U.S. markets rose modestly Thursday, adding another day to the recent summer lull, marked by nominal price movements and low trading volume. The Dow finished the day up 0.6 percent at 13,250, the S&P was up 0.6 percent at 1414—very close to the April high of 1422—and the Nasdaq was up 1.0 percent at 3,062—boosted by strong performance by shares of Cisco Systems.
Goldman Sachs’s market commentary from late Wednesday summed up this summer’s trading: “Metaboring: it’s getting boring to make the comment that equities are again boring. Or maybe that’s called boring-squared. Here’s to hoping tomorrow is boring-cubed. To reinforce the point that nothing much is moving, our US portfolio strategy team has 20 ’thematic baskets’ … and not a single one moved more than 1% today.”
Despite the low volumes and muted price moves, there were several U.S. economic data points for traders to digest yesterday.
The Philadelphia Fed’s survey of manufacturing conditions posted another decline to minus 7.1 on expectations of minus 5.0. This is the fifth consecutive month of missed expectations and the fourth consecutive month of declines, although it improved from a minus 12.9 previously. The employment component was especially weak, declining 8.6 points. “Labor market conditions at the reporting firms deteriorated slightly this month. … The percent of firms reporting decreases in employment (15 percent) exceeded the percent reporting increases (7 percent),” said the report. Initial jobless claims for the week underpinned the perception of a slightly weaker job market, as claims rose from 361,000 a week ago to 366,000 Thursday. However, the less volatile four-week moving average fell by 5,500 to 363,750, the lowest level since late March.
Housing was mixed, as data reported by the commerce department showed a drop in housing starts from 756,000 to 746,000 from June to July. The positive side of the dataset was housing permits, which increased from 760,000 to 812,000, the highest reading since August 2008. Some critics noted that the nonseasonally adjusted data for July actually posted a three-month low.
Spain’s Ibex Outperforms
Markets in Europe also finished the day on a positive note, as Germany’s chancellor Angela Merkel spoke at a joint press conference with Canada’s Prime Minister Stephen Harper in Ottawa. “[The European Central Bank] made it clear that the European Central Bank is counting on political action in the form of conditionality as the precondition for a positive development of the euro,” she said, adding that Germany is “in line” with the ECB on this issue.
Previously, commentators had feared that Merkel would take ECB President Draghi to task after coming back from her holiday, as he made some remarks during Merkel’s absence that did not conform to Germany’s stance on sovereign bond buying, for example. Stocks across Europe rose, with Spain’s Ibex outperforming and closing 4.1 percent higher. The EURO STOXX was up 1.1 percent and the euro climbed 0.55 percent.
Facebook and Manchester United Dive, Cisco Soars
Shares of the social media website Facebook closed the day deep in the red, dropping 6.3 percent to close at $19.87. As The Epoch Times had reported Thursday, insiders took the opportunity to sell shares in the Palo Alto, Calif., company as the lockup period on 271 million insider shares expired Thursday. Investors in the original IPO have now lost close to half of their initial investment.
Another recent IPO that did not fare so well Thursday was Manchester United PLC. The English soccer club that floated some of its shares on the New York Stock Exchange on Friday of last week, saw its price drop over 5 percent intraday before recovering to close down 2.0 percent at $13.77. Shares were originally offered at $14, and the price chart over the last few days indicates that there was heavy support at that level.
Cisco Systems, the San Francisco, Calif., tech company jumped 9.6 percent to $19.02 on better than expected earnings and an increase in its dividend. The maker of networking equipment reported net income of $1.9 billion and revenues of $11.7 billion, and increased its dividend by 75 percent to $0.14 per share. “Our strategy—delivering intelligent networks and technology architectures, built on integrated products, services and software platforms, to fuel our customers’ businesses—is proving the right long-term strategy for our success,” commented Chief Executive John Chambers on the solid results.
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