Stock Market In Holding Pattern

Unless you owned stock in American Greetings (AM) or Family Dollar Stores (FDO) there was no significant news for the stock market on Wednesday. As a result, the major indices were little changed, although the Nasdaq 100 made a decent advance and the Russell 2000 extended its streak of record-high closing levels to a fourth consecutive trading day. As for American Greetings, the company had a robust first quarter. Unfortunately plans to take the company private next month at $19 per share kept Wednesday’s closing price for AM at $18.98. On the other hand, Family Dollar had a big day as the stock skyrocketed 7.11 percent.

The release of the FOMC minutes concerning the historic monetary policy meeting of June 18-19 (which brought us the taper timetable) turned out to be a non-event. Ben Bernanke’s June 19 press conference brought us all of the information from the FOMC minutes.

Earnings reporting season will gain more attention on Friday, when Wells Fargo (WFC) heads the bill. Thursday’s only interesting earnings report will come from Emerson Radio (MSN – Yeah, that’s right! MSN!)

The Dow Jones Industrial Average (DIA) lost 8 points to finish Tuesday’s trading session at 15,291 for a 0.06 percent decline. The S&P 500 (SPY) inched upward by 0.02 percent to close at 1,652.

The Nasdaq 100 (QQQ) climbed 0.55 percent to finish at 3,000. The Russell 2000 (IWM) advanced 0.23 percent to end the day at a new record-high closing level of 1,020.42.

In other major markets, oil (USO) jumped 1.79 percent to close at $37.43.

On London’s ICE Futures Europe Exchange, September futures for Brent crude oil advanced by 11 cents (0.10 percent) to $107.18/bbl. (BNO).

August Gold Futures advanced by $5.20 (0.42 percent) to $1,251.10 per ounce (GLD).

Transports backed over the cat on Wednesday, with the Dow Jones Transportation Average (IYT) falling 0.78 percent.

In Japan, stocks declined as the yen strengthened to 100.38 per dollar before the closing bell in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). Japan’s Cabinet Office reported that its consumer confidence index declined to 44.3 in June from 45.7 in May. A reading below 50 indicates consumer pessimism. The Nikkei 225 Stock Average declined 0.39 percent to 14,416 (EWJ).

In China, stocks made shocking gains despite some awful trade data. The nation’s Customs Administration reported that exports sank by 3.1 percent in June on a year-over-year basis, despite expectations for a 3.7 percent advance. Imports declined 0.7 percent, despite expectations for a 6 percent increase. Widespread belief that the downbeat report would motivate the People’s Bank of China to provide more monetary stimulus resulted in a stock market rally. Does that sound familiar? The Shanghai Composite Index soared 2.17 percent to close at 2,008 for its biggest surge since March 20 (FXI). Hong Kong’s Hang Seng Index jumped 1.07 percent to finish the session at 20,904 (EWH).

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Concern about an awful trade report in China caused European stocks to decline on Wednesday as the materials sector took a hard hit. Fear that China’s economic slowdown would reduce demand for European exports and materials pushed the major European stock indices into the red despite the rally in China.

The Euro STOXX 50 Index finished Wednesday’s session with a 0.17 percent decline to 2,659 – remaining above its 200-day moving average of 2,636. Its Relative Strength Index is 51.38 (FEZ).

Technical indicators reveal that the S&P 500 continued rising above its 50-day moving average of 1,629 after closing at 1,652. Its Relative Strength Index increased from 59.96 to 60.04. The MACD continues to rise above the zero line, suggesting a continued advance.

For Wednesday, five sectors were in positive territory and four sectors went negative, as the healthcare sector took the lead, with a 0.67 percent gain. The energy sector took the hardest hit, falling 0.62 percent.

Consumer Discretionary (XLY): +0.10%

Technology: (XLK): +0.32%

Industrials (XLI): -0.02%

Materials: (XLB): -0.03%

Energy (XLE): -0.62%

Financials: (XLF): -0.57%

Utilities (XLU): +0.56%

Health Care: (XLV): +0.67%

Consumer Staples (XLP): +0.12%

Bottom line: The stock market remained in a holding pattern on Wednesday, in the absence of any significant earnings reports or market-moving news events.

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