Closing Wrap-Up, July 25
July 25, 2008
The bulls regained some control Friday, although gains were mild compared with Thursday’s losses. The Dow ($INDU) gained 21.41 points to close the session at 11,370.69. The S&P 500 ($SPX) added 5.22 points to 1,257.76. The Nasdaq ($COMPQ) advanced 30.42 points to 2,310.53. Volume was light on the session with 1.29 billion shares traded on the NYSE and 2.02 billion shares exchanged on the Naz. Market breadth was positive by an 18-to-14 and 18-to-11 margin on the Big Board and Naz respectively.
Economic news was the story Friday with data providing a better view of the economy than expected. This positive news was accompanied by a drop in crude prices. Earnings news was more upbeat today, helping push the tech sector higher. A strong earnings report from Juniper Networks (JNPR) and gains in tech bellwethers Microsoft (MSFT), Apple (AAPL) and Google (GOOG) benefited the Naz.
Durable goods orders rose 0.8 percent in June, which was much better than the decline of 0.4 percent that was expected. Nondefense capital goods orders, excluding aircraft, rose 1.4 percent. This is important because this component is a proxy for business spending. Overall, the data points to improvement in the manufacturing sector.
Consumer sentiment rose more than expected in July to a level of 61.2 when a reading near 56.4 was expected. Inflation expectations fell 2-tenths of a percent to 5.1 percent for the one year outlook and 3.2 percent for the five year forecast. This news will be welcomed by the Fed, although strength in the economy could keep the FOMC on the verge of hiking rates.
New home sales were also a positive Friday after falling just 0.6 percent in June. This put the annualized rate at 530,000 units, easily surpassing expectations for a figure of 505,000. Even better, data for April and May was revised higher by 21,000 and 17,000 respectively. Though this isn’t enough to call a bottom, it definitely is a step in the right direction.
Crude prices fell by $2.19 a barrel to close the session at $123.30. This is another positive for stocks considering crude was priced above $147 a barrel just a few weeks ago. Some analysts feel that prices will ease back below $100 by the end of the year and this would go a long way in improving sentiment and consumer spending.
Shares of JNPR rose 17.72 percent Friday to a price of $26.57 following the company’s earnings release. The network infrastructure company reported a 40 percent gain in profits and a 32 percent rise in revenues. Not only did JNPR beat estimates by a penny a share, the company also lifted its full year outlook. Despite these gains, the stock is still well below its 52-week high $37.95.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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