July new-home sales come in below expectations
US stocks ended higher on Monday, 25 August 2014. The stock market began the last week of August on an upbeat note with the S&P 500 making its first appearance above the 2,000 level. Equity indices rallied out of the gate, but the opening push ran out of steam. Shares of Burger King Worldwide, Tim Hortons and InterMune surged on merger news, while July new-home sales came in slightly below expectations, but the government upwardly revised the June result.
The Dow Jones Industrial Average climbed 75.65 points, or 0.4%, to end at 17,076.87. The Nasdaq Composite jumped by 18.80 points, or 0.4%, to finish at 4,557.35. The S&P 500 gained 9.52 points, or 0.5%, to end at 1,997.92.
All 10 sectors advanced, with financials and energy performing best.
M&A activity in the health care sector contributed to the opening rally after Swiss drug maker Roche agreed to acquire InterMune for $74.00 per share, representing a 38.0% premium to Friday's closing price.
Also of note, the consumer discretionary space underperformed with homebuilders showing relative weakness following today's disappointing New Home Sales report.
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Economic data was limited to the New Home Sales report for July, which declined 2.4% to 412,000 from an upwardly revised 422,000 (from 406,000), while the consensus expected an increase to 427,000. While sales were a disappointment, demand in July remained in-line with recent trends even after taking into account the June revision. Since January, the 12-month moving average has averaged 426,000 and the drop in July sales brought the moving average to exactly 426,000.
Large cap components were mixed with Apple and IBM posting modest gains, while Google and Intel struggled.
The financial sector finished in the lead with Goldman Sachs climbing 1.4% after reaching a settlement with the Federal Housing Finance Agency over claims with respect to mortgage-backed securities.
A surging U.S. dollar index has been a bearish weight on commodities the past couple weeks. The U.S. dollar index hit an 11-month high and the Euro currency sunk to an 11-month low on Monday, following remarks from European Central Bank president Mario Draghi, who last Friday in Jackson Hole, Wyoming, sounded very dovish commentary on ECB monetary policy. Draghi's comments suggest the ECB will initiate further monetary stimulus measures, including quantitative easing, in the coming months, or sooner. Fed Chair Janet Yellen also spoke in Jackson Hole Friday, but the market place deemed her remarks more balanced, regarding U.S. monetary policy.
In other news on Monday, the August German Ifo consumer confidence survey came in at a reading of 106.3 versus expectations for a reading of 107.0. The downbeat report is yet another sign the European Union economy has slipped back into recession and is another sign of more monetary policy stimulus coming from the ECB soon.
There are still geopolitical matters that have the attention of the market place. U.S. military action in Iraq and the rise of the ISIS fighters in the region is a big worry for Western powers. Russia-Ukraine tensions and the fighting on the Gaza strip are also in the background.
Bullion metals ended lower at Comex on Monday, 25 AUgust 2014. Gold got back to its losing ways after last week's positive finish, slipping on Monday as traders and central bankers continue to assess the threat of rising interest rates and as a buildup of Russian forces near Ukraine stoke global jitters.
Gold for December delivery fell $1.30 to settle at $1,278.90 an ounce on the Comex division of the New York Mercantile Exchange. September silver was off 3 cents to end at $19.36 an ounce.
Crude-oil futures extended losses to a second session on Monday, 25 August 2014 as concerns over plentiful supplies outweighed tensions in oil-producing regions like the Middle East. Both global oil benchmarks ended lower last week.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October lost 30 cents, or 0.3%, to settle at $93.35 a barrel, its fourth loss in the past six sessions.
Treasuries finished the day with modest gains after spending the day in positive territory. The 10-yr yield slipped two basis points to 2.39%.
Despite the advance, there wasn't much conviction in the rally as only 482 million shares changed hands at the NYSE floor. This represented the lowest total of the year.
Tomorrow, Durable Orders for July (consensus 7.0%) will be released at 8:30 ET, while June Case-Shiller 20-city Index (consensus 8.3%) and the FHFA Housing Price Index for June will both be reported at 9:00 ET. The day's data will be topped off with the Consumer Confidence report for August, which will be released at 10:00 ET (expected 88.3).
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