Change text size

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Bulls refuse to give in to a bear market, sending the major market indices higher to start the quarter. The Dow ($INDU) added 32.25 points Tuesday to close the session at 11,382.26. The S&P 500 ($SPX) gained 4.91 points to 1,284.91. The Nasdaq ($COMPQ) tacked on 11.99 points to 2,304.97. Volume was moderate on the session with 1.64 billion shares traded on the NYSE and 2.64 billion shares exchanged on the Naz. However, market breadth was negative by 13-to-18 and 12-to-17 margin on the Big Board and Naz respectively.

The Dow once again moved into bear market territory intraday when the index was down 20 percent from its peak in October. However, a better than expected ISM Mfg. Survey helped the bulls win Tuesday’s battle with the bears. Nonetheless, the stock market remains in a rough place with the major market indices all losing about 9 percent in June alone. Besides economic data on manufacturing, traders got auto sales results that were a bit better than expected and crude prices rose, but came off their intraday highs.

Crude has been a major factor in economic slowing with the commodity hitting new highs seemingly ever session. On Tuesday, crude rose to a high at $143.33 intraday, but ultimately closed with a gain of 97-cents to $140.97. The IEA lowered its global demand forecast through 2012 on the view higher fuel prices will ease demand. However, the group also stated that they do not see any reason to believe prices are elevated due to speculators.

Better than expected economic news was a plus for stocks Tuesday. The ISM Mfg. Survey moved above 50, albeit by just 2-tenths of a point. However, this was higher than the 49.6 seen in May and bested estimates for a reading of 48.7. Even though the headline figure was better than expected, there remain concerns about prices paid by manufacturers. In fact, this component of the index rose to 91.5, which is the second highest reading in the 60 years of data on hand. The only other time prices moved higher was during the oil embargo of the 1970’s.

Shares of General Motors (GM) bounced back Tuesday, rising 2.3 percent to $11.75. The auto maker benefited from better than expected sales results in June. GM did report an 8.3 percent drop in North American auto sales during the month, but this was better than expectations for a decline of 21 percent and the company was more optimistic than rival Ford (F). Ford shares fell 2.1 percent on lower than expected sales and comments that didn’t bode well for the future. Overall, domestic vehicle sales came in at an annualized rate of 10.1 million, down from 10.3 million in May.

Though volumes could lighten as the week progresses, there will be some key data that could influence stocks. Of course, the key release is due out Thursday in the form of the employment situation report for June. Of course, oil prices will continue to draw plenty of attention as well.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Recent Articles by Jody Osborne, Optionetics.com

• August 19, 2008
  Economic Watchdog, August 19
• August 19, 2008
  Morning Watch, August 19
• August 18, 2008
  Closing Wrap-Up, August 18
• August 18, 2008
  Morning Watch, August 18
• August 17, 2008
  Economic Watchdog, August 18