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US indices Stopped Their Rally
US indices started the first session of the week in green helped by quarterly results from Bank of America Corp, which topped forecasts, giving a lift to financial shares. The bank reported a 43% drop in earnings per share to $0.72. However, the result easily topped Wall Street's forecast of $0.53 per share, which pushed its stocks up by 3.9%.
A boost of the initial positive investors’ sentiment was also given by the news that the Swiss pharmaceutical company Roche Holdings made an offer to acquire the remainder share of biotech Genentech, it doesn’t already hold. SEC introduced new rules for the short sales of the shares of 19 of the biggest financial companies in the country, including Fannie Mae and Freddie Mac. The new regulations are in effect from Monday to 29 of July, and if necessary they could be extended for a total of 30 days. The commission forbids so called naked shorting (opening of short positions without arrangements to borrow shares) for those 19 companies as their shares must be pre-borrowed and located by the broker. The reading of the June Leading indicators came out during the day showing a decline by 0.1% which completely met expectation and didn’t have any reflection on the market. After midday the moods worsened seriously due to concerns that the two pharmaceutical giants Merck & Co and Schering- Plough Corp would announce lower quarterly results as the postponed reporting for after close. Their shares suffered a serious selling pressure losing respectively 6.2% and 11.5% of their value, after researchers put the efficiency of their co-made cholesterol drug Vytorin under suspicion. Yahoo Inc. agreed to let dissident shareholder Carl Icahn on its board. Two other seats would be chosen from a list of nine candidates recommended by Icahn. After the news the shares of the internet company fell by 3.5%.
In a volatile big trading volume session all the three indices closed in red.
Dow Jones Industrial Average fell by 0.2% to 11467.34, S&P500 declined by 0.05% to 1260.00 and Nasdaq Composite was down by 0.1% to 2279.53.
Trading volume on NYSE was 1.2 billion shares, with a ratio decliners/advancers 2 to 1, and volume on Nasdaq was 1.8 billion shares, with a ratio decliners/advancers 5 to 4.
TECHNICAL OVERVIEW
DOW JONES
The sharp rise of Dow from the previous days was stopped by the resistance level at 11550. If broken successfully, next targets will be the resistance levels at 11670 and 11930. Otherwise, the negative sentiment remains, and on the downside, support is seen at 11410, followed by 11040 and 10930.
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22.07.2008 Dow daily report.pdf, 156 Kb
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