Stocks Closed Mixed after Fed Minutes

Published on Wednesday, 22 August 2012 18:02 Written by Christopher Lynn

New York, August 22^nd (TradersHuddle.com) – Stocks recovered in afternoon trading to close narrowly mixed for the session. Equities and the euro received a bid after the FOMC meeting minutes left the impression that the Fed as closer to announcing additional easing to boost the sluggish economy.

The Dow Jones Industrial Average lost 30.82 points, or 0.23%. The S&P 500 index gained less than 1 point, or 0.02%, while the NASDAQ climbed 6.41 points, or 0.21%.

The market started with modest losses after Japanese exports slumped the most in six months, as exports to China and Europe dropped in July. The weak trade data in Japan spurred downward pressure in overseas and the U.S. future markets.

On the economic front, existing home sales climbed in July and the median sales price was higher than a year earlier. Also, the latest FOMC meeting minutes showed that many members were on the side of additional accommodation, signaling that the Fed is close to start QE3.

The euro jumped to its highest level since July, breaking above $1.25 following the Fed minutes showing increased likelihood for additional easing, which also helped stocks to move from session lows and recover into the close. Among the S&P 500 sectors it was also a mixed bag. Industrials, consumer staples, and utilities logged the biggest declines, while materials, consumer discretionary, and energy were the best performers.

The material sector gained 0.8% in the session, with PPG Industries (NYSE: PPG) rallying more than 3% to $111.05 and posting the biggest gain in the sector. Newmont Mining (NYSE: NEM) gained more than 2%, buoyed by the gains in the price of the bullion amid the likelihood of additional stimulus from the Fed.

Consumer discretionary stocks received a boost from homebuilders, which rallied on the back of better than expected results from Toll Brothers (NYSE: TOL). The luxury homebuilder jumped 3.77% to $33.01 after its quarterly results topped expectations, amid a sharp gain in new orders. D.R. Horton (NYSE: DHI) rallied more than 4% to $19, posting the biggest gain in the S&P 500, while PulteGroup (NYSE: PHM) climbed 3.9% in the session.

In tech land, Dell (NASDAQ: DELL) slumped 5.4% to $11.68 after the PC maker beat earnings expectations but revenue was short of consensus and provided a weak outlook amid a sharp drop in revenue in its consumer business. Rival Hewlett-Packard (NYSE: HPQ) dropped 3.7% to $19.20, posting the biggest percentage decline in the Dow Jones Industrial Average. In after hours, the stock fell 0.31% to $19.14 amid reaction to its quarterly results that showed earnings inline with its preannouncement on revenues that was shy of consensus. The tech giant lowered its fiscal 2012 earnings guidance to inline with consensus. HP earned $1 per share, excluding non-recurring items, $0.02 better than consensus, on revenues that fell 4.9% from a year ago to $29.67 billion versus consensus of $30.19 billion.

Apple (NASDAQ: AAPL) gained 1.95% to $668.87, posting a new all-time closing high after Needham bumped its target price to $750 from $620 and a Bloomberg report stated the stock had an attractive valuation despite being the most valuable company in the world. The report said that Apple trades at a discount to the NASDAQ Composite and to be at par, Apple needs to trade at $703 per share.

Also in the technology and consumer services space, eBay (NASDAQ: EBAY) was a notable mover, jumping 2.5% in the session and posting a new 52-week high of $48.08. The company together with Discover Financial (NYSE: DFS) announced an agreement to provide access to eBay’s online payment provider Paypal to nearly 7 million physical stores in the U.S.

Elsewhere, Fifth Third Bancorp (NASDAQ: FITB), the regional bank with presence in the Midwest and Southeast of the U.S., rallied nearly 3% to $14.81 after posting a new 52-week high of $15.02, following news of a 100 million common share buyback program and the potential for a dividend increase next month.

Facebook (NASDAQ: FB) gained 1.46% to $19.439 after another filing showed that co founder Dustin Moskovitz sold 450,000 shares last week after the lockup period expired last week, leaving him with a still very sizeable stake of 133 million shares. The news followed disclosures that early investor and board member Peter Thiel sold most of its holdings last week.