Marc Pado Comments: Stocks Close Down on Weak Data
August 3, 2010 - TheStreet.com
Stocks closed lower Tuesday after stagnant personal incomes and spending in June -- combined with weaker-than-expected factory orders -- renewed concerns about the recovery.
The Dow Jones Industrial Average lost 38 points, or 0.4%, to 10,636. The S&P 500 gave up 5 points, or 0.5%, to 1121, and the Nasdaq shed 12 points, or 0.5%, at 2284.
The flat June income report is symptomatic of an economy that has not yet made the transition to a self-sustaining recovery," said PNC chief economist Stuart Hoffman, adding that gains to dividend income in April and May were revised sharply lower, "painting a more subdued picture of household finances.
Marc Pado, U.S. market strategist at Cantor Fitzgerald said, "Given some of the recent manufacturing news that we've seen lately, the drop in June factory orders was a bit of a surprise -- not surprising that orders were negative, which was expected going into the summer, but that it came on top of May's decline, which was downwardly revised to a drop of 1.8%."
May's level was originally reported as a decrease of 1.4%.
Pado said markets appear to be in something of a holding pattern ahead of Friday's July jobs report.
"That jobs number is clearly the most important number of the week, so the market is clearly bracing for that. We'll get some indication from the ADP report tomorrow of what's going on in the private sector, but I think it will take a positive jobs number to get us through the resistance point of 1130 on the S&P 500," Pado said.
Also on Tuesday, the New York Federal Reserve Bank said it will begin conducting small-scale, real-value reverse repurchase transactions on Wednesday. The transactions will use all collateral types, including, for the first time, agency mortgage-backed securities. The New York Fed said the actions don't imply any change in monetary policy and are simply a reflection of prudent planning for future actions.
Overseas, Hong Kong's Hang Seng increased 0.2%, and Japan's Nikkei rose 1.3%. The FTSE in London slipped 0.5%, while the DAX in Frankfurt gained 0.2%.
