Stocks Gained, But Still Snapped 6-Week Winning Streak

Published on Friday, 24 August 2012 18:30 Written by Christopher Lynn

New York, August 24^th (TradersHuddle.com) – Stocks gained to end the week on an upbeat tone after a letter from Fed Chairman Ben Bernanke reiterated that there is room for further accommodation, while reports from Europe indicate the ECA was considering setting yield targets for a new bond buying program. However, the gains at the end of the week were not enough to log a weekly gain, with stocks snapping a six-week winning streak.

The Dow Jones Industrial Average jumped 100.51 points, or 0.77%. The S&P 500 index climbed 9.05 points or 0.65%, while the NASDAQ climbed 16.39 points, or 0.54%.

For the week, the Dow fell 0.88%, while the S&P 500 lost 0.50% and the NASDAQ slid 0.22%.

The market started the session with modest losses after durable orders data was mixed and overseas markets showed weakness amid fading hopes that the Fed will introduce another round of easing to boost the sluggish economy.

July durable orders climbed 4.2%, well above the 2.5% figure that was widely expected, but ex-transportation orders fell 0.4% versus consensus of 0.6%. Most of the headline climbed came from a 12.8% jump in motor vehicle orders and a 53.9% increase in nondefense aircraft and parts orders.

The early weakness was quickly replaced by a market bid, as traders reacted to a letter from Ben Bernanke to Representative Issa, in which the Fed Chief said there is a scope for further policy action to ease financial conditions and support the economy.

Most of the S&P 500 sectors gained, with consumer staples, healthcare, and consumer discretionary posting the biggest gains, while materials fell. In the staples side, Whole Foods Market (NASDAQ: WFM) was the best performer, climbing more than 2% after in the prior session the stock reversed from an all-time high of $98. Yesterday, Wells Fargo initiated coverage on the stock with an Outperform rating.

Also in the sector, Altria (NYSE: MO) gained 1.9% to $34.08 after the company announced that it would increase its quarterly dividend by 7.3% to $0.44 from $0.41 per share.

Meanwhile, Watson Pharmaceuticals (NYSE: WPI) jumped 5.96% to $83.32, posting the biggest gain in the Healthcare sector and the S&P 500 Index. The stock logged a new all-time high of $83.83 after the company’s generic substitute for the Lidoderm pain patch received approval.

Eli Lilly (NYSE: LLY) gained 3.4% to $43.86, posting one of the top gains in the sector. The pharmaceutical company logged a new 52-week high of $45.01 after it announced top-line results for solanezumab Phase 3 clinical trial in patients with Alzheimer's disease. The primary endpoints not met goals, but secondary analysis of pooled data showed a statistically significant slowing of cognitive decline with mild forms of the disease.

In the technology sector, telecom helped the sector higher, with Verizon (NYSE: VZ) jumping 2.2% and posting the biggest gain in the Dow Jones Industrial Average, while Sprint gained 2.3% to $4.89.

Autodesk (NASDAQ: ADSK) plunged to the bottom of the S&P 500, as shares tumbled 15.6%. The stock actually traded as low as $27.70 after its earnings report missed expectations and after it issued a weak outlook, but it was able to stage a nice size reversal from the lows of the session. The stock was downgraded to a Neutral from Overweight at JPMorgan and to Underperform from Neutral at Bank of America Merrill. Autodesk was also downgraded to a Hold from Buy at Canaccord Genuity.

Salesforce.com (NYSE: CRM) also saw a reversal from the lows of the session. The stock traded as low as $140.77 after its earnings outlook was below expectations, but was able to rebound to end with a gain of 1.2% to $148.54.

Apple (NASDAQ: AAPL) added 0.09% to $663.22, logging a 2% weekly gain. Earlier this week the stock logged a new all-time high of $674.88 amid heightened expectations for its product refresh cycle. Needham raised its target price to $750 from $620. Separately, South Korea's Samsung won a home court ruling in its patent wars against Apple when judges in Seoul said the company didn't copy the look and feel of the U.S. company's iPhone, and that Apple infringed on Samsung's wireless technology. However, in a split decision on patents, the panel of judges also said Samsung violated Apple technology and ordered both sides to pay limited damages.

In the material sector, United Stated Steel (NYSE: X) was once again one of the worst performing stocks, with shares slumping 1.8%, meanwhile, Vulcan Materials (NYSE: VMC) rallied 3.7%.

Elsewhere, Facebook (NASDAQ: FB) slid 0.16% to $19.41, but gaining 1.8% for the week. The company announced a new app for iPhones and iPads that will provide a faster experience for users, while increasing the screen size for its news feed. The app will try to capitalize in the company’s new sponsored news feed, which has been generating a new revenue stream for the company.