Stocks Lose Some Steam - TheStreet

Stocks Lose Some Steam

Shares end well off session highs amid some last-minute profit-taking.
Author:
Publish date:

Updated from 4:12 p.m. EDT

Stocks rose Thursday but ended well off session highs, as a sharp early rally ran out of steam in the final hour of trading. Traders cited some end-of-the-month profit-taking and some uncertainty ahead of a data-laden session Friday.

The

Dow Jones Industrial Average

closed up 33.75 points, or 0.4%, at 9233.8, while the

Nasdaq

finished higher by 14 points, or 0.8%, at 1735. The

S&P 500

rose 2.8 points, or 0.3%, to 990.3. Earlier in the day, the Dow had been up more than 150 points on an unexpectedly strong reading on gross domestic product growth as well as some encouraging news about the labor market and manufacturing sector.

"People are lightening up at the end of the month and ahead of economic news," said Tom Schrader, a trader at Legg Mason. On Friday, the market will get statistics on unemployment, consumer sentiment, the manufacturing sector, personal income and spending, in addition to vehicle sales.

Others cited a large sale of S&P futures for the late-day dip. "Someone decided to sell, and everyone else followed," said David Memmott, a trader at Morgan Stanley. "This was a futures-led decline."

Earlier, the Commerce Department said gross domestic product rose at an annualized 2.4% rate in the second quarter, a much faster clip than the 1.5% rate economists had expected. The boost came mainly from strong defense spending related to Iraq, after two quarters of an anemic 1.4% growth rate.

Treasuries ended lower, with the yield on the 10-year note rising 11 basis points to 4.42%. Earlier, the 10-year yield hit its highest level in more than a year, as bond investors bet on an economic recovery.

Overall domestic demand accelerated to a 4.6% annualized clip -- the largest increase since the first quarter of 2000. Further, capital spending had its biggest gain since before the recession.

"This is a nice set-up for the rest of the year," said Chris Low, an economist at First Tennessee Capital Markets. "It's easy to make the case for second-half growth of 3.5%, and it could be as strong as 4%."

Meanwhile, first-time unemployment claims for the week ended July 26 continued to show companies curbing layoffs. The number fell to 388,000 from a revised 391,000 the week earlier. That represents two consecutive weeks in which claims have been below the critical 400,000 mark.

And the National Association of Purchasing Management's index for manufacturing in the Midwest rose to 55.9 from 52.5 in June. A reading above 50 indicates expansion in the factory sector, while a reading below that suggests contraction. The index has been above 50 since April.

In earnings news, consumer products giant and Dow component

Procter & Gamble

(PG) - Get Report

posted a rise in profit that beat analysts' estimates with the help of currency gains and new products. Shares finished ahead 12 cents, or 0.1%, to $87.87.

"We have had some good earnings and fairly decent guidance," said James Park, a trader at Brean Murray Foster Securities. "That is going to give more confidence to the market."

Another Dow component, oil mammoth

ExxonMobil

(XOM) - Get Report

, said second-quarter earnings and revenue rose from a year ago on higher energy prices, beating analysts' estimates by a considerable margin. The stock gained 26 cents, or 0.7%, to $35.58.

Oil-services company

Halliburton

(HAL) - Get Report

swung to a second-quarter profit, despite charges related to a project in Brazil. The company earned $26 million, or 6 cents a share, compared with a loss of $498 million, or $1.15 a share, in the year-ago period. Shares closed up $1.06, or 5%, to $22.17.

Insurer

Chubb

(CB) - Get Report

handily surpassed Wall Street estimates with a 20% second-quarter profit rise. The company also raised its full-year earnings forecast. Investors responded by sending shares up $2.90, or 4.68%, to $64.80.

Home furnishing retailer

Ethan Allen

(ETH) - Get Report

reported smaller fiscal fourth-quarter earnings that were in line with analysts' estimates, on slightly higher revenue. The stock gained $1.49, or 4.4%, to $35.54.

Gold miner

Newmont Mining

(NEM) - Get Report

said earnings rose in the second quarter, due to higher gold prices. Newmont earned $90.8 million, or 22 cents a share, compared with $67.1 million, or 17 cents a share, a year ago. Shares advanced 66 cents, or 1.9%, to $36.10.

Agricultural company

Monsanto

(MON)

said second-quarter earnings were better, because of strong seed sales. It earned $295 million, or $1.12 a share, compared with $147 million, or 56 cents, a year ago. The stock rose 55 cents, or 2.5%, to $23.

Shares of

Newell Rubbermaid

(NWL) - Get Report

were down $4.79, or 17%, to $23.63 after the consumer products maker said second-quarter earnings were 17% below year-ago levels. The company also reduced its outlook for the rest of the year, due to softer expectations for its picture-frame business and retailer inventory reductions.

Health insurer

Anthem

(ATH) - Get Report

said earnings improved in its second quarter, as rising premiums offset medical costs. The company had net income of $177.3 million, or $1.25 a share, compared with $106.2 million, or $1.01 a share, in the year-ago period. But shares finished down $3.46, or 4.4%, to $75.51.

Sara Lee

(SLE)

ended down 91 cents, or 4.6%, to $18.69 after it said earnings fell 16% in its latest quarter. Going forward, the company lowered its outlook.

Telephone company

CenturyTel

(CTL) - Get Report

gained $1.47, or 4.5%, to $34.29, after it said second-quarter earnings rose to $87.4 million, or 60 cents a share, from $78.8 million, or 55 cents a share, in the year-ago period.

In research news, J.P. Morgan upgraded

EMC

(EMC)

, a maker of data-storage products, to overweight from neutral due to a positive outlook for the fourth quarter based on the company's restructuring, new-product launches and higher corporate spending. Shares closed up 59 cents, or 5.9%, to $10.64.

Also in EMC's sector, J.P. Morgan downgraded

Network Appliance

(NTAP) - Get Report

to neutral from overweight on valuation concerns. Shares finished down $1.23, or 7.1%, to $15.98.

Overseas markets closed higher, with London's FTSE 100 up 0.4% at 4157 and Germany's Xetra DAX ahead 1.72% at 3417. In Asia, Japan's Nikkei closed with a loss of 0.7% at 9563, while Hong Kong's Hang Seng gained 0.1% to 10,134. Crude oil prices for future delivery were higher in London, while the dollar gained strength against the euro but lost ground against the yen.

On Wednesday, the Dow closed down 4.4 points at 9200, while the Nasdaq ended lower by 9.4 points at 1721.95. The S&P 500 finished behind 1.6 points at 987.65.