Dow

U.S. Equities Dip Lower On Mixed Data, S&P Gains 1 Percent For Week

U.S. Session Key Developments

•    Reuters/University of Michigan Consumer Confidence Unexpectedly Declines in March
•    Retail Sales Surprisingly Rose in February Despite Winter Storms
•    Commodities Trade Lower Despite Dollar Index Closing Below 80 Level

U.S. stocks were generally lower today as a surprisingly weak consumer confidence report overshadowed February gains in retail sales.  The broad S&P 500 Index ticked lower by a quarter-point for the day, but still closed 1 percent higher for the week.  Initially, stocks appeared headed for another strong day following a pre-market Commerce Department report that showed retail sales rose 0.3 percent in February despite poor weather conditions during the month.  The release was considerably than the consensus of a 0.2 percent decline in sales and the S&P traded above 1153 within the first thirty minutes of trading.  Sentiment was quickly dampened, however, following an unexpected drop in the Reuters/University of Michigan Confidence gauge for March.  The S&P fell below 1147 following the release, and was never able to recover its initial gains.  On the commodities front, crude oil dropped over 1 percent to close at $81.24 a barrel on the NYMEX, while gold and silver futures fell to $1101 and $17.04 respectively.  Surprisingly, a strong greenback did not coincide with today’s weakness in commodities as the U.S. Dollar Index closed below 80 for the first time since March 3.  The Dollar fell against a basket of its major cross currencies for the third consecutive session.

DJIA 30                     10,624.69                      +12.85                       +0.12%
The Dow Jones Industrial Average posted the only gain among major U.S. indices, closing at its highest level since January 19.  General Electric was the strongest performer on the index, adding 3.4 percent following the better-than-expected retail sales report for February.  Caterpillar also posted a strong gain of 2.4 percent as general investor continued to improve for “blue chip” stocks.  The worst performer among the Dow’s 30 stocks was Bank of America, as the bank’s shares fell 1.6 percent on general weakness in the financial sector.  BofA’s shares still closed the week in the black, however, gaining 0.9 percent.

S&P 500                       1,149.99                           -0.25                       -0.02%
The broad-based S&P 500 traded slightly lower for the day on weakness in utilities and health care shares.  NRG Energy was the worst performing utility, dropping over 3 percent following a downgrade on the firm’s shares from “buy” to “neutral” from analysts at Bank of America.  PPL Corporation furthered the decline in utilities, falling over 2.5 percent, while Entergy and Constellation fell 1.9 percent each.  Health care shares traded lower as Pfizer said that trials failed for a new breast cancer drug.  Pfizer shares fell 1.2 percent on the day and have now dropped over 16 percent since January 20.

NASDAQ                     2,367.66                         -0.80                     -0.03%
Shares on the tech-heavy Nasdaq fell for the first time this week as technology stocks ticked lower by 0.04 percent.  Yahoo! had the worst day among the largest weighted ten tech stocks on the index, as shares of the search engine dropped over 1.2 percent.  A Benchmark Company analyst downgraded the search giant from “buy” to “hold”, citing issues like better-scaled competitors gaining larger share of the internet search market.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

U.S. Equities Rally Late On Eased Concerns Over Regulatory Reforms

U.S. Session Key Developments

•    Government Officials Struggle to  Put Together Health Care, Financial Reforms
•    Initial Jobless Claims and Continuing Claims Higher Than Expected
•    Commodities Post Slight Gains on Dollar Weakness

U.S. stocks rallied into market close today, as investor concerns were eased regarding health care reconciliation and financial regulatory reforms.  The late surge for equities helped push the S&P over the 1,150 level, the highest close for the index since 2008.  Initially, stocks traded lower on the open following a disappointing jobless claims report one hour before market open.  The Labor Department said that initial jobless claims fell to 462,000 last week versus 460,000 expected, and continuing claims unexpectedly rose over 4.55 million.  The news caused the S&P 500 index to dip under 1,139 off the open, before finding its footing and posting a strong rally into market close.  Financial shares led the ascent, as investors seemed more confident that financial regulation would struggle to pass and was unlikely to suffocate future bank profits as some feared the proposed “Volcker Rule” might have.  Senate Banking Committee Chairman Christopher Dodd announced that he will release his version of the regulation without bipartisan support, as talks with Republican Bob Corker have collapsed in recent days.  Following financial shares higher today was the health care sector, which gained nearly 0.5 percent on the S&P.  Investors speculate that health-care reform will be difficult to pass and that has taken some of the uncertainty out of the health care market, according to sector analysts.  Overall, investors continued to seek riskier assets, driving stocks and commodities higher on the session.  Crude oil closed above $82 a barrel, while gold and silver future contracts closed at $1108 and $17.16 respectively.  The U.S. Dollar Index fell for a third time in the last five trading days but held above the 80 level.

DJIA 30                     10,611.84                      +44.51                       +0.42%
The Dow Jones Industrial Average posted the strongest performance among the major U.S. indices led by 1 percent gains for IBM, Disney, Travelers, and Home Depot.  Disney had posted strong gains this week thanks to a strong opening weekend for the company’s newest hit film, “Alice in Wonderland.”  Today, the entertainment giant announced an agreement that gives Starz Entertainment exclusive licensing for Disney movies through 2015.  Overall, the thirty Dow stocks have gained collectively in eight of the past ten trading days, and the index is inching closer to its 2010 high close of 10725 on January 19.

S&P 500                       1,150.24                           +4.63                       +0.40%
The broad-based S&P 500 traded to a 17-month high on strength in health care and financial shares.  Financial shares gained nearly 1 percent led by a strong 5.5 percent gain for Citigroup following bullish commentary from Chief Executive Officer Vikram Pandit.  Pandit said that the bank should be consistently profitable and he “wouldn’t be surprised” if the government decided to sell its 27 percent state in the firm.  Furthering gains for the S&P index was the health care sector, which added nearly half of one percent as Coventry Health, Aetna, and Davita added 3 percent each.

NASDAQ                     2,368.46                         +9.51                     +0.40%
Shares on the tech-heavy Nasdaq gained for a sixth day as technology were generally higher on the day.  Blackberry maker Research in Motion posted the strongest gain among the ten largest tech stocks on the index, adding 1.2 percent.  Oracle also had a strong day, gaining over 1 percent as CEO Larry Ellison was announced to be the sixth richest billionaire this year.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

NASDAQ Looks To Extend Gains With Little Ressitance Ahead

The Dow gains have been slowed by resistance at 10,586- 61.8% Fibo extension of 13,136-6,460. The technical level could prove formidable considering it is the golden ratio of a major decline. Downside risk are to 10,400 where we find trendline support, a break above exposes 10,750 followed by 11,000.

The S&P 500 like the Dow has broke from its short-term wedge but is facing resistance at 1,144-61.8% Fibo of 1,440-665. A break above exposes 1,175, with downside risks to 1,100.

The NASDAQ continues to set fresh yearly highs and continues to be the outperformer of the U.S. indices. However, this could make it more susceptible to a bout of risk aversion.  Possible trend line resistance at 2,415 could slow current momentum with psychological resistance at 2,400 in the way as well. The next major barrier is the August 15, 2008 high of 2,473 which could be tested before any major retracement.

Dow

U.S. Equities Open Week With Mixed Results

U.S. Session Key Developments

•    Dow Jones Industrial Average Returns to Positive Territory For 2010
•    Jobless Claims Slightly Better Than Expected, Home Sales Plunge
•    Commodities Decline as Greenback Gains Against European Counterparts

U.S. stocks were generally higher today following mixed trading in Europe’s session as well as the Asian session overnight.  The Nasdaq rose slightly on strength in technology shares, but the Dow Jones Industrial Average and S&P 500 each closed lower on the day.  There was very little action on the trading day, however, as only 7.1 billion shares exchanged hands on U.S. indices- the second-lowest amount of the year.  On the other hand, the VIX volatility index rose for the first time in nine days as investors seem unsure of what lies ahead for the world’s stock markets.  As for commodities today, crude oil continued its rise, trading near $82 a barrel at session close.  Precious metals were on the decline, however, as gold fell to $1123 on the COMEX and silver fell towards the $17.20 level.  The U.S. Dollar Index held above the 80 level for a third consecutive day, gaining against the British Pound but falling against the euro.

DJIA 30                     10,552.52                      -13.68                       -0.13%
The Dow Jones Industrial Average posted the weakest performance among major U.S. indices as 18 of the 30 Dow stocks closed lower on the day.  3M Co posted the biggest loss on the index, dropping 1.3 percent, while American Express and Bank of America fell over 1 percent each to lead financial shares lower.  On the positive side, McDonald’s shares gained over 2 percent as strong overseas growth led to a 4.8 percent increase in sales for the world’s largest fast-food chain.  Verizon shares also gained today, after the company announced plans to expand its next-generation wireless broadband beyond its initial test sites of Boston and Seattle.

S&P 500                       1,138.50                           -0.20                       -0.02%
The broad-based S&P 500 ended its six-day rally today  on weakness in industrials and health care.  Health care stocks fell 0.4 percent as U.S. President Barack Obama leads a final push to overhaul the medical industry in the United States.  Davita shares were the worst performing among the health care sector, falling over 2.4 percent, while shares of UnitedHealth and Coventry Health dropped at least 1.7 percent each.  Other shares with unusual moves today included AIG, which rallied over 3 percent after agreeing to sell its American Life Insurance Co. unit to MetLife.

NASDAQ                     2,332.21                         +5.86                     +0.25%
The tech-heavy Nasdaq was the best performer among major U.S. indices as technology stocks rose nearly 0.5 percent on the day.  Cisco shares rallied over 3 percent after JPMorgan initiated coverage of the stock and word that the technology firm would be making a major announcement tomorrow.  BlackBerry maker Research in Motion rose 4 percent after a BMO analyst upgraded his estimates and price target on the shares.  As for non-technology shares on the index, IMAX Corp. rallied over 8 percent following a successful weekend opening of Disney’s 3D film “Alice in Wonderland.”

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

U.S. Stocks Rally as Dow Returns to Positive Territory

U.S. Session Key Developments

•    Dow Jones Industrial Average Returns to Positive Territory For 2010
•    Jobless Claims Slightly Better Than Expected, Home Sales Plunge
•    Commodities Decline as Greenback Gains Against European Counterparts

U.S. stocks were generally higher for a fifth consecutive day as initial jobless claims and continuing claims were shown to be slightly lower than expected in their most recent readings.  Investors managed to shake off a 7.2 percent plunge in January home sales and pushed the Dow Jones Industrial Average back into positive territory for the 2010 year.  The employment data released by the Labor Department this morning showed that initial jobless claims fell by 29,000 to 469,000 in the week ended February 27, while continuing claims decreased to 4.5 million in the week ended February 20.  This data, coupled with a 6.9 percent improvement in nonfarm productivity in the fourth quarter, helped boost market sentiment and extend the winning streak for equities.  Commodities, on the other hand, did not fair as well due to weakness in Asia overnight and a rising U.S. dollar.  Crude oil fell nearly 1 percent today and fell below $80 a barrel intraday before closing at $80.21.  Precious metals were also weak, as gold prices fell to $1131 and silver futures fell towards the $17 level.  Silver has had a strong run as of late, gaining over 17 percent in the last month.  The U.S. Dollar Index posted its second gain of the week today, returning to the 80.5 level.  The greenback snapped its two-day losing streak against the euro, as the EURUSD fell to $1.3581 at the time of this writing.  Overall, there was very little price action after the initial morning gains as investors looked ahead to the nonfarm payrolls release tomorrow.  Economists expect the report to show that payrolls fell by 68,000 in February after declining 20,000 in the month prior.

DJIA 30                     10,444.14                      +47.38                       +0.46%
The Dow Jones Industrial Average gained back yesterday’s slight loss and some, rallying nearly 50 points on strong performances for financials and basic materials shares.  Disney was the top performer on the index, adding nearly 3 percent after analysts at Bank of America Merrill Lynch raised their rating on the stock to “buy” from “neutral.”  Shares in Bank of America rallied 1.7 percent after the U.S. Treasury sold its warrants on the company’s shares for $1.57 billion.  Other strong performers included Coca-Cola and Boeing, which each gained over 1 percent on upgrades from analysts at UBS.  Overall, shares on the index have rallied over 6 percent in the last month and have returned to the black for 2010 to date.

S&P 500                       1,122.97                           +4.18                       +0.37%
The broad-based S&P 500 rallied for a fifth day as consumer services and financials gained nearly 1 percent each.  Financials were generally higher on news of the U.S. Treasury’s sale of BofA warrants, as well as easing concern over the Volcker Rule’s potential impact on bank profits.  Goldman Sachs had a strong day, posting a 3.7 percent gain on high volume trading.  Consumer services shares were led by gains in Abercrombie & Fitch, Zumiez, and Aeropostale as year-over-year comparisons showed improvements in the retail sector.  The worst performing sector on the S&P today was energy due to falling oil prices.

NASDAQ                     2,292.31                         +11.63                     +0.51%
The tech-heavy Nasdaq was the best performer among major U.S. indices as technology stocks rose nearly 0.6 percent on the day.  Of the largest-weighted fifteen tech stocks on the index, search engine giants Yahoo!, Google, and Baidu posted the strongest gains, each adding over 1 percent.  Research in Motion was the worst performer among the largest Nasdaq tech stocks, dropping 1.2 percent.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

U.S. Equities Gain For Third Consecutive Session

U.S. Session Key Developments

•    Sovereign Debt Concerns Ease as Greece Prepares For More Deficit Cuts
•    February Vehicle Sales Announced After Market Close, Fall Short of Expectations
•    Commodities Trade Higher as Greenback Generally Weaker

U.S. stocks gained for a third consecutive day, following a strong session in Europe, as investor concerns regarding a Greece debt default continued to ease.  The broad-based S&P 500 rose 2 points to 1118, the highest close for the index since January 20.  The gains in U.S. stocks were a continuation of the European session today, in which the FTSE, CAC, and DAX each gained over 1 percent.  Sovereign debt concerns in the region eased for a second day, as yields on 10-year Greek bonds fell 10 basis points to 6.14 percent.  Leaders of the Greek government plan to announce additional cuts of $6.5 billion tomorrow to help reign in the country’s massive debt-to-GDP ratio that currently sits at three times the acceptable European Union level.  The news fueled speculation that other EU nations would provide aid to Greece and boosted risk appetite across the globe.  The positive momentum wore off by the end of the U.S. session, however, as the Dow Jones Industrial Average dipped into the red during the last hour of trading before closing slightly above even.  There was no economic data today to drive market sentiment as the only data release took place an hour after U.S. markets closed.  The data showed that domestic vehicle sales were slightly lower than expected in February and that ABC consumer confidence ticked slightly higher last week.

On the commodities front, crude oil had a strong showing and rallied over 1 percent to $79.68 a barrel.  Precious metals had an even better day as gold futures posted their largest gain in two weeks to $1137 and silver futures rose 3 percent to $17.06.  Rising metal prices coincided with a relatively weak dollar, as the U.S. Dollar Index fell for the fourth time in five days.  The greenback still managed to gain against the British Pound, however, driving cable lower for a sixth consecutive session.  Looking ahead, the ISM Non-Manufacturing Composite report and ADP employment report will be released tomorrow morning, while the Fed will release its Beige Book in the latter half of the trading day.

DJIA 30                     10,405.98                      +2.19                       +0.02%
The Dow Jones Industrial Average closed slightly higher today, led by a near half-percent gain for industrials and oil & gas stocks.  Chevron led commodity stocks with a 0.7 percent gain due to rising oil prices, while Boeing and 3M gained 0.6 percent each to lead industrials.  Disney was the best overall performer on the Dow today, adding over 1 percent as fans await the opening of Alice in Wonderland in theaters on March 5.  The main laggards of the index today were Microsoft and Bank of America, which dropped 1.9 percent and 1.5 percent respectively.  The U.S. Treasury announced yesterday its intentions to auction off $272 million warrants to buy stock in BofA.

S&P 500                       1,118.31                        +2.60                         +0.23%
The broad-based S&P 500 rose to its highest level since January as rising commodity prices helped boost basic materials and energy shares.  Massey Energy led basic materials shares with a 4 percent gain, followed by Consol Energy and Newmont Mining which added nearly 3 percent each.  The coal sector posted strong gains today amid speculation that Massey will acquire Patriot Coal Corp., the fourth-largest U.S. coal producer.  Tesoro Corp. posted a 5 percent gain to lead a strong showing for energy stocks.  Financial shares added to the bullish momentum after bank analyst Dick Bove said that bank earnings over the next few years “will soar.”

NASDAQ                     2,280.79                       +7.22                       +0.32%
The tech-heavy Nasdaq was the best performer among major U.S. indices although technology stocks posted a minimal gain.  Qualcomm led the heaviest-weighted fifteen tech stocks on the index, gaining 6.6 percent after the chip maker boosted its dividend by 12 percent and announced a $3 billion stock buyback program.  Internet search giant Google rose over 1.5 percent on news that the company agreed to purchase online photography site Picnik.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

Dow Triangle Signals Potential Breakout

Recent Dow price action has developed a potential triangle formation which could signal the potential for a breakout.  The blue chip index appears to have breached the upper bound signaling a stronger move to the upside. However, this is a weak interpretation of the pattern which leaves us without significant conviction on the pending move. Nevertheless, a clear upward trend has emerged leaving potential to re-test 10,750.

The S&P 500 like the Dow is also in the midst of a bullish trend after finding trendline support. Look fro the continuation of the broader channel and a re-test of resistance at 1,144-61.8% Fibo.

The NASDAQ has broken resistance at 2,251-61.8% Fibo of 1,265-2,861 leaving the yearly high of 2,234as the next barrier. Continuation of the bullish trend leaves potential to 2,500.

Dow

U.S. Equities Trim Weekly Loss On Fourth Quarter GDP Revision

U.S. Session Key Developments

•    U.S. Fourth Quarter GDP Revised Higher to 5.9 Percent, Personal Consumption Lower
•    Existing-Home Sales Drop in January, Chicago Business Gauge Better-Than-Expected
•    Commodities Trade Higher as Greenback Falls Against Major Cross Currencies

U.S. stocks posted a slight gain in the final day of trading this week, as estimates for fourth quarter economic growth were shown to be higher than previously thought.  Despite today’s gain, however, the S&P 500 closed the week down 0.4 percent to 1,104.  The market-moving GDP revision was announced one hour before the opening bell and showed that the U.S. economy expanded 5.9 percent in the fourth quarter of 2009, better than the 5.7 percent initial estimate.  The GDP data was revised higher thanks to stronger business investment in the quarter and a greater contribution from inventories.  The personal consumption aspect, however, was revised lower to 1.7 percent from a 2.0 percent initial reading.  Overall, stocks traded mostly sideways during the session as other economic data released today was mixed.  The Chicago Purchasing Managers Index unexpectedly rose from 61.5 to 62.6 in February, but the University of Michigan Confidence indicator fell in the month and existing home sales disappointed for January.  Home sales were expected to rise 0.9 percent in January but instead were shown to have fallen 7.2 percent, after declining 16.2 percent in the month prior.

Globally, stocks had a strong day as the major European indices and China’s Hang Seng Index each traded at least 1 percent higher.  Investor risk appetite made a strong return as commodities joined stocks in trading higher across the board.  Crude oil prices gained for the third time this week, adding nearly 2 percent to $79 a barrel, while gold futures posted a second consecutive gain and closed the week near the $1120 level.  As for currencies, the U.S. Dollar was generally weak, falling against most of its major counterparts, including the euro.  The U.S. Dollar Index fell for a third consecutive day, but held above the 80 level for a seventh consecutive session.

DJIA 30                     10,325.26                      +4.23                       +0.04%
The Dow Jones Industrial Average closed slightly above even on a low-volume trading day.  Volume on U.S. exchanges today was slightly under 8 billion shares, 11 percent less than the 2010 average due to a snow storm in New York City and the surrounding area.  JPMorgan Chase led the index with a 3.2 percent gain after analysts at Barclays recommended buying the bank’s shares.  The bullish commentary led to a near full percent gain among financial shares.  Other stocks that outperformed the index included General Electric and drug maker Merck, which each added 0.8 percent on the day.  The worst performer on the index was Kraft Foods, which fell over 1.3 percent on the day.

S&P 500                     1,104.49                         +1.55                         +0.14%
The broad-based S&P 500 posted a small gain in the final day of trading this week on strength in financials and basic materials shares.  Financials rose nearly 0.7 percent on bullish commentary from Barclays analysts as well as commentary from Fed Chairman Ben Bernanke in the past two days that suggested rates would remain low for the foreseeable future.  The basic materials sector added 0.3 percent today, as commodities generally traded higher during the session.  Mining company Freeport McMoRan gained over 1 percent, while Barrick Gold Corp. added 0.2 percent on higher precious metals prices.  On the downside, AIG fell 10 percent for the biggest loss  on the index after posting a fourth-quarter net loss of $8.8 billion.

NASDAQ                     2,238.26                         +4.04                         +0.18%
The tech-heavy Nasdaq was the best performer among major U.S. indices as technology stocks posted a slight gain.  Among the heaviest-weighted fifteen tech stocks on the index, smart phone competitors Research in Motion and Apple posted the largest gains.  Shares of each company rose at least 1.2 percent as shares of Palm, another smart phone competitor, sank on news that company sales may be very weak this year.  Qualcomm was the worst performer among the large Nasdaq tech stocks, dropping 1.3 percent on the session.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

U.S. Equities Retreat For Second Day on Weak Confidence Data

U.S. Session Key Developments

•    Consumer Confidence Falls to 10-Month Low
•    Commodities Sell-Off, Dollar Gains
•    Fed Chairman Bernanke to Deliver Report on Economy Tomorrow and Thursday

U.S. stocks retreated today on weak consumer confidence data and falling commodity prices.  The S&P fell for a second consecutive day to its lowest closing level since February 12.  Investors turned bearish after the Conference Board announced its confidence index fell in February from 55.0 to 46.0, its lowest reading in ten months.  The weak confidence data shows that economists do not believe the U.S. economy is out of the woods yet and the recovery will struggle to overcome major hurdles that still remain.  Weak consumer spending and high unemployment are the most obvious concerns going forward, and San Francisco Federal Reserve President Janet Yellen said yesterday that she does not see the employment situation improving much this year.  Further weakening sentiment today was the S&P/Case-Shiller housing index that showed home prices fell annually for a third consecutive month in December to their lowest levels since July.  The data led to widespread risk aversion that filtered through commodities as well as stocks.  Crude oil fell 1.8 percent to $78.86, while gold and silver prices fell 0.8 percent and 2 percent, respectively.  Looking ahead, all eyes will be on Fed Chairman Ben Bernanke’s testimony before House and Senate panels both tomorrow and Thursday.  This is his semi-annual report to Congress regarding the state of the economy as well as monetary policy.

DJIA 30                     10,282.41                      -100.97                       -0.97%
The Dow Jones Industrial Average posted a near 1 percent decline as twenty-seven of the thirty index stocks closed lower on the day.  General weakness in commodity prices hurt the basic materials and industrial sectors, as aluminum giant Alcoa dropped 2.5 percent and equipment maker Caterpillar fell 2.3 percent.  A drop in crude oil futures below $79 pushed shares of energy giants Chevron and Exxon Mobil down 1.2 percent and 0.7 percent, respectively.  One of the few bright spots on the Dow was Home Depot, which posted a 1.4 percent gain to lead the index after announcing better-than-expected earnings and its first dividend increase since 2006.  Kraft Foods also posted a modest gain today of 0.6 percent after analysts at Credit Suisse gave the stock an ‘overweight’ rating.

S&P 500                     1,094.60                         -13.41                         -1.21%
The broad-based S&P declined over 1 percent on weakness in commodities and the financial sector.  Shares in financial firms traded lower after the FDIC announced that bank failures are continuing their torrid pace, with one of every 11 banks at risk of failure as of the fourth quarter.  The sector fell nearly 2 percent on the FDIC announcement, as well as a news briefing from White House spokesman Robert Gibbs where he said that the Obama administration continued to back the Volcker banking plan in its current form.  According to the proposed regulation, banks would no longer be allowed to use proprietary trading operations, hedge funds, or private equity funds in ways that are unrelated to directly serving their customers.  Citigroup fell 3 percent on the news, while JPMorgan Chase, Wells Fargo, and Morgan Stanley dropped at least 2 percent each.

NASDAQ                     2,213.44                         -28.59                         -1.28%
The tech-heavy Nasdaq was the worst performer of the major U.S. stock indices as technology shares fell over 1.5 percent.  The twenty largest tech companies on the index all posted losses today, led by declines in Applied Materials and Marvell.  The semiconductor firms fell 3.5 percent and 2.5 percent, respectively, despite a generally favorable report on the sector released yesterday by analysts at UBS.  The world’s largest chipmaker, Intel Corp., faltered over 2 percent after announcing that the company, alongside venture-capital companies, will invest $3.5 billion in the U.S. technology sector over the next two years to facilitate domestic job growth.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

Dow

U.S. Equities Rally For Third Day, Fed Tightens After Hours

U.S. Session Key Developments

•    Fed Unexpectedly Raises Discount Rate By 0.25 Percent After Hours
•    Commodities Advance During Market Hours, Fall After Hours on Fed Hiked
•    Philadelphia Fed Index Higher For Sixth Month, Leading Indicators Rise Slightly

U.S. stocks rallied for a third day, capping the biggest three-day rally since November for the Dow Jones Industrial Average and S&P 500.  The news of today’s trading was quickly overshadowed thirty minutes after close, however, when the Federal Reserve unexpectedly raised the discount rate by a quarter point to 0.75 percent.  During trading hours, the market moved steadily higher as investors were encouraged by further strength in commodity producing firms and generally positive economic data.  The economic docket provided an upbeat outlook for market participants as the  Philadelphia Fed beat expectations and rose for a sixth consecutive month to 17.6, while leading indicators gained for a tenth straight month.  Stocks and commodities rallied in tandem, as crude oil traded above $79 a barrel and gold held above $1120 during the session.  Commodities moved sharply lower after hours, however, as the Fed unexpectedly announced a quarter point rise in the discount rate- the rate charged to banks for direct loans from the central bank.  The rate had previously been held at 0.50 percent since 2008 as Fed policy makers maintained a dovish stance amidst the worst financial crisis since the Great Depression.  In their statement today, the central bank said that “these changes are intended as a further normalization of the Federal Reserve’s lending facilities.”  The policy statement went on further to state that the modification does not signal a change in the outlook for the economy or monetary policy, although some market participants appear to disagree.  The dollar rose nearly a full percent to $1.3510 per euro following the announcement, and gold futures sold off from their $1118-$1125 intraday range back to the $1100 level.

DJIA 30                     10,392.90                      +83.66                       +0.81%
The Dow Jones Industrial Average posted the largest gain among major U.S. equity indices, led by a 1 percent gain in financial and industrial shares.  Insurance company Travelers was the best performer on the index, adding 1.9 percent, followed by Boeing, whose shares rose 1.7 percent.  Furthering gains among financial shares were Bank of America and JPMorgan Chase, whose shares gained 1 percent each.  Procter and Gamble also traded higher, adding nearly 1 percent, after company executives reiterated its strong earnings expectations for 2010.  Walmart was the biggest laggard of the 30 Dow stocks, dropping over 1 percent after sales by U.S. stores fell 1.6 percent, worse than the company’s projection of 2 percent.  The company’s fourth quarter profit actually beat estimates, although revenues fell short of analyst expectations.

S&P 500                     1,106.75                         +7.24                         +0.66%
The broad-based S&P posted its third consecutive gain led by basic materials and industrials.  Precious metals continued their climb during the regular trading hours, pushing Newmont Mining and Freeport McMoRan higher by at least 2 percent each.  Priceline.com rose the most on the index, gaining nearly 10 percent after announcing that forecast first-quarter profit is significantly higher than analyst estimates.  Hewlett-Packard, the world’s largest personal-computer maker, rallied over 1 percent after the company posted a 25% profit jump from one year ago.

NASDAQ                     2,241.71                         +15.42                         +0.69%
The tech-heavy Nasdaq rallied for a fifth consecutive session as technology stocks gained over 0.8 percent on the day.  The fifteen largest technology companies on the Nasdaq closed higher today, with the exception of Teva Pharmaceutical.  The top performing large tech company was DirecTV, whose shares gained over 4 percent on the session.  DirecTV added customers in the fourth quarter last year despite a rise in monthly bills for customers.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

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