowerRating), down 1.4%, and pharmaceuticals
(
$DRG.X |
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down 1.5%.
Broker/dealers were the hot sector of the day, mainly because of buyout talks
surrounding Donaldson Lufkin Jenrette
(
DLJ |
Quote |
Chart |
News |
PowerRating). DLJ soared 16 1/16 or 24% to 81
7/8 to lead the sector higher. Joining DLJ with big gains were Raymond James
Financial
(
RJF |
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PowerRating), up 6.4%, Bear Stearns
(
BSC |
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PowerRating), up 5.5%, A.G. Edwards
(
AGE |
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PowerRating),
up 5.3%, and Goldman Sachs
(
GS |
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PowerRating), up 4.4%.
Top Dow gainers included AT&T
(
T |
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PowerRating), up 4.9%, Caterpillar
(
CAT |
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PowerRating), up
4.0%, and J.P. Morgan
(
JPM |
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PowerRating), up 2.6%. Dow laggards included Philip Morris
(
MO |
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PowerRating),
down 2.9% and Alcoa
(
AA |
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PowerRating), down 4.0%.
Looking ahead, the August Index of Leading Economic Indicators will be
released at 10:00 AM ET, and analysts expect an increase of 0.1%.
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