Stocks Gained; Closed at 3-Month High

Published on Monday, 06 August 2012 18:33 Written by Christopher Lynn

New York, August 6^th (TradersHuddle.com) – Stocks gained for the session, despite losing steam in the final minutes of trading. Participants continued to react to the better than expected employment report amid growing optimism that the ECB will begin purchasing Italian and Spanish debt next month.

The Dow Jones Industrial Average gained 21.34 points, or 0.16%. The S&P 500 index fell climbed 3.24 points, or 0.23%, while the NASDAQ jumped 22.01 points, or 0.74%.

The market started with sizeable gains amid positive action in overseas markets, as participants digested last week’s better than expected jobs report and speculated that the ECB will ultimately act to tackle the debt crisis, staving off the euro demise. Stocks had snapped a four-day losing streak after the non-farm employment report showed that 163,000 jobs were added in July.

Also in the morning, Fed Chairman Ben Bernanke said that although broad measurements of the economy point to recovery, many people and businesses are still facing tough times. The Fed Chief didn’t address or commented on the recent jobs report, or provided a new outlook for monetary policy.

However, the market lost some steam towards the end of the session, paring earlier gains. Still, stocks ended at fresh 3-month highs. In the S&P 500 sector, materials, technology, financials, and consumer discretionary gained the most, while consumer staples and utilities fell.

In the materials sector, United States Steel (NYSE: X) rallied 5.6%, posting the biggest gain in the sector. Newmont Mining (NYSE: NEM), the largest gold producer, also provided strength, with shares jumping 3.3% on supportive action from the price of the bullion.

DuPont (NYSE: DD) gained 1.4% to $50.16 on a report that stated that the chemical company might be close to a $5 billion deal to sell its automotive paint business to a private equity firm Carlyle.

On other M&A related news. Best Buy (NYSE: BBY) surged to the top of the S&P 500 and helped performance in the consumer discretionary sector, as shares rallied more than 13% in the session. The stock reacted to news that Best Buy founder Richard Schulze, offered to buy the struggling consumer electronics retailer for between $24 and $26 per share. He is currently Best Buy’s largest shareholder, holding 20.1% of the company's shares.

Netflix (NASDAQ: NFLX) was another top performer in the discretionary space, with shares jumping 5.8% to $56.79. The positive performance did not permeated to the staples side, where poor earnings results and outlook from Tyson Foods (NYSE: TSN) weighed on the sector. Shares of Tyson Foods tumbled nearly 8% to $14.17 after logging a new 52-week low of $14.07 and posting the biggest percentage decline in the broad market index.

In the financial sector, Bank of America (NYSE: BAC) rallied 2.8% to $7.64, posting the biggest percentage gain in the Dow Jones Industrial Average. Meanwhile, Citigroup (NYSE: C) jumped 4.2% to $28.56, logging the biggest gain in the sector.

Technology due to its weight in the broad market index and the NASDAQ helped both outperform the blue chip index. First Solar (NASDAQ: FSLR) rallied 11.7%, posting the biggest gain in the tech sector. Last week, the solar company handily beat earnings and revenue estimates.

Among earnings in the sector, Cognizant Technology (NASDAQ: CTSH) surged nearly 11% to $64.21 after beating quarterly results and boosting its full-year adjusted profit forecast.

Apple (NASDAQ: AAPL) gained 1.1% to $622.55, breaking above its 3 ½ month high resistance, as the stock continues to trade amid its near term product refresh cycle that includes the new iPhone 5, a potential iPad mini in the fall, and a potential iTV sometime next year. Apple also announced that its new iOS will not include a prepackaged app for Google’ you tube.

Elsewhere, Facebook (NASDAQ: FB) rallied nearly 4% to $21.92, rebounding from its 11% drop last week. The stock had been a free fall, hitting a new low under $20 per share after its quarterly results and lack of guidance, spurred concerns over the business model and worries over the company’s ability to monetize its rapidly growing mobile platform. Last Friday, the better than expected results from LinkedIn and a bullish report from Standpoint Research helped change momentum.