Stocks Little Changed ahead of Central Banks

Published on Monday, 30 July 2012 18:03 Written by Christopher Lynn

New York, July 30^th (TradersHuddle.com) – Stocks ended slightly lower for the day after trading in a narrow range in the session. Participants were reluctant to commit into new positions ahead of the key meetings from both the Fed and the ECB later this week. The market has rallied in the prior sessions amid increasing expectations that the central banks will unveil new stimulus measures to boost economic growth and tackle the debt crisis in the euro zone.

The Dow Jones Industrial Average lost 2.65 points, or 0.02%. The S&P 500 index fell less than 1 point, or 0.05%, while the NASDAQ dropped 12.25 points, or 0.41%.

The market started near the flat line after impressive gains in the prior week and after a generally positive start for the week in overseas markets. Participants were looking forward to a busy week regarding earnings and economic data, which will end with the key employment report for July. Additionally, the Fed and the ECB will take center stage in the middle of the week, as they are expected to unveil a new set of measures to boost the economy, while tackling the debt crisis in the euro zone. Italian yields dropped after a successful auction, which helped prop up European trading.

M&A activity increased once again on a Monday after Chicago Bridge & Iron (NYSE: CBI) said it entered into and agreement to purchase Shaw Group (NASDAQ: SHAW) for $46 per share. Shares of Shaw surged 55.45% to $41.49 after the deal worth nearly $3 billion was announced. Meanwhile, shares of CBI plunged more than 14% to $34.94.

On another deal, Roper Industries (NYSE: ROP) said that it would acquire privately held laboratory software service provider Sunquest Information Systems for about $1.4 billion. Shares of Roper gained more than 1% after it reported earnings that were inline with consensus on revenues that were shy of expectations, while boosting its 2012 guidance to reflect the Sunquest acquisition.

In the S&P 500 sectors it was a mixed bag, Healthcare, consumer discretionary, and industrials posted the biggest declines, while consumer staples, utilities, and energy logged the best performances. In the healthcare sector, Coventry Healthcare (NYSE: CVH) logged the best performance, jumping more than 2%. Last week, the stock beat earnings expectations on revenues that were inline with consensus. The worst performance in the sector was Alexion Pharmaceuticals (NASDAQ: ALXN) was the worst performer with a 4% drop.

Eli Lilly (NYSE: LLY) was another underperformer in the sector, as Jefferies downgraded the stock to Underperform from Hold, citing concern with the drug maker’s Alzheimer’s treatment failing in late stage testing.

In the consumer space, SUPERVALU (NYSE: SVU) surged 12.6% to $2.24 after the company announced top management changes in an effort to halt a fall in both earnings and sales. SUPERVALU said that Chariman Wayne Sales would replace CEO Craig Herkert, an executive brought in three years ago to fix the supermarket chain.

Coca-Cola (NYSE: KO) saw a significant bid, climbing 1.4% to $81.12. The stock posted the best gain in the Dow Jones Industrial Average and logged a new 52-week high at $81.17 after announcing a new operating structure, dividing its global business into three units.

Another Dow Component logging a new 52-week high was AT&T (NYSE: T). The owner of the U.S, second largest wireless carrier logged a new multiyear high of $37.69 after the company announced a new 300 million share repurchase program.

In the tech sector, Apple (NASDAQ: AAPL) jumped 1.7% to $595.03 after trading above $600 per share amid reports that the iPhone maker will unveil its new iPhone 5, iPad mini and iPod nano on September 12^th.

Energy was one of the top performers after natural gas stocks jumped amid a 5% surge in natural gas prices. WPX Energy (NYSE: WPX) rallied to the top of the S&P 500, with shares jumping more than 6%, while Southwestern Energy (NYSE: SWN) rallied 3.8%.

Elsewhere, Loews (NYSE: L) tumbled more than 5% in the session after its quarterly results showed that its net profit declined to $56 million from $250 million last year, hurt by weak earnings at 50 percent-owned Diamond Offshore (NYSE: DO).

While, JPMorgan (NYSE: JPM) logged the worst performance among the blue chips, slumping 2% after Deutsche Bank downgraded the stock to a Hold from Buy.