JOYG Joy Global Inc. (MM)

Economic reports helped markets register modest gains on Wednesday, which was also the last day of one of the wildest months the benchmarks have experienced in their history. However, the Dow and S&P 500 recorded their steepest monthly fall since May 2010, even as indices extended their stay in the green for the fourth-straight day.

 

The Dow Jones Industrial Average (DJIA) opened with gains and was trading substantively higher. However, the Dow lost some of those gains at a later stage to close at 11,613.53, up 0.5%. The Standard & Poor 500 (S&P 500) climbed 0.5% to finish the day at 1,218.89. The Nasdaq Composite Index could manage only marginal gains and increased 0.1% to settle at 2,579.46. On the New York Stock Exchange, the American Stock Exchange and Nasdaq, consolidated volumes were 8.2 billion shares, compared with last year's daily average of 8.47 billion. On the NYSE, for every one stock that moved down, a couple of stocks managed to climb higher.

 

It was a calm end to what had been one of the wildest months in the bourses' trading history. The volatile run of the markets had actually started in late-July and had continued into the greater part of August, when the Dow logged 400+ points of movement for a few-consecutive days. The Dow was recording three-digit movement for quite a number of days during the month, and the S&P 500 and Nasdaq also shared the roller-coaster ride. Unfortunately, the benchmarks failed to register monthly gains and recorded the fourth-straight month of decline. For the month, the Dow slipped 4.4%, the S&P 500 plunged 5.7% and the Nasdaq skidded 6.4%.

 

The roller-coaster ride was initially fuelled by the political gridlock over raising the debt-ceiling and was followed by rating agency Standard & Poor’s downgrade of the US credit rating. Concerns about European debt also dented the markets. During the final days of the month, investor sentiment was buoyed by the possibility of Federal Reserve Chairman, Ben Bernanke’s announcing a third round of quantitative easing.

 

It was the economic reports that primarily guided the markets on Wednesday. Factory orders came in strong, suggesting a strong platform for the manufacturing sector. Job data from payroll-processor Automatic Data Processing (ADP) was also encouraging, coming ahead of important non-farm payroll data on Friday. The Chicago purchasing managers index reading also came in better than expectations.

 

Coming to the individual reports, the Department of Commerce reported: “New orders for manufactured goods in July, up two of the last three months, increased $10.5 billion or 2.4 percent to $453.2 billion, the U.S. Census Bureau reported today. This followed a 0.4 percent June decrease. Excluding transportation, new orders increased 0.9 percent”. A hike in transportation equipment was the primary factor responsible for the rise in new orders. The consensus estimate for the current period was a jump of 1.8%.

 

The job market is a crucial indicator of the economy’s health, and luckily the ADP report bolstered sentiment ahead of significant Government job data scheduled for release on Friday. According to ADP, the economy added an additional 91,000 jobs in the private sector driven primarily by the service sector and small businesses. Economists were hoping the ADP to report a 100,000 hike in job additions. Though the figures were lesser-than-expected, market watchers believe this is a positive report given the difficulties the economy has been struggling with recently.

 

Separately, the Chicago purchasing managers index slipped to 56.5 in July from 58.8 in June. However, this was better that expectations of a reading of 53.0.

 

Among the sectors, industrials was one of the top gainers, while the telecom sector suffered a heavy beating. Industrial shares like Honeywell International Inc. (NYSE:HON), United Technologies Corp. (NYSE:UTX), Joy Global, Inc. (NASDAQ:JOYG) and Caterpillar Inc. (NYSE:CAT) jumped 1.1%, 0.7%, 1.3% and 1.2%, respectively. The decliners for the telecom sector were AT&T, Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), Vodafone Group plc (NASDAQ:VOD) and Leap Wireless International Inc. (NASDAQ:LEAP) and they dropped 3.9%, 0.4%, 0.9% and 2.3%, respectively.

 

 
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