Economic reports will contest earnings news for control of the stock market Wednesday.
Durable goods orders for June will provide an important look at the industrial economy, when released at 8:30 a.m.. It could have as much directional sway with stocks as the flood of earnings news coming from companies like Boeing, Conoco Phillips, Comcast, General Dynamics, International Paper, Newmont Mining and others. The Fed's beige book is released at 2 p.m. and will be a close up look at a broad swath of the economy.
Stocks turned in a mixed performance Tuesday after three days of strong gains. The Dow edged up 12 points to 10,537, while the S&P 500 fell slightly more than a point to 1113, its 200-day moving average. Early gains in risk assets were erased when consumer confidence for July came in at a 50.4, down from a reading of 54.3 in June and its lowest reading since February.
The euro gained slightly against the dollar but enough to push it just above $1.30. Consumer confidence data also weighed on oil, which lost nearly 2 percent to a level of $77.50 per barrel. Gold slipped 2 percent to a 3-month low, as traders eyed the key $1,150 support level in the August contract. Gold ended the day at $1,158, down $25.10 per ounce.
Record Low Auction Yield
Treasurys saw selling, and yields edged higher as a result. The Treasury auctioned $36 billion in 2-year notes at a yield of 0.665, the lowest ever in a 2-year auction.
But the auction "was pretty decent," said Nomura's George Goncalves. "It doesn't really tell you much. People are hiding out in the 2-year notes."
"You can buy them in the new issue market, but the fact so much supply cleared at such a low yield level...that really tells you something," he said.
Goncalves said Wednesday's $37 billion 5-year auction could be the most difficult of the week. "It will be the most challenging of the three because the belly of the curve, which is usually led by the 5-year, is relatively rich, when compared to the rest of the curve," he said. "There's some potential for it to give back some of its gains of the last few weeks." The Treasury auctions 7-year notes Thursday.
Earnings news Tuesday continued to deliver a string of upside surprises, but investors were left with a mixed picture.DuPontled the winners and had a positive impact on the Dow. The chemical maker beat expectations and raised its forecast. It also said several of its businesses - electronics and titanium dioxide - had results that "far exceeded" pre-recession levels.
But the trend was more troublesome when it came to the steel industry. AK Steelsaid it was cutting back on production due to demand, and U.S. Steel reported a bigger loss than expected, adding it could be affected by the uneven economy. Paccar, the truck maker, fell after it lowered its estimate for 2010 industry wide sales in the U.S. and Canada.
Norfolk Southern, like other transports, beat expectations with its after the bell report. It reported profits of $392 million, a 59 percent increase, on sales of $2.43 billion, up 31 percent. Norfolk said it is optimistic about continued year-over-year increases in rail traffic
Other earnings expected Wednesday include Arcelor Mittal, Constellation Energy, Corning, Southern Co, Sprint Nextel, WellPoint, Wyndham, Martha Stewartand Sealed Air. Visa, Akamai, BMC Software,Express Scripts, Symantec, Varian Medical,Lincoln National, Citrix Systems, Cliffs Natural Resources, FMCand Tesororeport after the bell.
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