Stocks Advanced, Trimming Monthly Loss. Dow Leaders: T, JPM, MRK, BAC, and DD

Published on Tuesday, 31 August 2010 18:54 Written by Christopher Lynn

New York, August 31^st (TradersHuddle.com) – Most Stocks advanced trimming monthly losses, as increases in home prices and consumer confidence tempered concern about economic slowdown in the world’s largest economy.

The Dow Jones Industrial Average gained 4.99 points, or 0.05%. The S&P 500 index added less than 1 point, or 0.04%, while the NASDAQ slid 5.94 points, or 0.28%. Market breadth was mixed. On the NYSE winners outpaced decliners by a rate of 6 to 5, while on the NASDAQ losers topped advancers by a narrow margin.

The market started under pressure, as Wall Street took early cues from overseas trading and economic woes continued to dampen sentiment; however support at the 1040 level in the S&P helped the stocks to stage a bounce, which moved into positive territory after the release of the Conference Board's Consumer Confidence Index for August. The Index climbed to 53.5, when it was widely expected to slip to 50.0.

Investors shrug off the Chicago PMI reading, which came short of expectations, as they focused on the broader Conference Board index. The overall market remained in positive territory with little reaction to the release of the minutes from the last FOMC meeting. At the meeting several members said the Fed should consider more stimulus if the economy weakens, and that reinvesting in mortgage-backed securities, in addition to Treasury securities, may be an option.

Telecom, financials, utilities, and materials were the best performing sectors. Technology and healthcare fell, dragging on the overall market and causing the tech heavy NASDAQ to underperform the other major benchmark indices.

AT&T (NYSE:T), the owner of the second largest U.S. wireless carrier, jumped 1.50% to $27.03, posting the biggest percentage gain in the Dow Jones Industrial Average and helping lead the sector to a 1.1% gain.

Financials bounced back in the session with a gain of 0.9%. JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC), the U.S. largest lenders, were among the five top Dow components as their shares gained at least 1.14%, after the Federal Deposit Insurance Corp. said U.S. lenders posted their biggest quarterly profit in almost three years, even as the number of banks at risk of failure rose to 11% of insured institutions. News that home prices gained in June, also helped their caused.

Materials posted a modest 0.3% gain, with DuPont (NYSE:DD), the life sciences Company, adding 1.12% to $12.46, rounding up the five best Dow components. DuPont advanced the same day that Monsanto (NYSE:MON), issued a tepid outlook that send its shares tumbling. Investors piled on DuPont as it leads the Dow components in year to date gains.

Despite weakness in healthcare, Merck (NYSE:MRK), the pharmaceutical company maker of Singluair and Zocor, gained 1.24% to $35.16, posting the third biggest percentage gain in the blue chip index.

And crude oil tumbled 3.7% below $72 per barrel on concern that some Federal Reserve policy makers saw increased risks to the U.S. economic recovery. Meanwhile, Treasuries gained, extending their monthly gain. Yields on the benchmark 10-year note slip to 2.47%.