Posted by: Catherine | June 30, 2009

Stock Markets Give Up All Of Mondays Gains

The stock markets had a rough day on Tuesday, giving up virtually all of the  gains made on Monday.  The Dow Jones Industrial Average lost 82.38 points or almost one percent, the Nasdaq gave up 9 points or half a percent and the Standard and Poors 500 Index, the broadest of the three, was down 7.91 points or 0.85 percent.  The Dow was actually in positive territory this morning until the release of the consumer confidence number of 49.3 for June.  A big drop from the 54.8 number in May and huge miss of the consensus estimates that were as high as 56.  With the consumer being two thirds of the economy this was a painful miss for the markets.

Despite Tuesdays losses the Dow still finished the second quarter with a gain of 838.08 or 11.01%.  It was one of the best quarters for the Dow in more than five years.  Because of the rough first quarter the Dow Jones is still negative year to date by 3.8%.  The Standard and Poors 500 index had its best percentage gain in a quarter in over a decade, tacking on more than 15%, but year to date the index is only up by 1.8%.  The technology heavy Nasdaq has been the best performer over both periods gaining 20.1% in the second quarter and 16.4% on the year.  Some of the best performing stocks on the quarter were Genworth Financial (GNW), Office Depot (ODP) and Ak Steel (AKS).  Some of the worst performing stocks were KeyCorp (KEY), CIT Group (CIT) and Eastman Kodak (EK).

Sealy Corporation the largest global manufacturer of bedding, reported their second quarter earnings after the bell today.  Net sales were $298.5 million down from the $375.4 million in the same period a year ago.  The net loss turned out to be 0.06 cents per diluted share and was below analysts estimates.  The company cited a very difficult retail environment and said they expected a challenging retail environment moving forward.  The stock (ZZ) was unchanged on the day at $1.96 per share.

Trading volumes have been increasingly falling since May but after the big consumer confidence surprise trading may step up over the next couple days on the release of more economic data.  For Wednesday we have the ADP report, motor vehicle sales, the ISM Manufacturing Index and Construction Spending among others. 

The motor vehicle sales report is another measure of consumer spending and is the unit sales of domestically produced cars and light duty trucks.  A strong number here is viewed by investors to signify economic growth.

The ADP report is an employment report representing 24 million U.S. employees in the private sector (non government).  It is typically released the day before the Bureau of Labor Statistic’s non farm payroll report.  The employment statistics also shows data on wage trends and wage inflation helping the federal reserve in determining monetary policy.

The Institute for Supply Management Manufacturing Index surveys over 300 manufacturing firms on different aspects of business including employment, inventories, production, and new orders.  Readings above 50 indicate an expanding factory sector.  May’s number was 42.8 and the estimates for June are for an increase to around 45.

For tomorrow Wednesday July 1 if any of these economic release drastically surprise in either direction we could see an increase in volume going into the July 4 holiday.   Also six companies will report their earnings tomorrow including Constellation Brands Inc. (STZ) estimates are for 0.32 cents per share and General Mls Inc. (GIS) estimates are for 0.80 cents per share.

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