Published July 30, 2012
FOX Business: The Power to Prosper
Wall Street dipped slightly lower Monday afternoon as the bulls take their feet off the gas pedal after the blue chips soared more than 250 points at the end of last week amid signs of help from the European Central Bank.
As of 3:30 p.m. ET, the Dow Jones Industrial Average fell 11.43 points, or 0.08%, to 13068.43, the S&P 500 lost 0.85 point, or 0.06%, to 1385.64, the Nasdaq Composite declined 9.72 points, or 0.32%, to 2948.54 and the FOX 50 slipped 0.55 point, or 0.05%, to 1038.46.
The lackluster market action puts the blue chips in jeopardy of their ninth-straight Monday decline, the longest such streak since July 1973 when they tumbled 11 straight Mondays, according to Dow Jones Newswires.
“The big move Thursday and Friday is meeting a little bit of skepticism today,” said Michael James, managing director of equity trading at Wedbush Securities. “Traders are somewhat cautious about commentary versus actions coming from Europe. It sounds good but the proof is in the details.”
There were few new catalysts to move the markets in either direction on Monday, resulting in a relatively modest trading range and little volatility.
The cautious trading comes as Wall Street embarks on what could be a very significant week as central bankers in the U.S., eurozone and U.K. are all scheduled to meet and could unleash new measures aimed at easing lingering economic strains.
Last week the S&P 500 leaped to its highest level since May 3 and the Dow surged over 250 points and recaptured the 13000 threshold after European Central Bank Mario Draghi promised to do whatever it takes to preserve the euro. Reports followed suggesting the ECB could take more aggressive steps, including direct bond purchases.
While European markets rallied to four-month highs on Monday, the euro dipped about 0.65% against the dollar to $1.2241.
“It seems you can only declare your intention to save the euro so many times before the excitement wears off; markets are now awaiting firm action to back up the impressive words,” Chris Beauchamp, market analyst at IG Index, wrote in a note.
The eurozone crisis was front and center as Treasury Secretary Tim Geithner huddled with his German counterpart Wolfgang Schauble in Germany on Monday.
The two finance ministers issued a joint statement that said little new, highlighting the "need for policymakers to adopt and implement all reform steps required to deal with the financial crisis and crisis of confidence.
Geithner is scheduled to meet with Draghi later in the day.
Almost half of the Dow's 30 stocks advanced in recent action, led by tech giant Cisco Systems (CSCO) and United Technologies (UTX). The blue-chip index's biggest intraday losers included Merck (MRK) and J.P. Morgan Chase (JPM).
All eyes will be on the Federal Reserve later this week as the odds the central bank will unleash a third round of quantitative easing to aid the economy continue to rise. The Fed’s decision is scheduled to be handed down on Wednesday.
And then on Thursday the ECB is scheduled to announce its policy decision, with the bar significantly raised by Draghi's comments last week.
Just 40% of S&P 500 companies have beaten revenue estimates, the lowest level in at least a decade, according to S&P Capital IQ. Companies have also been pessimistic about the outlook, providing the most negative guidance since 2001, Thomson Reuters says.
In commodities, crude oil fell 65 cents a barrel, or 0.73%, to $89.48. Gold gained $1.20 a troy ounce, or 0.07%, to $1,623.90.
Chicago Bridge & Iron (CBI) unveiled a deal to acquire engineering and construction giant Shaw Group (SHAW) for $3.04 billion in cash and stock. The $46-a-share deal represents a lofty 72% premium on Shaw's closing price on Friday.
HSBC (HBC) suffered a 9% dip in first-half profits after setting aside $2 billion to resolve a series of scandals, including $700 million tied to an anti-money laundering scandal in the U.S.
Coca-Cola (KO) spelled out plans to revamp its operating structure by slimming down to three major business segments: Coca-Cola International, Coca-Cola Americas and Bottling Investments Group. The move is aimed at streamlining reporting lines and intensifying focus on key markets.
CIT Group (CIT) widened its second-quarter loss to 35 cents a share, surpassing consensus calls for a wider loss of 41 cents a share. The commercial lender, which emerged from bankruptcy in 2009, was hit by higher expenses
London’s FTSE 100 rallied 1.18% to 5693.63, Germany’s DAX jumped 1.27% to 6774.06 and France’s CAC 40 leaped 1.24% to 3320.71 -- its highest level since April 3.
In Asia, Japan’s Nikkei 225 advanced 0.80% to 8635.44 and Hong Kong’s Hang Seng soared 1.61% to 19585.40.