Tuesday, August 4, 2009

Stocks Stagger After Bull Run

. Tuesday, August 4, 2009

By stockOzone team

Stocks dipped modestly Tuesday morning, as investors took a step back after a three-week advance that left the major indexes at new 2009 highs.

The Dow Jones industrial average (INDU) lost 18 points, or 0.2% in the early going after ending the previous session at a 9-month high. The S&P 500 (SPX) index lost 9 points, or 0.5%, after ending the previous session above the 1,000 level for the first time since last November.

The Nasdaq composite (COMP) lost 14 points, or 0.7%, after ending the previous session above 2,000 for the first time since last November.

Wall Street kicked August off with a solid start Monday, continuing an uptrend that made July the best month for stocks in two decades. Monday's rally pushed the benchmark S&P 500 index above the 1,000 level for the first time since last November, and the tech-heavy Nasdaq closed above 2,000.

Economy: Personal income fell 1.3% in June, the Commerce Department reported Tuesday morning. That was worse than the 1% decline economists were expecting, according to a Briefing.com survey, and much worse than the previous month, when income surged on government stimulus. Personal spending rose 0.4% in June, after a 0.1% increase in May. Economists thought it would rise 0.3%.

The Treasury Department said it will borrow less in the third quarter than it had previously expected, partly due to banks paying back bailout money. The news may calm fears that surging government debt will hurt the dollar and spark runaway inflation.

Autos: One day after U.S. automakers reported July auto sales that improved from June levels, Toyota Motor (TM) posted a smaller-than-expected quarterly loss. The company also issued a more encouraging outlook for the full year and said it expects government incentives to help boost sales in Japan.

In the U.S., an incentive program aimed at rejuvenating auto sales is in the hands of the Senate. The Cash for Clunkers program faces extinction unless the Senate approves additional funding.

Earnings: Companies on tap to release quarterly financial results include Archer Daniels Midland (ADM, Fortune 500), CVS Caremark (CVS, Fortune 500) and Kraft Foods (KFT, Fortune 500).

Swiss bank UBS (UBS) posted another quarterly loss. The financial giant was hit by restructuring fees and client withdrawals.

Oil: Crude prices fell 84 cents to $70.74 a barrel.

World markets: Most Asian markets finished the session with modest gains. Sentiment was more downbeat in Europe, where major markets fell in afternoon trading.

In currency trading, the dollar was little changed against the euro and yen.

Disclosure: Author does not own any of the stocks discussed here.





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