Kitsap Business and Economy

Now at 9,294, up 8 points

NEW YORK (AP) — Stocks barely budged Tuesday as investors took a break from a huge three-week rally.
The market’s pause follows a surge that catapulted the Standard & Poor’s 500 index past the 1,000 mark on Monday for the first time since November.
Reports showing an uptick in consumer spending and a fifth straight monthly increase in pending home sales gave investors new signals that the economy is stabilizing.
The market found more good news in Caterpillar Inc.’s confirmation that cost cuts and other initiatives will enable the heavy equipment maker to post profits over the long term no matter the pace of the economic recovery.
The world’s largest maker of construction and mining equipment is considered a bellwether of the global economy. Shares of the Dow component rose more than 4 percent.
Even with mostly upbeat economic news, investors looked to lock in some profits following a 14 percent climb in the S&P 500 index and Dow Jones industrials since July 10.
“There is a lot of concern that the market has moved too far too fast and that we’ve gotten ahead of the economy,” said Brian Bush, director of equity research at Stephens Inc. “So there may be a pause here.”
In midafternoon trading, the Dow Jones industrial average rose 2.12, or less than 0.1 percent, to 9,288.68. The Standard & Poor’s 500 index fell 1.63, or 0.2 percent, to 1,001.00, while the Nasdaq composite index fell 5.95, or 0.3 percent, to 2,002.66.
Many analysts believe the market will push higher for now as investors use dips to put money into stocks.
Financial, industrial and consumer discretionary stocks were among the best performers as investors placed bets on areas of the market that stand to benefit the most when the economy is growing again.
Traders have seen better-than-expected corporate earnings reports and encouraging forecasts this summer as well as improvements in manufacturing and housing as promising signs that the nearly two-year-long recession is coming to an end. Stocks now stand at levels not seen since last fall.
“Everyone that I am talking to is interested in getting more money into the market,” Bush said. “People don’t want to miss this market if it is going significantly higher.”
The market’s gains on Tuesday were held in check, however, by the government’s looming jobs report.
Unemployment stands at a 26-year high of 9.5 percent, and that rate is expected to rise to more than 10 percent this year. Analysts warn that bad news in the Labor Department’s monthly jobs report could rattle the market.
“The second half of the week is going to be heavily dominated by the employment data,” said John Canally, economist at LPL Financial. “That is keeping markets hesitant today, and the fact that we’re at a 1,000. People are naturally going to take a break.”
Investors are more optimistic about the economy, and more confident in companies’ ability to make money, than they were last fall at the peak of the financial crisis. But concerns about the financial health of consumers as well as rising unemployment have yet to subside.
On Tuesday, the National Association of Realtors reported a better-than-expected rise in pending home sales for a fifth straight month in June. However, the housing market has begun to show steady signs of stabilization, and investors have largely factored in improvements there.
The Commerce Department said consumer spending rose 0.4 percent in June, slightly more than anticipated and the second straight monthly gain. But the report also showed that personal incomes, an indicator of future spending, dropped by a larger-than-expected 1.3 percent.
Among the day’s earnings news, homebuilder D.R. Horton Inc. reported a smaller loss than the same period a year ago, beating Wall Street’s estimates, while Toyota posted a smaller-than-expected loss on booming sales of its Prius hybrid. That came a day after U.S. automakers reported better sales for July thanks to the government’s wildly successful cash for clunkers program.
D.R. Horton jumped 54 cents, or 4.6 percent, to $12.29. Toyota fell 90 cents, or 1 percent, to $86.29. Caterpillar gained $2.55, or 5.7 percent, to $45.67.
On Monday, all major stock indexes rose more than 1 percent to fresh highs for the year, tacking on to July’s big advance that sent the Dow up 725 points. Major indexes are still down 35 percent from their peak in October 2007.
Bond prices reversed early gains and fell. The yield on the benchmark 10-year Treasury note, a widely used benchmark for mortgages and other kinds of loans, rose to 3.70 percent from 3.64 percent late Monday.
The dollar was mixed, while gold prices rose.
Oil prices shed 59 cents to $70.99 a barrel on the New York Mercantile Exchange.
Advancing stocks outnumbered decliners by nearly 4-to-3 on the New York Stock Exchange, where volume came to 744.9 million shares compared with 731.4 million shares at the same time Monday.
In other trading, the Russell 2000 index of smaller companies rose 3.54, or 0.6 percent, to 569.32.
Overseas, Japan’s Nikkei stock average rose 0.2 percent, while Hong Kong’s Hang Seng index dipped 0.1 percent. Britain’s FTSE 100 and Germany’s DAX index both lost 0.2 percent, and France’s CAC-40 slipped 0.04 percent.

This entry was posted on Tuesday, August 4th, 2009 at 10:36 am by Rachel Pritchett and is filed under Uncatagorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.