Market Timing System Should Be In Place For Stock Market Indexes

June 25, 2010 - PRLog -- A flurry of conflicting economic data left the benchmark indexes mixed. The Dow Jones Industrial Average closed down 8.99 points, or 0.09%, to 10143.8. The measure fell 2.94% this week. The Dow's consumer components led its decline, as investors grew worried about how those sectors could be affected by a slump in consumer spending. The government cited weaker consumer spending in a downward revision to the government's estimate of first-quarter economic growth. Coca-Cola dropped 3% and Wal-Mart Stores slid 2.5%.

But financial components strengthened after House and Senate lawmakers reached agreement on a landmark package of financial regulations in the early morning hours on Friday. American Express gained 3.9%, while J.P. Morgan climbed 3.7% and Bank of America rose 2.7%.

Investors said the bill's passage through Congress eventually watered down some of the most severe provisions.

While the legislation will impose new capital requirements on banks and for the first time extend comprehensive regulation to the over-the-counter derivatives market, banks will be required to spin off only their riskiest swap-trading operations.

"That's a sigh of relief for the financial services," said Tim Speiss, head of personal wealth advisors at Eisner LLP. Still, he said, the bill's total effect should not be understated. "This is the biggest overhaul of financial regulation since the 1930s. It's no small piece of regulation," he said.

The Nasdaq Composite climbed 0.27% to 2233.48, but still closed down 3.74% for the week. The Standard & Poor's 500-stock index climbed 0.29% to 1076.76. For the week, the S&P 500 was down 3.65%. On Friday, the financial sector led the measure's gains while the consumer-staples sector lagged.

The dollar weakened against both the euro and the yen, with the U.S. Dollar Index, reflecting the U.S. currency against a basket of six others, down 0.5% recently. But demand for safe-haven Treasurys rose, with the 10-year note up to push its yield down to 3.11%. Crude-oil prices jumped, settling at $78.86 a barrel, while gold futures slipped.

Among stocks in focus, KB Home slid 9.0% after the home builder posted a 23% drop in second-quarter orders, providing further proof of a softening U.S. housing market.

In the tech sector, Research In Motion dropped 11% after the company reported a 20% rise in fiscal first-quarter profit but didn't ship as many BlackBerrys as analysts had anticipated. However, business-software giant Oracle climbed 4.3% after the company reported a 25% rise in fiscal fourth-quarter profit and said new software license sales rose 14%.

American depositary shares of BP dropped to a 14-year low, closing down 6%. The oil giant said total costs of cleaning the Gulf of Mexico oil spill reached $2.35 billion. The company took additional steps to bolster its cash and available credit, adding roughly $5 billion more to its war chest than previously disclosed, a person familiar with the matter told the Wall Street Journal, by Kristina Peterson, WSJ.com.
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