Sam Collins

Consumer Stocks Hold the Key

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After four days of buying, sellers jumped on the financial group yesterday.

A strong opening resulting from an upgrade of American Express (AXP) and Capital One Financial Corp. (COF) by Barclays was reversed after SunTrust Bank (STI) CEO James Wells said that U.S. banks will see more pain from bad commercial real estate loans, and that the pain could last through 2010.

Banks were hit the worst, with the regional banks down 3.2% and diversified banks off 2.3%. SunTrust fell 3.8% and Huntington Bancshares (HBAN) lost 4.6%.

Energy stocks were strong the entire day, helped by higher crude oil prices, which set new highs for the year. The sector gained 1.3%, with Exxon Mobil (XOM) up 2%, ConocoPhillips (COP) up 2.5% and Chevron (CVX) up 1.5%.

At the close, the Dow Jones Industrial Average (DJI) gained 3 points closing at 9,509, the S&P 500 (SPX) was off less than a point at 1,026, and the Nasdaq (NASD) fell 3 points to 2,018.

Volume on the NYSE totaled 1.2 billion shares with decliners just slightly ahead of advancers. On the Nasdaq, decliners ruled by 7-to-6 and volume totaled 609 million shares.

What the Markets Are Saying

Dow Jones technician Geoffrey Rogow is correct when he says that the success of the current breakout will be determined by the consumer stocks. They hold not only the key to the market, but to the economy, as well, accounting for the lion's share of GDP.

This week there are several reports that will focus on the consumer. The August consumer confidence numbers will be released today. New home sales will be released on Wednesday, followed by GDP, personal income and consumer spending later in the week.