MarketView for August 10

Summary

Both the Dow Jones Industrial Average and the S&P 500 indexes chalked up their fifth straight week of gains, the result of ongoing expectations for additional stimulus by both the Fed and the European Central Bank, with the run-up coming despite the weak data from China. The S&P 500 ended the day slightly higher thereby enabling the claim for six straight upward sessions. Nonetheless, you have to take into account the very light trading activity brought about in part by a seasonally factor. This is a very slow time of the year for the financial markets.

Overall, the S&P has gained a scant 0.3 percent over the past three trading sessions; a sign that while there is an obvious bias against reducing positions, while at the same time there is also a reluctance to make robust moves above the three-month highs the S&P has been hovering around.

Trading has been relatively light in August, ahead of what is anticipated to be a busier September when market participants return from summer holidays and central banks, including the Federal Reserve and the European Central Bank, may swing into action. The European Central Bank is expected to act soon, though not before September, to lower punishing borrowing costs for Spain and Italy as a way to stabilize the euro zone's economy.

Cyclical stock sectors, including financials, energy, materials and consumer discretionary names, fell, while defensive plays like telecom and health care rose. The expectation of central bank action, however, may give support to equities as investors think twice about shorting the market on the possibility of any action.

Going nowhere on Friday were shares of Manchester United in its trading debut. The stock closed at $14, same as the initial public offering price. The IPO garnered some attention because of the high profile of the U.K. football club, but trading volume diminished shortly after it opened for trading. The stock priced well below its expected range on Thursday, valuing the British soccer club at $2.3 billion.

Yahoo fell 5.4 percent to $15.15 a day after it said it may reconsider what it does with the cash it was expecting from a multibillion-dollar sale of half of its stake in Alibaba Group. Yahoo previously promised to return most of the cash to shareholders.

For the week, the Dow was up 0.9 percent, the S&P 500 chalked up a 1.1 percent gain, while the Nasdaq was up 1.8 percent. The Nasdaq has gained in four of the past five weeks.

Data on Chinese trade and bank lending suggested pro-growth policies have been insufficient in the face of weak demand from China's trading partners, and more urgent government action may be needed to stabilize the economy. Data on Chinese exports included a 16 percent decline in shipments to Europe from a year ago.

Some economists said China's central bank could move as early as this weekend to ease policy. It has reduced banks' required reserve ratio in three steps since November to free up new lending and cut interest rates in June and July.

Research In Motion's hares (RIM.TO) (RIMM.O) rose 6.3 percent to $8.29 after Bloomberg reported IBM Corp (IBM.N) has considered buying RIM's enterprise division.

Fusion-io shares rose nearly 28 percent to $26.86 after the company's projection late Thursday of strong growth over the next year and the storage drive maker handily beat fourth-quarter profit estimates.

J.C. Penney (JCP.N) shares rose 5.9 percent to $23.40 as the company said its second-quarter results showed a slowing in the flight of long-time customers reacting to a new pricing policy.

Volume was incredibly light, with about 4.97 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion.