The Dow Jones Industrial Average (DJIA) has bounced back from heavy losses on the open, as Wall Street comes to grips with a slower U.S. economic recovery. While the Dow's current gain of about 13 points is nothing to write home about, it's considerably better than the triple-digit loss the DJIA suffered earlier in the session. Helping to bolster sentiment on Wall Street, manufacturing in the Chicago region improved more than expected, while consumer confidence slipped less than economists were expecting. The DJIA is currently battling with resistance at the 10,500 level, which is also home to the blue-chip barometer's 20-week moving average. The Dow has not closed a week above both these technical hurdles since mid-May. Turning to the S&P 500 Index (SPX), bullish investors might consider a second weekly close above 1,100 since mid-June a victory.
Taking a closer look at today's economic news, U.S. second-quarter GDP rose at a 2.4% annualized rate, well below the average 4.4% increase during the prior six months. Despite the deceleration, it was almost in line with economists' predictions for a 2.5% rate. First-quarter GDP was revised higher, to an annualized rate of 3.7%, from the prior estimate of a 2.7% increase.
Elsewhere, the Chicago purchasing managers index rose to 62.3 from 59.1 in June. The rise was unexpected, as economists were expecting manufacturing activity in the region to decline. Readings above 50 indicate overall business expansion.
The University of Michigan/Reuters consumer sentiment index fell to 67.8 in late July from 76 in late June. The July reading was revised higher from a preliminary reading of 66.5. Economists had expected a final July index reading of 67.
Finally, in case you missed this morning's editions of Opening View, or Early Edge, below is a quick wrap-up of what you missed:
Merck & Co. Inc. (MRK) reported second-quarter earnings of 86 cents per share, excluding items and one-time charges, as revenue jumped 92% to $11.35 billion. Wall Street was looking for a profit of 83 cents per share and revenue of $11.45 billion. Merck said it expects adjusted 2010 earnings of $3.29 per share to $3.39 per share, which falls short of the current consensus estimate for a fiscal 2010 profit of $3.37 per share.
Potash Corp. of Saskatchewan (POT) attracted a trio of price-target adjustments this morning, one day after the fertilizer firm hiked its 2010 earnings outlook. UBS raised its price target from $112 to $120 and reiterated its "buy" rating, while Soleil Securities upped its target from $89 to $100. Meanwhile, National Bank took the road less traveled by cutting POT's price target from $127 to $120.
Coventry Health Care Inc. (CVH) reported second-quarter earnings of $1.10, excluding one-time items and a $278 million litigation charge. Revenue for the quarter fell 18% to $2.87 billion. Analysts were expecting earnings of 55 cents per share on revenue of $2.83 billion. For 2010, Coventry sees earnings of $1.72 to $1.87 per share.
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