There's No Business Like FOX Business
The bulls put a stop to Wall Street’s four-day funk on Wednesday as bargain-hunters scooped up beaten-down stocks after the latest gloomy reports on the slowing economy triggered an early triple-digit sell off that briefly pushed the Dow below 10000.
The Dow Jones Industrial Average rose 19.61 points, or 0.20%, to 10060.06, the Standard & Poor's 500 added 3.46 points, or 0.33%, to 1060.06 and the Nasdaq Composite added 17.78 points, or 0.84%, to 2141.54. The FOX 50 gained 2.40 points, or 0.31%, to 765.82.
Wall Street's economic worries hit new levels on Wednesday morning as new data revealing anemic growth in durable goods orders and a record low for July new home sales combined to further spook the jittery markets. However, stocks stormed back and closed solidly higher, a move that didn't appear to be driven by any new developments. Instead, the comeback was likely a reflection of traders picking up stocks for a perceived discount and the markets breaching technical levels that triggered buy orders.
“The recovery is still in an incline, but not as steep as we had hoped,” NYSE trader Ben Willis of Sunrise Securities told FOX Business. “We’ve been down for four straight days…I fully anticipated (the bounce). The housing numbers shouldn’t have been a surprise.”
The early selloff left the Dow below the closely-10000 level and came amid amid mounting evidence that the U.S. economic recovery is slowing. The benchmark index on Tuesday tumbled 134 points to its lowest level since July 7 after a new report revealed existing home sales took a record plunge last month to the weakest pace in 15 months.
“Obviously it’s a little dark out there in the sense of the recovery We have a broader base of issues outside of housing in that consumers and business are not spending enough to sustain the recovery,” said Frank Davis, director of sales and trading at LEK Securities.
Most of the Dow's 30 components made headway by the closing bell, led by Pfizer (NYSE:PFE) and Home Depot (NYSE:HD). The index's worst performers were United Technologies (NYSE:UTX) and Caterpillar (NYSE:CAT).
Given the markets' poor performance over the past week, some traders weren't surprised to see the bounce back.
“Now that we’ve got that (data) behind us, we’ve gotten a little bit of a bid back in the market as we get some bargain-hunting” at favorable technical levels, said Paul Nolte, managing director at Dearborn Partners.
The turnaround on Wall Street was led by the consumer discretionary sector, which jumped 1% on the day. Despite the dreary economic headlines, stocks like Sears (NASDAQ:SHLD) and Starbucks (NASDAQ:SBUX) closed solidly higher.
Wall Street hit session lows after the Commerce Department said new home sales declined by 12.4% in July to a record-low pace of 276,000 units. Economists had forecasted a slight rise to a pace of 333,000 units. The government also cut its estimate for June new home sales and said median prices in July slid 4.8% to $204,000, the lowest level since December 2003.
Despite the worse-than-expected sales figures, shares of home builders like DR Horton (NYSE:DHI) and Hovnanian (NYSE:HOV) rallied. The housing group was boosted by luxury home builder Toll Brothers (NYSE:TOL), which posted its first quarterly profit since 2007.
At the same time, the Commerce Department said orders of big-ticket items expected to last more than three years, or durable goods, rose just 0.3% in July. The report spooked Wall Street as economists had forecasted much more robust growth of 2.7%. Excluding transportation, orders tumbled 3.8% in July -- the biggest one-month drop since the depth of the recession in January 2009.
After initially tumbling, economically sensitive commodities closed well off their lows. Breaking a five-day slump and bouncing off 11-week lows, crude oil jumped 89 cents a barrel, or 1.24%, to $72.52. Copper slid to 0.88% a pound to $3.211. On the other hand, gold jumped $7.70 a troy ounce, or 0.63%, to $1,239.50.
3Par (NYSE:PAR) said it has entered into talks with Hewlett-Packard (NYSE:HPQ) in the wake of H-P’s $1.6 billion takeover offer that trumped Dell’s (NASDAQ:DELL) bid. 3Par said it believes H-P’s offer will likely lead to a superior bid and that if it endorses the H-P package, it will give Dell three days to match.
Toll Brothers (NYSE:TOL) posted its first quarterly profit since 2007 and surprised analysts by saying it broke even on a non-GAAP basis. Wall Street had been bracing for a loss of 14 cents a share. Revenue slid 2% to $454.2 million, beating estimates for a decline to $393.43 million. Deliveries rose 1% to 803 units, while net signed contracts dropped by 11% to $400.1 million.
Coldwater Creek (NASDAQ:CWTR) swung to an unexpected profit of 2 cents a share, solidly topping estimates for a loss of 4 cents a share. The women’s apparel retailer said its revenue jumped 14% to $253.5 million, compared with forecasts from analysts for $233.77 million. Coldwater Creek also backed its 2010 EPS guidance of 8 cents to 12 cents that would exceed the Street’s view.
American Eagle’s (NYSE:AEO) net income tumbled 66% last quarter, but the retailer’s non-GAAP EPS of 13 cents matched Wall Street’s view. Sales slid 0.7% to $651.5 million, coming in just shy of expectations for $646.6 million. American Eagle said it sees third-quarter profits of 23 cents to 26 cents, compared with estimates for 26 cents.
OpenTable (NASDAQ:OPEN) saw its stock rise after it was reportedly upgraded to “buy” from “neutral” by Bank of America-Merrill Lynch. According to Reuters, BofA upped the restaurant reservation site on strong core business traction and new initiatives expected to expand the company’s business opportunities.
The U.K.'s FTSE 100 lost 0.90% to 5109.40, France's CAC 40 fell 1.17% to 3450.19 and Germany's DAX sank 0.61% to 5899.50.
In Asia, Tokyo's Nikkei 225 declined 1.66% to 8845.39, Hong Kong's Hang Seng slipped 0.11% to 20625.00 and China's Shanghai Composite tumbled 2.03% to 2596.58.