US stocks registered good gains for the week that ended on Friday, 27 July 2012. Earning reports coupled with euro zone matters dominated the headlines. Nearly 300 companies in the S&P 500 have reported second quarter results thus far. Roughly two thirds of them have beat earnings estimates. Stocks kicked off the week on a weak note but gained momentum following different comments from Euro zone officials. The ECB announced that it is vowed to protect the euro and the same led the dollar to weaken in the later part of the week. Most of the weekly gains were registered on Friday, the last trading day of the week.
For the week, that ended on Friday, 27 July 2012, Dow ended higher by 253.09 points or 2% to end at 13,075.7. The Nasdaq gained 32.8 points or 1.1% to end at 2,958.1. The S&P 500 gained 23.31 points or 1.7% to end at 1,385.97.
Monday started with reports suggesting Greece may see its aid cut off if the country fails to meet its commitments. Both Italy and Spain announced short-selling bans which had their U.S. listings under pressure. After the bell, Moody's placed the 'AAA' ratings of Germany, Luxembourg, and the Netherlands on 'negative watch.'
Tuesday saw the S&P 500 and Nasdaq decline. The day's action was driven by slim earnings outperformance coupled with lowered full year guidance from multiple firms. China's HSBC Flash Manufacturing PMI rose to 49.5 (48.2 previous), but the reading still pointed to a contraction in the manufacturing sector of the world's second largest economy. After the bell, tech giant Apple missed earnings and revenue estimates, and also slashed their guidance for the upcoming quarter.
Wednesday began with mixed earnings and a new home sales reading that missed expectations. Egan Jones issued a downgrade of Italy's sovereign rating to CCC+ from B+. Earnings season continued as Zynga was one of the weakest performers following a second quarter loss and slowing revenue growth.
Thursday witnessed stocks soaring following comments from Mario Draghi. Mr. Draghi was quoted as saying sharing national sovereignty on EU level to come and that the European Central Bank is ready to do whatever it takes to preserve the euro. At day's end, the much anticipated earnings from Facebook crossed the wires. The company reported earnings that were mostly in line, but the stock fell nearly 10% in the after-hours session as the company failed to give any guidance on the conference call.
Among other earning reports, McDonald's missed expectations as headwinds from overseas and rising costs of food products weighed on results.
On the final day of the week, U.S. stocks posted steep gains for second consecutive day on Friday, 27 July 2012 reclaiming a weekly advance as investors anticipated moves by the European Central Bank as well as the U.S. Federal Reserve. Stocks hit session highs after reports that European Central Bank President Mario Draghi would hold talks with Bundesbank President Jens Weidmann in an attempt to remove the biggest obstacles to adopting new measures including bond purchases.
Friday's gains marked the second session of triple-digit increases for the Dow and its third day of gains. The Dow Jones Industrial Average ended up 187.73 points, or 1.5%, to 13,075.66. The S&P 500 index added 25.95 points, or 1.9%, to 1,385.97, extending gains into a second session. The Nasdaq Composite gained 64.84 points, or 2.2%, to 2,958.09.
Health care and technology were the best performing of the index's 10 major industry sectors, all of which advanced.
In the currency market on Friday, the U.S. dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by 0.4%.
Among economic data expected for the day on Friday, advanced GDP for the second quarter suggested the economy grew at a 1.5% rate when an increase of 1.2% had been expected. The first quarter chain deflator reportedly increased by 1.6%, which is what had been anticipated.
Merck led the gains that included all 30 components, rallying 4.1% after the pharmaceutical company's earnings topped forecasts. Outside the Dow, Amgen gained 5.8% after the biotechnology company raised its 2012 outlook and reported second-quarter profit that exceeded analysts' estimates.
Stocks started the session higher after German Chancellor Angela Merkel and French President Francois Hollande said they were committed to keeping the euro area together. French newspaper Le Monde reported the European Central Bank was readying to purchase debt. Read more on Europe Markets.
Crude oil futures extended gains on Friday, 27 July 2012 at Nymex spurred by optimism about the euro zone as two heads of state pledged to save the single currency. Light and sweet crude for September delivery rose 74 cents, or 0.8%, to settle at $90.13 a barrel on the New York Mercantile Exchange. Prices earlier seesawed between small gains and losses as investors were disappointed with data on the U.S. economy. On the week, however, oil lost 1.3%.
Gold for August delivery rose $2.90, or 0.2%, to settle at $1,618 an ounce on the Comex division of the New York Mercantile Exchange on Friday. For the week, gold gained 2.2%. Prices moved well off highs, however, as the session progressed. Gold earlier traded as high as $1,628.60 an ounce. September silver gained 5 cents, or 0.2%, to end at $27.50 an ounce on Friday. Silver rose 0.7% on the week.
For every stock declining, five gained on the New York Stock Exchange, where 912 million shares traded hands. NYSE composite volume was 4.4 billion, while Nasdaq composite volume was 2 billion.
Indian ADRs ended mostly higher on Friday. Tata Motors gained 4.9%. HDFC Bank and ICICI Bank gained 3.2% and 2.9% respectively. Infosys and Wipro Technologies gained 2.4% and 2.9% respectively. Dr Reddys lost 0.6%. VSNL and MTNL lost 1% and 0.9% respectively.
For the year, the Dow, Nasdaq and S&P 500 are trading higher by 7%, 13.5% and 10.2 % respectively. This coming week, earnings season will dominate the headlines.
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