After a Big Struggle, The Dow Finishes Above 10,000. Dow Leaders: HD, PFE, KFT, MCD, and VZ

Published on Wednesday, 25 August 2010 18:29 Written by Christopher Lynn

New York, August 25^th (TradersHuddle.com) – Stocks recovered from earlier losses, as the Dow Jones Industrial Average finished the session above 10,000. The market had been lower for much of the day before bargain hunters stepped in and shorts covered their positions after a dismal new home sales report and a disappointing durable goods report increased the odds of a sharp economic slowdown.

The market started under pressure as Wall Street followed European markets lower over renewed concern over sovereign debt and disappointment over the durable goods report in the U.S.

Despite overcoming at first the S&P’s rating cut to Ireland’s sovereign debt, European bourses eventually rolled over adding bearish sentiment to the early morning trading in New York. Before the open the Commerce Department report on Durable Goods orders added to the negative tone, as orders for July increased just 0.3%, which is far less than the 3.0% increase that had been widely expected.

Bears intensified their efforts when new home sales numbers for July tumbled 12.4% month-over-month to an annualized rate of 276,000 units, well below the expected rate of 334,000 units. The selling pressure pushed the market thru near-term support levels, but the major benchmark indices were quickly to rebound, sparking short covering that helped lift them to positive territory.

Consumer discretionary, healthcare, telecom, and technology were the best performing sectors. Home improvement retailers and homebuilders showed some of the most impressive swings, as shorts moved to cover their bearish positions that they had taken ahead of the new home sales data. Home Depot (NYSE:HD), the largest home improvement retailer, saw a jump of 1.98% to $28.33, posting the biggest percentage gain in the Dow Jones Industrial Average.

Pfizer (NYSE:PFE), the largest pharmaceutical company in the world, lifted the healthcare sector to a 1% gain, as shares gained 1.07% to $15.99. Pfizer was the second best Dow component, as the company announced that it would release the late-stage study results next week of a potential blockbuster blood thinner apixaban, which is developing together with Bristol-Myers Squibb (NYSE:BMY).

And some defensive names like Kraft (NYSE:KFT), the branded consumer food maker, and McDonald’s (NYSE:MCD), also saw some strength, with gains of at least 0.65%. Kraft and McDonald’s were the third and fourth best Dow components, respectively.

Telecom was among the best sectors with a 0.6% gain as a group, Verizon (NYSE:VZ), the owner of the largest U.S. wireless carrier, climbed 0.64% to $26.89, rounding the five best Dow components.

And Apple (NASDAQ:AAPL), the maker of iPhones and iPads, reversed posting a gain of 1.23%, lifting the sector to a 0.5% gain and contributing in the NASDAQ outperformance. Analysts speculated that a new Apple TV would be released by the Holiday season or early next year. Apple has had several attempts to make the device the home entertainment hub, with limited success, the next iteration will attempt to make the device as another must have blockbuster product.