Shares on Wall Street flattered to deceive today; opening brightly but plunging soon after despite US GDP figures coming in better than expected.

In the second quarter, April to June, US gross domestic product decreased at an annual rate of 0.7%. Analysts, in an earlier Reuters poll, had forecast a decline of 1.2%. This could be the last quarter of decline in output for the US economy seen during this recession.

Constituent among the better-than-expected GDP figures were consumer spending and business investment, falling 0.9% and 9.6% respectively. Positive news for trade too, in the shape of exports which fell only 4.1% instead of the 5% predicted.

’Businesses are in better shape to start production. Massive government spending has been supportive of growth and will continue to help,’ said Michelle Meyer, an economist at Barclays Capital in New York. [1]

Earlier, the ADP National Employment report returned worse-than-expected figures of 254,000 private sector US jobs shed in September, though the figure was an improvement on last month and the smallest drop since July 2008.

Meanwhile, a fall in manufacturing activity indicated by the Chicago Purchasing Managers Index, which fell to 46.1 in September, has proven to be a major reality-check in what is clearly a more fragile market than many think at the moment.

Although the Dow Jones opened up some 19 points it was to fall back soon after. By 3.40pm (London time), the Dow Jones Industrial Average was trading 112.75 points (-1.16%) lower at 9629.45, while the broader S&P 500 was down 12.08 points (-1.14%). The Nasdaq was also in negative territory, down 22.43 points (-1.06%) to 2101.61.

It took what was perhaps an unlikely source to sum up this unlikely outcome. Ralph Shive, manager of the Wasatch-1st Source Income Equity Fund, said, ‘All of us to some degree are guessing how strong the recovery is or how long it will take. Market prices have anticipated a decent recovery at this point. At some point we need to see earnings turn.’ [2]

Banks were weighing heavily today. JP Morgan and Chase shares were down 1.96% at $44.00, while shares in Bank of America Corp fell to $16.90 (-1.57%).

Also among the strugglers today were giants American Express and Walt Disney, down 2.19% and 2.22% respectively.

In retail, Wal-Mart announced it will extend its aggressive $10 toy programme; US consumers will soon have a choice of 100 toys at $10 instead of just 10. This made no impression on investors though, its share price fell 0.75% to $48.86.

Among the few positives today was Nike, whose shares rose 6.7% to $64.13 after cost-cutting measures enabled it to post a slight rise in first-quarter profits that exceeded analyst estimates yesterday.

[1] Source: Bloomberg News (30 September 2009)
[2] Source: Bloomberg News (30 September 2009)

By Anthony Grech, Research Analyst, IG Index.

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The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

Wall Street fluctuated between gains and losses this afternoon following the release of mixed US macroeconomic reports. End of quarter portfolio rebalancing may have also contributed to the volatile session seen so far today.

The US trading day kicked off with better-than-expected house price data, yet the upbeat morale following these figures was tempered by disappointing consumer confidence figures.

The S&P/Case-Schiller home-price index showed annual house prices narrowing more than anticipated in July, suggesting the embattled US housing market has continued to recover from one of the worst slumps in history.

The 20-city US home price index for July rose 1.6% on the month, higher than a 0.5% increase expected from economists surveyed by Reuters. On the year, house prices were down by only 13.3%, the smallest drop in 18 months. The year-on-year records commenced in 2001 and the gauge has fallen every month since January 2007.

In the meantime, the Conference Board’s consumer price index for September tainted market morale following an unexpected drop. The gauge fell to a reading of 53.1 this month from 54.5 in August, trailing Reuters’ expectations for a rise to 57.

The present situation index, a barometer of consumers’ assessment of current economic conditions, fell to 22.7 from 25.4 in August, while the consumer expectations index slipped to 73.3 from 73.8.

The drop in consumer confidence triggered a bout of selling pressure on Wall Street today, as it suggests that consumers may rein in on spending.

By 3.30pm (London time), the Dow Jones Industrial Average was trading 5.51 points (-0.06%) lower at 9783.85, while the S&P 500 was 0.85 points (+0.08%) above its previous close at 1063.83. The Nasdaq was also in negative territory, down 3.93 points (-0.23%) to 1720.66.

Banks were in focus today, with Citigroup advancing 3.3% to $4.72 after managing to sell its Portuguese credit-card business to Barclays. The British bank did not disclose the financial terms of the transaction, which is still subject to Portuguese regulatory approval.

Frits Seegers, the chief executive of Barclays Global Retail and Commercial Banking, said the acquisition will put the bank among the five top credit-card players in the country.

An upbeat broker report also boded well for Citigroup today; Richard Bove of Rochdale Securities raised his price target on Citigroup from $4 to $6.50, saying the bank has a solid future. [1]

JPMorgan Chase rose 0.1% to $44.85 a share this afternoon, after announcing that it has reached a deal to sell its investment advisory servicing business to Royal Bank of Canada. Details of the agreement were not disclosed, however.

Bank of America was marginally higher, up 0.12% to $17.24, while Wells Fargo traded 0.7% lower at $28.69.

Elsewhere, Walgreen, the biggest US pharmacy chain, rallied over 9% to $37.34 this afternoon, after unveiling earnings that were ahead of expectations.

Broker ratings also helped a couple of companies gain some traction; Coca Cola edged 0.56% higher to $53.43 after Citigroup released an upbeat report on the carbonated soft-drink sector and recommended buying shares in the company. [2]

Lamar Advertising jumped 7.3% to $27.32 after Barclays Capital raised its recommendation on the US billboard owner from ‘equal weight’ to ‘overweight’. Barclays also upped its price target on the company by 59% to $35.

In the meantime, Polo Ralph Lauren added 5.2% to $78.05 after Goldman Sachs raised its recommendation on the stock from ‘neutral’ to ‘buy’, saying the company is ‘at the start of a multi-year growth opportunity across geographies (Asia) and categories (accessories).’ [3

In contrast, Sequenom, a diagnostic and genetics analysis company, tumbled 36.5% to $3.61, after announcing that it has dismissed most of its top management team as a result of a scandal involving the mishandling of data on its pre-natal Down's syndrome test.

[1] Source: Associated Press (29 September 2009)
[2] Source: Financial Times (29 September 2009)
[3] Source: Bloomberg News (29 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

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The Dow and S&P 500 opened higher today as a raft of high profile merger news provided the market with a much needed shot of adrenaline.

‘M&A can be a driver of gains for the market,’ said Benoit de Broissia of KBL Richelieu Gestion. ‘It illustrates that industrials have the cash to invest and consider valuations attractive. We can expect the M&A movement to continue.’ [1]

Affiliated Computer Services (ACS) surged 14.3% to $53.99 after Xerox Corp agreed to buy the company in a cash-and-share deal that values it at $6.4 billion, approximately $63.11 a share.

This deal will shift Xerox’s focus from traditional printing equipment to technology outsourcing and data management, a more lucrative business. Xerox believes this transaction will help it triple sales from services to around $10 billion.

‘By combining Xerox’s strengths in document technology with ACS’s expertise in managing and automating work processes, we’re creating a new class of solution provider,’ said Ursula Burns, Xerox’s chief executive, in a statement. ‘A game-changer for Xerox, acquiring ACS helps us expand our business and benefit from stronger revenue and earnings growth.’ [2]

Abbot Laboratories was also in M&A news; its shares jumped 3.5% to $48.98 after agreeing to acquire Solvay SA’s pharmaceutical unit for €4.8 billion ($7.1 billion) in order to enhance its presence in emerging markets.

In the meantime, speciality chemical and vehicle engine components maker GenTek rallied nearly 40% to $37.75 after agreeing to a takeover by ASP GT Acquisition Corp, a wholly-owned subsidiary of investment funds managed by American Securities LLC. Under the terms of the merger agreement, ASP will purchase all of the outstanding shares of GenTek common stock at a price of $38.00 per share, valuing the company at $411 million.

By 3.30pm (London time) the Dow Jones Industrial Average was trading 111.70 points (+1.16%) above its previous close at 9776.89, while the broader S&P 500 had climbed 14.10 points (+1.35%) to 1058.48. The Nasdaq, meanwhile, climbed an impressive 29.43 points (+1.74%) to 1723.58.

Technology shares were having a good run as well today, following a number of broker upgrades.

Cisco Systems, the largest maker of networking equipment, jumped 5.14% to $23.78 after Barclays upgraded the company from ‘equal-weight’ to ‘overweight’, predicting an increase in revenues. Applied Materials, the largest maker of semiconductor-production machinery climbed 3% to $13.50 after Citigroup raised its recommendation on the stock from ‘hold’ to ‘buy’, citing ‘cost savings and a renewed focus on silicon share.’ [3]

In contrast, Cal-Maine Foods, the largest US egg producer, tumbled as much as 12% to $24.50 after reporting a first-quarter loss of 16 cents a share. This compares with a profit of 47 cents per share a year ago. The company also cited lower demand from restaurants and food service customers.

[1] Source: Bloomberg News (28 September 2009)
[2] Source: FT (28 September 2009)
[3] Source: Bloomberg News (28 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

Wall Street opened modestly higher today, as better-than-expected US labour market data encouraged investors to take advantage of yesterday’s stock market dip.

The Commerce Department reported that the number of Americans filing first-time unemployment benefits (initial jobless claims) unexpectedly fell by 21,000 last week to 530,000, suggesting that the embattled US labour market is slowly beginning to stabilise.

The four-week moving average for initial jobless claims, a less volatile gauge, fell to 553,500, the lowest since January 24.

In the meantime, the number of Americans continuing to claim for jobless benefits (continuing jobless claims) fell by a bigger-than-anticipated 123,000 to 6.138 million in the week ending September 12.

‘We’ve turned the corner,’ said Tom Wirth of Chemung Canal Trust Co. ‘The latest economic reports are telling us that we might see revenue growth in the fourth quarter. On top of that, interest-rates are so low that stocks seem to be the only game to play.’ [1]

Investor sentiment turned sour within the first half hour of trading, however, after an unexpected 2.7% decline in existing US home sales for August triggered another bout of profit taking.

The National Association of Realtors revealed that the annual pace of existing home sales stood at 5.1 million last month. This is compares with Bloomberg’s median estimate for a 2.1% rise to 5.35 million from the prior month’s 7.2% increase.

By around 3:30pm (London time), the Dow Jones Industrial Average was 49.5 points (-0.51%) below its previous close at 9699.05, while the broader S&P 500 was 9.73 points (-0.92%) lower at 1051.14, in line with Morgan Stanley’s revised year-end target.

Morgan Stanley today raised its year-end target for the S&P 500 to 1,050 from 900, citing better-than-expected earnings - but not higher multiples. ‘A higher multiple would justify a higher target, but we don’t see a compelling reason why equities should trade significantly richer in the current environment, despite low official interest rates,’ they said in a note to clients. [2]

The market is clearly struggling to find direction at the moment and likely to trade sideways for sometime until there is some justification to move higher. Analysts are likely to pay very close attention to top line revenue prospects in the upcoming third-quarter, as this will, in my view, justify whether there is any compelling upside left in the market.

There were a few companies that managed to buck the negative trend dominating US equity markets today. Citigroup edged 0.4% to $4.54 after the Wall Street Journal reported that the bank was planning to downsize its retail banking network.

Bank of American rose 0.2% to $4.53 and JPMorgan Chases added 0.7% to $45.37 while Wells Fargo declined 0.5% to $28.61 and Morgan Stanley slid 2.2% to $31.33.

Software company Red Hat was among the handful of best performers today, soaring 13% to $28.13 after unveiling better-than-expected quarterly results, as the rising popularity of its open-source Linux software attracted more companies that sought to cut costs in the recession. Bank of America/Merrill Lynch also upgraded the stock.

National Semiconductor also benefited from a ‘buy’ recommendation upgrade from Citigroup. Its shares opened 3.4% higher at $15.4, but soon fell to $14.80 on the back of negative stock market sentiment.

Elsewhere, October gold futures breached the $1000 level this afternoon, falling 1.5% lower to $997.3 an ounce. November crude oil (WTI) contracts slid 3.8% to $66.34 a barrel following a report showing an unexpected rise in inventories.

[1] Source: Bloomberg News (24 September 2009)
[2] Source: Wall Street Journal (24 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

Wall Street opened cautiously today, with a dip in commodities neutralising positive expectations ahead of the Fed’s announcement due out around 6.15pm (London time).

Expectations are that the Fed is likely to keep interest rates unchanged, with most speculation focussing on possible comments about the wider economic outlook or changes to the government’s stimulus package.

The general consensus is that the Fed is unlikely to rock the boat too much, but that there may be further signals – albeit tentative ones – that the economy is treading the road to recovery.

Nevertheless, markets are not expected to be impacted heavily; Jim Award, Managing Director at US securities firm Zephyr Management, suggested the Fed would ‘walk right down the middle’, adding, ‘I think they might be a touch more optimistic about the economy but not enough to rattle the markets either way.’ [1]

General Mills boosted US equities, as its shares rose 5% to $64 in early trading. The maker of the cereal Cheerios posted a better-than-expected profit for the quarter, helped by buoyant sales figures and generally low commodity prices.

Ford was also up in early trading; gaining 5.7% after announcing plans to begin production of small cars in India next year. CEO Alan Mullaly helped lift sentiment by suggesting that the US market was showing signs of recovery. He expects sales to rise across the industry over the course of next year.

Nevertheless, after yesterday’s rally for the sector, today saw energy-based companies lead the Dow Jones slightly lower in early trading. Caterpillar, the construction and mining manufacturer, fell 0.81%, while energy company Chevron shed 0.65% in early trading. Exxon Mobil joined its sector mates by falling 0.1% by 3.30pm (London time).

The net effect was a largely unchanged level for the Dow by late-afternoon in London. The index was down 0.2% (19.9 points) to 9809 at 4.25pm (London time).

The slightly directionless trading on Wall Street impacted UK markets, with the FTSE giving up all the gains it had made on the back of the CBI’s suggestion that the UK was emerging from recession.

Crude oil prices fell ahead of the weekly US inventories data, with low demand and reduced refinery activity continuing to impact prices outweighing the expected fall in stockpiles. Prices were put under even further pressure once the weekly report compounded these issues by showing an increase of 2.8 million barrels to 335.6 million barrels in the week ending September 18.

Elsewhere, gold prices continue to sit above $1000 per ounce as investors continue to see it as a safe haven as the Dollar fluctuates.

[1] Source: Reuters News (23 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

Wall Street made modest gains at the start of trading today, as rising commodity prices lifted resource shares.

Mining companies were in demand, as US Dollar weakness helped boost underlying commodity prices; three-month copper futures were up by 2.3% to $6,335 a metric ton, October Gold futures were 1.4% higher at $1018.2 per ounce and October crude oil rose 2.5% to $71.47 a barrel today.

An official report from China also contributed to crude oil gains; the report revealed that the country’s net crude imports surged 18% to 17.92 million metric tons in August, the second highest on record.

Rising metal prices and a broker upgrade helped US Steel Corp’s shares rise 2.9% to $49.40; Bank of America upped its recommendation on US Steel from ‘underperform’ to ‘neutral’ today, stating that the company ’should return’ to profitability in 2010.’ [1]

Shares of Freeport-McMoran Copper & Gold jumped 2.4% to $71.74 a share, Newmont Mining climbed 2.3% to $45.45 and Alcoa advanced 1.6% to $14.16. In the meantime, energy majors Chevron and Exxon Mobil edged 0.50% higher to $72.41 and 0.4% to $69.86 today.

Banks were also in favour, with Citigroup up 4.3% to $4.62, Bank of America 2.1% higher at $17.63 and Wells Fargo 2.2% above its previous close at $28.90.

Interestingly, the Government of Singapore Investment Corporation (GIC) today announced that it has pocketed a £1.6 billion profit after disposing half of its 9% stake in Citigroup – could this move suggest that the country’s sovereign wealth fund is bearish about the outlook for the bank?

‘A stake below 5% reflects GIC’s goals and desire to be a portfolio investor,’ the sovereign wealth fund said. ‘GIC will continue its investment in Citigroup as we are confident of its long-term prospects.’ [2]

In the meantime, the US regulator is said to be planning to sue Bank of America over charges that it misled investors about bonuses when it acquired Merrill Lynch. Separately, Bank of America said it intends to pay the government $425 million to cut its reliance on federal support.

Some investors still believe that there is value in the stock market, despite the six-month rally. Nick Purves, a fund manager for Schroder Income Fund, told Reuters that there are still a number of potentially undervalued companies.

‘We can find a good number of companies where we think the share price today does not reflect the long-run profit potential of the companies concerned,’ Mr Purves said. ‘Typically a company should be priced at about 12 or 13 times its normal earnings, so if we can find something on six or seven, then we get quite excited because over time there could be 100% upside.’ Mr Purves flagged Royal Bank of Scotland, Legal & General and also said that some telecom and pharmaceutical companies fit his category.

By 3.45pm (London time), the Dow Jones Industrial Average was 6.5 points (+0.07%) higher at 9785.36, while the broader S&P 500 was 3.51 points (+0.33%) above its previous close at 1068.17.

Ford was also in the spotlight today; its share price rose 2.8% to $7.02 this afternoon after Reuters reported that the car maker was planning to construct a third car manufacturing plant in China. Ford is said to believe that sales could soon outpace its existing capacity.

Elsewhere, Dell’s shares slid 1.4% to $15.80 this afternoon after Credit Suisse downgraded the computer maker to ‘neutral’ and recommended buying Hewlett-Packard and Apple. [3] In the meantime, Hewlett-Packard today announced that it was awarded with a contract that could be worth up to £70 million from Northern Ireland’s Department of Health. HP’s share price climbed 1.3% to $46.95, while Apple fell 0.3% to $183.43.

In economic news, the US house price index rose by 0.3% in July, marginally lower than anticipated, while the Richmond Fed manufacturing index remained unchanged at 14, suggesting that manufacturing in the region has continued to expand.

Finally, it is important to note that the outcome of the Federal Reserve’s two-day monetary policy meeting will be released tomorrow. A decision on interest rates and further updates on financial stimulus measures will be discussed.

[1] Source: Bloomberg News (22 September 2009)
[2] Source: Financial Times (22 September 2009)
[3] Source: Bloomberg News (22 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

US equity market futures fluctuated between gains and losses this afternoon as a number of futures and options contracts get ready to expire.

‘The story today is quadruple witching, but we may not see as much volatility as usual, since most activity already took place this week,’ explained Peter Cardillo of Avalon Partners. ‘It’s going to be a sideways market today with nothing really happening. The market will take a pause with averages slipping in and out of positive territory.’ [1]

Quadruple witching occurs on a day on which stock index futures, stock index options, stock options and single stock futures expire. This phenomenon occurs on the third Friday of March, June, September and December and tends to create some market volatility.

Market sentiment in general was tempered by concerns over fears about the six-month stock market rally coming to an end, disappointing results from Palm and a drop in industrial metal prices.

Palm Inc was in the limelight today after unveiling a wider loss despite a jump in the company’s smartphone sales; the company reported a first-quarter net loss of $161.1 million, or $1.17 a share - worse than the prior year’s comparative loss of $39.5 million, or 39 cents a share.

First quarter revenues, meanwhile, fell to $68 million from $366.9 million a year ago. However, after adjusting for certain items, revenues would have come in at $360.7 million, beating Thomson Reuters’ $297.7 million forecast by 21%.

The disappointing part came when Palm said it expects second-quarter non-GAAP revenue to come in between $240 million and $270 million, nevertheless. This estimate trailed Reuters’ average forecast for revenue of just over $345 million. Palm’s share price sagged 1.5% to $14.22 during the pre-market session.

US miners were also in the red during pre-market trading today, with Freeport-McMoRan Copper & Gold down by around 0.4% to $71.21 and Southern Copper 1.6% lower at $29.23 after copper inventories monitored by the London Metal Exchange increased by 1% to 327,700 metric tons, the highest level since May.

Airline companies were eyed as well today after sources told Reuters News that American Airlines will team up with British Airways and Qantas to offer fresh capital to Japan Airlines.

There were also a few upgrades today. Procter & Gamble advanced 2.5% to $55.53 during the pre-market session after Citi upgraded the company from ‘hold’ to ‘buy’. In the meantime, housebuilders KB Home and Toll Brothers jumped 3.35% to $20.35 and 3.2% to $22.22 after JPMorgan upgraded the companies from ‘neutral’ to ‘overweight’. The broker reduced its rating on MDC Holdings to underweight, however. [2]

Elsewhere, Citigroup gained 0.7% to $4.45 in the pre-market session after responding to rumours that one of its traders was entitled to a pay package of $100 million; the bank said that $100 million was too much to pay an employee given the banks circumstances.

[1] Source: CNN Money (18 September 2009)
[2] Source: Wall Street Journal (18 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.

US equity markets fluctuated between gains and losses at the start of trading this afternoon, as an improvement in housing starts and jobless claims data lured investors back to the market. On the other hand, disappointing results from Oracle and FedEX encouraged others to take profits.

The number of US housing units on which construction has started (housing starts) climbed 1.5% to an annual rate of 598,000 in August, the Commerce Department has revealed today. This was a nine-month high and in line with Bloomberg’s expectations.

The rise in housing starts came on the back of a 25% surge in multi-family units, which came in at a rate of 119,000. This countered a 3% decline in the construction of single-family houses - builders’ probably fear that demand for this segment will weaken once the US government’s tax credit incentive for single-family dwellings expires. In the meantime, building permits, a sign of future construction, rose 2.7% to an annual rate of 579,000 in August.

Shares of D.R. Horton were up by nearly 1% to $13.76, Pulte Homes climbed 2.4% to $13.42 and Lennar Corp edged 0.6% higher to $17.49.

A separate report released from the Labour Department suggests the pace of deterioration in the American labour market has slowed; the number of US citizens claiming first-time unemployment benefits (initial jobless claims) unexpectedly dropped by 12,000 to 545,000.

This was better than Bloomberg’s expectations for a rise to 557,000. The report shows the total number of Americans collecting jobless benefits for more than a week (continuing jobless claims) rising by 129,000 to 6.23 million, however.

Also encouraging was the regional Philly Fed manufacturing index, which jumped to a reading of 14.1 this month from 4.2 in August. This was substantially higher than expectations for a rise to 8 and suggests that manufacturing activity in Philadelphia has continued to expand.

By 3:30pm (London time) the Dow Jones Industrial Average was up by a meagre 5.59 points (+0.06%) to 9797.30 while the broader S&P 500 was 0.17 points (-0.02%) to 1068.59. The Nasdaq was a notch higher, up 0.27 points (+0.02%) to 1724.

‘We’re looking at a global recovery and the latest economic numbers confirm that,’ said Philip Orlando of Federated Investors. ‘But everyone would like to see some top-line improvement. Investors are reacting to a top line miss from two bellwethers.’ [1]

Disappointing results from Oracle, the world’s second-biggest software producer, and FedEx, the second-biggest US package-shipping company, weighed on sentiment this afternoon.

Shares of Oracle slumped nearly 3% to $21.50 this afternoon after unveiling first-quarter sales that trailed consensus expectations. Sales of database and middleware programmes fell 22% over the period to $711 million, missing expectations of $826 million. The company said sales were hurt by slowing demand for its databases.

Separately, FedEX shares declined 1.4% to $77.10 after unveiling a 20% drop in quarterly revenues of $8.01 billion. This trailed Bloomberg’s average estimate of $8.23 billion. The company reiterated its forecast for the current quarter, saying it expects earnings to come in between 65 and 95 cents a share.

Elsewhere, shares in MEMC Electronic Materials continued to advance today, up 0.5% to $18.84 on vague rumours that the company might be a takeover target.

AMR’s shares surged 20.3% to $8.84 this afternoon after said it managed to raise $2.9 billion in cash and aircraft financing. It also said it will focus more on its most profitable networks.

The world’s largest steelmaker ArcelorMittal declined 2.1% to $27.9 after having its share rating cut from ‘buy’ to ‘hold’ at Societe Generale. In contrast, Nucor Corp, the second-largest US-based steel producer, added 4.5% to $50 after being upgraded to from ‘hold’ to ‘buy’ at Citigroup. The broker said it believes the company may return to profit in the fourth quarter. [2]

Aircraft parts maker Spirit AeroSystems Holdings also benefited from an upgrade today; its shares rallied more than 7% to $18.09 after Goldman Sachs Group included the company to its ‘conviction buy list’. [3]

[1] Source: Bloomberg News (17 September 2009)
[2] Source: Bloomberg News (17 September 2009)
[3] Source: Bloomberg News (17 September 2009)

By Anthony Grech, Research Analyst, IG Index.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The above comments do not constitute investment advice and neither IG Index nor Spread-Betting.org accept any responsibility for any use that may be made of them.

IG Index is Authorised and regulated by the Financial Services Authority, register number 114059.