16:15 ET Dow +18.67 at 15470.52, Nasdaq +11.50 at 3610, S&P +4.65 at 1680.91 :[BRIEFING.COM] The major averages finished today's relatively quiet session with modest gains. The S&P 500 added 0.3% while the Dow Jones Industrial Average underperformed, ending little changed.
Equities began the session in the black after the prepared remarks from Ben Bernanke's testimony in front of the House Financial Services Committee provided an opening boost. Mr. Bernanke's comments were in-line with previous statements, indicating the Federal Reserve plans to base its decisions on the incoming data. The Fed Chairman expounded on this by saying asset purchases could be scaled back if economic conditions improve faster than expected, and inflation rises towards the Fed's objective. However, if financial conditions were to tighten, the current pace of purchases could be maintained or increased.
In that vein, today's housing data released concurrently with Chairman Bernanke's comments spoke in favor of leaving asset purchases unchanged.
Housing starts hit an annualized rate of 836,000 units during June. Economists polled by Briefing.com had expected for housing starts to hit an annual rate closer to 958,000. The large miss was mostly due to 26.2% decline in multi-family units while single-family starts declined by 0.8%.
Separately, today's weekly MBA Mortgage Index decreased 2.6% to follow last week's decline of 4.0%. While the weekly reading can be quite volatile, this was the fifth negative reading in a row and the ninth decline out of the past ten weeks.
Homebuilders received the news in stride, and the iShares Dow Jones US Home Construction ETF (ITB 23.26, +0.29) advanced 1.3%. However, the remainder of the discretionary sector was not as strong. Most quick service restaurants underperformed, and Dow component McDonald's (MCD 100.10, -0.78) fell 0.8% after Janney Montgomery Scott downgraded the fast food giant to ‘Neutral' from ‘Buy.'
Speaking of the Dow, the price-weighted index trailed behind the broader market throughout the day. American Express (AXP 76.80, -1.47) was a notable index laggard after a Financial Times report indicated the Eurozone is likely to implement limits on transaction fees.
On a related note, another major financial, Bank of America (BAC 14.31, +0.39) jumped 2.8% after delivering a solid earnings report. Bank of America's outperformance helped the financial sector end with a gain of 0.5%.
Other cyclical sectors settled in mixed fashion. Technology underperformed (+0.1%) while energy (+0.5%) and materials (+1.0%) finished ahead of the broader market.
Elsewhere, the utilities sector (-0.1%) was the weakest countercyclical group while consumer staples (+0.2%), health care (+0.2%), and telecom services (+0.5%) posted gains.
Also of note, The Federal Reserve's July Beige Book was generally in-line with reports from prior months. The Beige Book indicated that pricing pressures remain contained and housing continues on a ‘moderate to strong' pace. Wage growth was also described as ‘modest,' but the report did note three districts (Chicago, Philadelphia, and Richmond) indicated reluctance to hire permanent or full-time staff. Instead, Chicago and Richmond districts reported solid demand for part-time workers.
Tomorrow, weekly initial claims will be reported at 8:30 ET while the June leading indicators and July Philadelphia Fed Survey will be released at 10:00 ET. On the earnings front, UnitedHealth Group (UNH 66.23, -0.68) and Verizon (VZ 50.74, +0.46) will report their quarterly results before the opening bell. In addition, the second half of the Humphrey Hawkins testimony will take place with Ben Bernanke appearing in front of the Senate Finance Committee. ..NYSE Adv/Dec 1963/1027. ..NASDAQ Adv/Dec 1470/1020. |
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