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DJIA Industrial Average

Weekly Commentary-July 26-July 30

Open: 10424.17

High: 10632.52

Low: 10327.37

Close: 10465.94

Change: 47.23 (0.45%)

RSI: 59

MACD (Delta): 12.3

Strategy:  The week remained largely listless for the US stocks, which kept searching for a proper direction and battling between better Q2 earnings and weaker economic indicators. The week closed with minor gains in the indices, as the markets are looking to take a shot upwards from improved economic indicators.

Commentary

Stocks closed the week with the best monthly gains in a year during July as investors cheered strong second-quarter results from an array of major U.S. companies. Dow Industrial gained closed to 7% in the month of July, albeit with subdued volumes.

The last week, however, did not see any pick up in the market activity, as the Dow Industrial Average closed with minor gains of 47.3 points, or 0.45% at 10465.94 points. The tech heavy Nasdaq Composite, however, shed 9.77 points, or 0.4% in the week.

The Q2 estimates for GDP were released on Friday, to 2.4% from 2.7% projected in the Q1. These were largely in line with the expectations.

On the jobless data front, the initial jobless claims filed for the previous week fell by 11,000 to 457,000 last week, according to the Department of Labor.

However, Durable goods orders fell 1% in June after dropping 0.8% in May.

A major dampener on sentiment came early in Tuesday, as the consumer sentiment for the past month fell to lowest since last November, making the buyers cautious.

There were reports floating around that the Fed officials had warned of a Japan type deflation pressure in US hitting in near future.

Dow component Exxon Mobil reported higher quarterly earnings and revenue thanks to an increase in oil prices versus a year ago.

Another Dow constituent Sprint Nextel posted its first rise in subscribers in three years, but also posted a wider second-quarter loss as it lost more lucrative customers.

Boeing was under pressure as its second-quarter profit fell from a year earlier, due to less airplane deliveries and defense revenue.

BP posted a huge quarterly loss of $17.2 billion due to costs connected to the Gulf of Mexico oil spill. The company also said that British CEO Tony Hayward will be replaced by American Robert Dudley Oct. 1.

DuPont reported higher quarterly sales and earnings that beat the estimates, due to higher prices and increased demand.  The shares gained in the week.    

Pressure was also seen on FMCG stocks like Colgate Palmolive, Kraft Foods and Proctor & Gamble late in the week, since Colgate Palmolive could not match the analysts’ expectations for Q2.

The Week Ahead

Monday

Reports on manufacturing activity and construction spending

Tuesday

A report on June factory orders

July auto sales for car truck makers

June personal income and spending report

Wednesday

EIA Petroleum Status Report

ISM index of activity in the service sector for July

ADP July private sector employment report

Thursday

Jobless Claims Data

Friday

July unemployment report