Marc Pado Comments: Wall Street Rebounds Despite Weak Data
August 26, 2010, Channel News Asia
Wall Street stocks rebounded on Wednesday despite grim reports on the housing market and goods orders that stoked concerns the US economy was heading downwards.
The Dow Jones Industrial Average was up 19.61 points (0.20 percent) to 10,060.06 in closing trade, after dipping below the psychologically sensitive 10,000-level threshold.
The broader S&P 500 index gained 3.46 points (0.33 percent) to 1,055.33, ending four straight days of losses along with the Dow index.
The tech-rich Nasdaq composite index rose 17.78 points (0.84 percent) to 2,141.54.
The markets digested a Commerce Department report that new home sales in July plunged by 12.4 percent from a month earlier to the lowest level since 1963, shattering analysts' expectations for a modest rise.
Investors also weighed another department report showing a slight 0.3 percent rise in orders for manufactured durable goods - items such as planes, cars, refrigerators and computers.
Most economists had expected orders to rebound by a stronger 3.0 percent.
The small July rise was on the back of transportation equipment, mostly non-defence aircraft and parts. Excluding transportation, new orders decreased 3.8 percent.
"The economic data stream has been bad for five weeks, but you get to a point in time where some of it gets priced in," said Jefferies analyst Art Hogan.
"The market is just taking a bit of a pause... and we'll see what the data looks like the rest of the week."
US stocks had slumped on Tuesday after an industry report showed a massive drop in existing home sales in July from a month earlier.
The government is expected on Friday to significantly revise downward gross domestic product (GDP) growth chalked up in the second quarter to 1.4 percent from 2.4 percent previously, according to most analysts.
"What looms large is the big downwards revision in GDP, the market will have a tough time doing much until they get passed that number...," said Marc Pado, a market analyst at Cantor Fitzgerald.
"But we are oversold here, I think the market has taken the worst of the news."
Among stocks in focus, data storing firm 3PAR dropped 1.04 percent a day after it gave computer-making giant Dell three days to revise its acquisition offer after rival Hewlett-Packard made a superior bid.
Dell saw its shares rise by 1.68 percent following a report that it was considering an upward revision of its offer.
The bond market declined. The yield on the 10-year US Treasury bond was up to 2.538 percent from 2.499 percent on Tuesday while that on the 30-year bond rose to 3.575 percent from 3.564 percent. Bond yield and prices move in opposite directions.
