Sam Collins

Indicators Stuck in Neutral; Will Market Reverse?

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Good news from the economy and a positive reaction to it by bank stocks yesterday resulted in broader rally that took all 10 of the S&P sectors higher. It was the third-straight session of higher prices.

Initial jobless claims for the week ending Aug. 15 were higher than expected and so the market opened lower. But the market turned mid-morning on news that the Philadelphia Fed's activity index rose 4.2 in August after a negative number in July and economists had been predicting another negative number. The result shows that manufacturers have moved from drawing down stockpiles of unsold goods to increasing production, and that usually occurs at the end of a recession.

The financial sector was the chief beneficiary of the good news from Philadelphia. But even some of the battered retail stocks showed marked improvement despite disappointing earnings from Sears Holdings (SHLD) which reported Q2 figures of 17cents versus estimates of 35 cents. The stock fell 11.88%.

But, despite the gains, it wasn't all positive: GameStop (GME) posted poor earnings, down 32%, but the stock gained 0.9%. And natural gas futures hit a new seven-year low.

At the close, the Dow Jones Industrial Average (DJI) gained 71 points to 9,350, the S&P 500 (SPX) rose 11 points at 1,007, and the Nasdaq (NASD) gained 20 points to close at 1,989.

The NYSE traded just over a billion shares with advancers ahead of decliners by 11-to-4. The Nasdaq traded 584 million shares with advancers ahead by just under 2-to-1.

The expiring September crude oil contract gained 12 cents to $72.54 a barrel, and the Amex Energy SPDR (XLE) advanced 43 cents to $50.91. Gold (December contract) fell $3.10 to $947.70 an ounce, and the PHLX Gold/Silver Index (XAU) rose $1.34 to $144.22.