Dow up 56 as stocks surprise with a rebound
An early decline gives way to decent gains as traders shrug off worries about Europe and higher Chinese interest rates. The ISM non-manufacturing index slips. Oil moves lower; transports flirt with record highs. Netflix gets a downgrade.
By Charley Blaine Jul 6, 2011 1:25PM
Updated: 7:55 p.m. ETCarefully, quietly, the stock market moved higher today as transportation, industrial and consumer-staples stocks gained. This performance may well be the pattern for the week as the market prepares for Friday's big jobs report.
While the market was higher, bank and energy shares mostly moved lower.
Crude oil (-CL) settled modestly lower, but gold (-GC) and silver (-SI) settled higher in New York.
Weighing on the market have been an interest-rate increase in China and a weaker-than-expected report on the non-manufacturing economy from the Institute for Supply Management.
The Dow Jones industrials ($INDU) closed up 56 points to 12,626, their first close above 12,600 since May 19. The Standard & Poor's 500 Index ($INX) was up 1 point to 1,339, and the Nasdaq Composite Index ($COMPX) added 8 points to 2,834.
Article continues below.
The S&P 500 struggled for gains all day because of energy and financials, two of the three biggest sectors by market capitalization, which were both lower.
Two factors helped the market, according to CNBC's Bob Pisani: After European markets closed, some of the selling pressure dissipated. European stocks were lower because of Moody's downgrade of Portuguese debt. Also, short-sellers have been forced to buy back shares at a premium.
On Thursday, the market will deal with the weekly government report on jobless claims and the ADP National Employment Index, which looks at private-sector employment. In addition, major retail chains are expected to report June sales.
Futures trading suggests stocks will open higher.
Are the gains for transports bullish?
Trucking company Con-Way (CNW), up 5.7% to $41.87, earlier had hit a 52-week high of $42.28. The Dow Jones Transportation Average ($DJT) hit a record intraday high of 5,577 before slipping back to 5,566, up 67 points, or 1.2%.
The Dow Transports' performance is worth watching. Transportation companies' order books, particularly those of railroads, trucking companies and logistics companies like FedEx (FDX) and United Parcel Service (UPS), are often a signal of where the economy is headed.
FedEx and UPS were up 1.3% to$ 96.78 and 1% to $74.50, respectively. Railroad operators CSX (CSX) and Union Pacific (UNP) were up 0.8% to $26.71 and 0.8% to $106.59, respectively.
The Dow Transports are up 7.9% for the year. That beats the gains for the Dow, S&P 500 and Nasdaq.
Gold jumps on European debt worries
Light sweet crude oil in New York settled down 24 cents to $96.65 a barrel as the dollar moved higher against major currencies. Brent crude settled at $113.62, up a penny on the day.
Gold settled at $1,529.20 an ounce, up $16.50 in New York. The metal is up 3.1% in just two days. Silver settled up 50.6 cents to $35.916 an ounce; it's up 6.6% this week. Copper (-HG) was off slightly to $4.335 a pound.
The catalyst for gold was the worry created by the Portuguese debt downgrade. "You’re getting a flight-to-quality fear coming in for gold," Adam Klopfenstein, a senior market strategist at broker Lind-Waldock in Chicago, told Bloomberg News.
The 10-year Treasury yield was at 3.095%, down from Tuesday's 3.136% and Friday's 3.197%.
| Energy prices -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $96.65 | $96.89 | 1.29% | 5.77% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.9633 | $2.9566 | 0.58% | 16.50% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $4.2170 | $4.3630 | -3.59% | -4.27% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9976 | $2.9774 | 0.96% | 22.19% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $113.62 | $113.61 | 1.01% | 19.92% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.5690 | $3.5620 | 0.79% | 16.18% | ||||||||
| (per gallon; AAA) | ||||||||||||
ISM, Challenger Gray show a sluggish economy
The market was disappointed at first by the ISM non-manufacturing index, which dropped to 53.3 in June from 54.6 in May. A reading above 50 means the sector is still growing, although a bit more slowly.
The employment component was up slightly, while the new-orders component was off a bit. Neither was below 50, however.
The report is "a reminder that the economy is still pretty sluggish," Paul Ashworth, chief U.S. economist for Capital Economics, wrote clients today.
The uptick in employment tracks with the economic consulting firm's projection that the Labor Department will report a gain of 125,000 jobs for June on Friday. The firm expects U.S. growth to accelerate in the second half; today's ISM report suggests the acceleration hasn't started yet.
In fact, planned layoffs rose to 41,432 in June, according to outplacement firm Challenger, Gray & Christmas. That's the second monthly increase in a row, the firm said. But there was some good news: The pace of layoffs through the first half is the lowest since 2000.
A rate increase in China
The People's Bank of China said it will raise benchmark deposit and lending rates by 0.25%. The increase is the third this year as China continues trying to rein in inflation.
The rate increase was a bit of a surprise. But outside the United States, rates have been drifting higher. The European Central Bank is expected to raise its benchmark rate by 0.25% to 1.25% on Thursday.
DuPont, Intel, Caterpillar lead the Dow
Nineteen of the 30 Dow stocks were higher, along with 49 stocks in the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks.
Caterpillar (CAT), Intel (INTC) and DuPont (DD) were the Dow leaders. Big staples stocks like Procter & Gamble (PG) and Wal-Mart Stores (WMT) gained as well.
JPMorgan Chase (JPM) and Bank of America (BAC) were the laggards.
Urban Outfitters (URBN), up 5.6% to $30.75, and F5 Networks (FFIV), up 2% to $115.82, were the top gainers among Nasdaq-100 stocks. Costco (COST) was third, up 1.7% to $82.64.
Analysts expect Urban Outfitters and Costco to report decent results when major retailers report June sales on Thursday.
Walgreen (WAG) gave retailers a boost, reporting a 6.8% overall gain in June sales. Same-store sales, a closely watched statistic, were up 4.8%. Walgreen shares were up 1.5% to $43.38.
Urban Outfitters also led the S&P 500, followed by Compuware (CPWR), up 5.5% to $10.13, and oil refiner Tesoro (TSO), up 4.1% to $24.10. The company was raised to "overweight" from "equal weight" at Barclays Capital.
Netflix gets downgraded
Netflix (NFLX), the fourth-best performer among S&P 500 stocks this year with a 64% gain, was up 0.5% to $290.96 despite a rare downgrade from analyst Eric Wold of Merriman Capital. The shares hit an all-time high of $291.23 on Tuesday.
In a note to clients, he cited: a year of tough year-to-year operating margin comparisons; the potential for incremental earnings pressures from international launches; and new -- and probably more expensive -- content relationships. Plus, the stock is near his target of $300 to $330.
Netflix said Tuesday it plans a major expansion into Latin America.
Microsoft (MSFT) was up 1.2% to $26.33. Social networking site Facebook announced a relationship with Skype, the video service provider. Microsoft, the publisher of MSN Money, is in the process of acquiring Skype.
News Corp. (NWSA) shares were off 3.6% to $17.47 in the wake of an expanding scandal over hacking of private citizens' cell phones by the company's News of the World newspaper in England.
The 4-year-old phone-hacking scandal widened this week after previously centering on celebrities, politicians and sports stars.
The Guardian newspaper reported July 4 that a private detective working for the News of the World deleted messages from the voicemail of murdered schoolgirl Milly Dowler in 2002.
CEO Rupert Murdoch deplored the hacking in his first statement ever on the topic. Major advertisers have been pulling ads from the newspaper.
| Short hits from the markets -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.010% | 0.010% | -50.00% | -91.67% | ||||||||
| 5-year Treasury note | 1.648% | 1.695% | -6.04% | -18.25% | ||||||||
| 10-year Treasury note | 3.095% | 3.136% | -1.99% | -6.35% | ||||||||
| 30-year Treasury bond | 4.354% | 4.390% | -0.64% | -0.18% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 75.440 | 74.985 | 1.08% | -4.85% | ||||||||
| British pound | $1.5992 | $1.6069 | -0.21% | 2.48% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.6253 | £0.6223 | 0.21% | -2.42% | ||||||||
| Euro in dollars | $1.4306 | $1.4428 | -1.22% | 6.92% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.6990 | € 0.6931 | 1.23% | -6.48% | ||||||||
| U.S. $ in yen | 81.10 | 81.06 | 0.24% | -0.32% | ||||||||
| U.S. $ in Chinese | 6.49 | 6.46 | 0.44% | -1.89% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.036 | $1.039 | -0.16% | 3.24% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.966 | $0.963 | 1.86% | -3.14% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,529.20 | $1,512.70 | 1.76% | 7.58% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $4.3350 | $4.3475 | 1.23% | -2.52% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $35.9160 | $35.4100 | 3.11% | 16.09% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.2700 | $6.3550 | 7.23% | -21.06% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.1875 | $6.2550 | -1.63% | -0.60% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $1.1698 | $1.1895 | -26.79% | -19.22% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $2.6750 | $2.6960 | 0.81% | 11.23% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $96.65 | $96.89 | 1.29% | 5.77% | ||||||||
| (per barrel) | ||||||||||||
36Comments
Jul 6, 2011 2:32PM
The jobs report almost has to be better. Couldn't be much worse than last month unless you wnat to go back a couple of years.. I'd like to see the average wage on the jobs being created. IMO, a job isn't a job unless it can feed you, put a roof over your head, and provide transportation to that job. Unless you have a bed in the back room of McDonalds and they agree to feed you there is not much chance fo that.
Hey 1 desenter, "you want fries with that". Well thats 2 orders now. Guess they must already
have jobs. Maybe at Hardee's. Nicer back room and better burgers. Hey now much more ot
this thumbs down and I'm going to run out of fries. Must have stock futures in McDonalds.
out of fries. Going over to Burger King.
Jul 6, 2011 3:22PM
Jul 6, 2011 2:38PM
Airlines raked in $3.4 billion in baggage fees alone last year. With new charges popping up all the time, here's some advice for getting around the fees.
pure effing GREED; they are like prostitutes along with the TSA you must pay to be groped and then beaten down as anything you say may get you thrown off your flight...........nigerian national walks threw security check points with out dated boarding pass gets on the flight and fbi watches him do it a second time..........government motto: pay for everything for nothing in return!!Jul 6, 2011 6:03PM
continued from below -
The failure of leadership around the world is now complete. Nobody who needs to get it gets it. Our own money management team here in the USA is in a box even worse than Europe's. It's not even a hall of mirrors. It's a broke-down Winnebago with moldy upholstery and the propane line is leaking inside. Everybody's wondering if Ben Bernanke is going to light a cigarette. What else can he do? If he doesn't keep the QE-ZIRP racket going, the wheels will come off the Winnebago. If he lights that American Spirit, she'll blow.
The failure of leadership around the world is now complete. Nobody who needs to get it gets it. Our own money management team here in the USA is in a box even worse than Europe's. It's not even a hall of mirrors. It's a broke-down Winnebago with moldy upholstery and the propane line is leaking inside. Everybody's wondering if Ben Bernanke is going to light a cigarette. What else can he do? If he doesn't keep the QE-ZIRP racket going, the wheels will come off the Winnebago. If he lights that American Spirit, she'll blow.
The US banking system can easily implode, anyway, if a European nation or two opts out of ECB-peristroika. God knows who is a counter-party to whom in the mammoth international cluster**** of accounting fraud that passes for a commerce in capital. Hence, everybody is nervous - except the fools at the Nascar oval with Big Gulps in their fists. When the Greeks and Spain's youth corps, and even the bleery folk of Dublin take to the central square to express their rage, and hoist middle fingers to those who would chisel them into debt serfdom, Americans will have no central squares to go to. Will we take to the highway strips and burn down a Taco Bell or two? Maybe President Obama will ask congress for a home mortgage TARP, guaranteeing that nobody will ever buy a house again, at least not on an installment loan. Maybe in the New Hampshire "debate," Michele Bachman will appeal to Jesus for the release of Little Caylee from eternity's impoundment lot, and the stunt will carry her overwhelmingly to the oval office.
By then, America, too, will be more like Albania. You can take that to the bank, if there's one left standing. Yesterday a little US flag appeared on every mailbox in the neighborhood. Someone is trying to help remind us what country this is. Most years, this is just ceremonial routine, but now I suspect a lot of people get up and scratch their heads over it. And, believe me, just waving that old flag is not going to furnish any kind of idea you can really hang onto.
Out of the current stillness in world events, a horrible churning waits. Men in impeccable suits on Swiss terraces cannot hide their anxiety. One might even lose it and jump a hotel maid - you never know. Bernanke, Obama, Geithner are powerless against the dark lurking churn, though they can easily make it worse. What a summer we're in for. Get out of the stock market.
Jul 6, 2011 4:14PM
Jul 6, 2011 5:22PM
Jul 6, 2011 4:16PM
Stocks surprise with a rebound!
Stocks surprise.....they make it sound like STOCKS is a person or some thinking entity.
They make it sound as if they are going up on their own, against the
If the vast majority of people see bad news in the economy, domestic or global, wouldn't the vast majority (using logic, reason and common sense) send the market down in step with the bad news?
If that is the case, then who is behind the manipulation and exploitation of the average investor, who is behind "stocks surprise"? Did somebody say Goldman Sachs.....or Helicopter Ben....or ????
Jul 6, 2011 4:33PM
Jul 6, 2011 11:39PM
They say only about 20% of the US population plays or invest in the market. If thats true then 20% sets the prices for the other 80%. Yea, thats what I like to hear, manipulate those stocks and stick it to the other 80% by driving the dollar down and gas prices up.
And some wonder why so many hate these wallstreet traders..
And some wonder why so many hate these wallstreet traders..
Jul 6, 2011 6:02PM
From the "news", you'd think the world was in a coma, but I swear I heard ominous bassoon phrases through the night rain... something large groaning out there in the dark. A great churn, coming closer. The world is in a box, tortured with its obsolete ideas about how economies are supposed to run, especially the money part, and the economists are clueless.
A case in point: the eminent Vincent Reinhart at the Council of Foreign Relations. (Conspiracy theorists just shut your pie-holes):
"There are very few debt defaults... there are a whole lot of restructurings. For most of history, default is something the strong declare on the weak when they lose their patience. And if you're members of the same club, you're less likely to lose your patience. Hence you're less likely to default. Greece is in the club."
The club he refers to - the Euro money club - is less a jolly fraternal lodge than a funeral insurance association. The latest restructuring for Greece he referred to is a cockamamie perpetual rollover with no redemptions allowed, while Greece has to agree to become more like its neighbor, Albania, in lifestyle - that is, like Borat, minus the joie de vivre.
There's a third option that Reinhart ignores: the Greek populace can riot in the streets, toss out their government, install some kind of rump leadership and hoist its middle fingers at the Euro management team, opting out of the club. Why this does not occur to Reinhart (and many other vested poobahs) I can't say, despite the fact that there are many places around the world (especially Europe these days) where the natives are obviously getting restless. Besides, it's not lost on the Greek people that they're being asked to go Albanian for the sake of a dozen banks up in Germany, France, and Holland, not their own country's sacred honor.
Jul 6, 2011 6:03PM
continued from below -
The proposed restructuring is all about the Great Fear that haunts the inner sanctums of finance (like the ghost of Caylee haunts America): counter-party obligations on a Burj Dubai of side bets over things such as the soundness of bonds and the movement of interest rates. The world of money imagines a thundering crash of cascading defaults as the various counter-parties are revealed to be broke, naked, and ashamed. And rightly so, because the creakings and groanings of this tower of paper will not only crash, but burn, too. The bankers can already smell it.
The proposed restructuring is all about the Great Fear that haunts the inner sanctums of finance (like the ghost of Caylee haunts America): counter-party obligations on a Burj Dubai of side bets over things such as the soundness of bonds and the movement of interest rates. The world of money imagines a thundering crash of cascading defaults as the various counter-parties are revealed to be broke, naked, and ashamed. And rightly so, because the creakings and groanings of this tower of paper will not only crash, but burn, too. The bankers can already smell it.
Anyway, let's be clear that money has become a world unto itself now, a self-referential hall-of-mirrors that only sees itself and is increasingly confused by what it sees in that self. Outside that blinding little box there are real economies of people trying like hell to go about their daily life, and there is much to be fretful about. Economies are caught in the permanent compressive contraction of fossil fuel based activities. When you hear a politician utter the word "growth" note that he/she is speaking out of his/her ****. Contraction is contraction, not growth. We're done with growth of that kind because our fuel supplies are shrinking, not growing. The vaunted "recovery" is a political three-card-monte trick.
The sad fact is we don't want to go where history wants to take us: to a smaller human imprint on the planet, with all that implies. This is true especially of the intellectual avant-garde, who can't imagine a world without the joys of perpetual techno-narcissistic novelty, of levitating skyscraper cities with hanging gardens and flying cars, full of girls with green nail-polish in get-ups so fantastic mere mortals could never have dreamed them up, flaunting hand-held gadgets so miraculous that life itself seems besides the point. Oh, shimmering future! Oh Ray Kurzweil and your nano-ladder to the worm-holes of forever!
This Ancien Régime is about to be swept away on the tsunami of its own futility.
Jul 6, 2011 8:23PM
thought-provoking post deccster. in our minds china could be a huge house of cards based on smoke and mirrors, hence we are defensive. a wise man once said:
it is easy to get into trouble (think apple and netflix) ........ 
and it is fairly easy to stay out of trouble (think cash and inverse bear funds) ..... 
BUT it is very, very, very difficult to get out of trouble once
you are in it (think of a violent 25% lurch to the downside) ...... 
be safe out there .............
Jul 6, 2011 7:55PM
ok class, let's review today's featured article, shall we?
- Weighing on the market have been an interest-rate increase in China and a weaker-than-expected report on the non-manufacturing economy from the Institute for Supply Management.
- The S&P 500 struggled for gains all day because of energy and financials, two of the three biggest sectors by market capitalization, which were both lower.
- European stocks were lower because of Moody's downgrade of Portuguese debt. Also, short-sellers have been forced to buy back shares at a premium.
- The catalyst for gold was the worry created by the Portuguese debt downgrade. "You’re getting a flight-to-quality fear coming in for gold,"
- In fact, planned layoffs rose to 41,432 in June, according to outplacement firm Challenger, Gray & Christmas. That's the second monthly increase in a row, the firm said.
now then johnny, can you tell the class which direction the market is likely to take over the near-term? feel free to use the chalkboard if you like ............ 
Jul 7, 2011 6:42AM
can i be an a-hole for a second!!!
African drought: 12 million face 'fight for survival'
a plan of action would be too have 6 to 8 more children to help with the problem!!
Jul 6, 2011 11:19PM
Jul 6, 2011 6:23PM
Jul 6, 2011 11:26PM
Whats even more insulting is after the price of gas dropped to $3.39 finally(the lowest I've seen in a bit) that today it went back up to $3.47. Thats only a 30 cent drop in a month or 30 days but a $.08 rise in just 1 day. What gives????? It recovered around 35% of what took the whole month to get for consumers. I guess they can stop reporting on that big savings for consumers they talked about at the gas pumps.
Jul 7, 2011 6:38AM
End gas tax?
aaaaaaaaaaaah, but that would mean selling off toll highway's and making a quick buck for a quick fix and screwing the long term profit's................hahahahaha, that's right they being sold off now even with a gas tax!!Jul 6, 2011 4:20PM
Jul 7, 2011 12:25AM
COME ON 
WEST COAST AND 
PASADENA CALIFORNIA Report
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