The stock market continues to tread higher with the S&P 500 inching closer to potential resistance at its August highs. Currently the S&P 500 is poised to mark its fifth gain in a row, a feat not seen since November 2008. A little improvement in the weekly jobless claims and some positive comments from Proctor & Gamble (PG) helped set the mood this morning. The Treasury Department is poised to auction another $12 billion in 30-year notes this afternoon. Meanwhile the U.S. dollar is still falling and set another new low for 2009.
Asian markets were mixed. The Chinese Shanghai index lost 0.7% snapping a seven-day winning streak. As of yesterday the Shanghai had rallied 12% off its recent lows on September 1st. The Hong Kong Hang Seng bounced back to 12-month highs with a 1% gain. The Japanese NIKKEI displayed some strength with a 1.9% rally. Asian markets could see volatility tomorrow as futures and options on the Japanese exchange expire and China will see another round of economic data.
European markets stumbled with some minor profit taking. Most of the European bourses ended a four-day run of gains. Energy stocks and financials reversed Wednesday's rally. The Bank of England left interest rates unchanged at 0.5% for the sixth month in a row. There was no change in their quantitative easing strategy at 175 billion pounds. The U.K. reported that construction orders were up 2 percent in the last three months and housing prices bounced again for the second month in a row with a 0.8% gain. Yet the FTSE index lost 0.33% falling back under the 5,000 mark. The French CAC-40 was almost unchanged with a 0.05% loss. The German DAX scored another win with a 0.37% gain.
The initial jobless claims data comes out weekly on Thursday and the Commerce Department said claims fell more than expected to a seasonally adjusted rate of 550,000. Last week's numbers were revised higher to 576,000. The Commerce Department confessed that they had to guess on initial claims for a handful of states that were unable to deliver the data due to the holiday-shortened week. The number of workers on the continuing claims list fell almost 160,000 to 6.1 million. In a separate report the Commerce Department said that the trade deficit jumped to a six month high in July. Total imports soared 4.7% to nearly $160 billion, which was the biggest one-month advance on record. Fueling the big gain was a 21.5% jump in imports of cars and auto parts. Exports rose 2.2% to $127.6 billion, which was their third gain in a row.
Investors continue to ignore the foreclosure problem in the U.S. RealtyTrac Inc. announced that foreclosure notices ticked down to 358,000 in August. That's enough for one in 357 homes. This is the sixth month in a row that foreclosure notices have come in at a record-breaking pace above 300,000. Nevada had the highest rate with one notice for every 62 homes. Florida was 1 in 140 with California with 1 in 144. Yesterday the Treasury Department admitted that even if the federal government's loan modification program was successful that we should still expect to see millions of foreclosures in the U.S. Some analysts are expecting upwards of six million foreclosures in the next three years.
In the positive news column Proctor & Gamble (PG) said they expect to see sales pick up in the rest of 2009. Management planned a 10% price cut for many of its items as they prepare to reinforce their value pitch toward consumers. Shares of PG are up almost 4% near $56 a share on the news. Glass-maker Corning (GLW) also released some good news saying sales volumes will come in better than expected with their outlook improving for the third and fourth quarters. Shares of GLW are up 2.4% and breaking out past several layers of resistance near $16.00. Monsanto (MON) was not so lucky. Management said their 2010 earnings would probably fall in the $3.10-3.30 per share range compared to analysts' estimates at $4.12. The stock gapped open lower this morning and is trading with a 5% loss near $79 a share.
Overall the trend is up and the S&P 500 is nearing potential resistance at the 1,040 mark. The NASDAQ is hitting new highs for the year above 2070 and above the 50% retracement of the bear-market decline from 2008-2009. The Dow Jones Industrials are up over 60 points and nearing potential resistance at the 9600 level. The small cap Russell 2000 index is up almost 1% and hitting new highs over resistance near 590.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list for movers I see that ATI is up 2.7% and breaking out over the $32.00 level. CF dipped on the Monsanto news but is quickly recovering. Goldman Sachs (GS) is up another 2.6% and trading over $174. NEU is hitting new highs over $88.00 a share. Railroad stock UNP is showing relative strength with a 2.8% rally to new 2009 highs near $64.