MarketView for July 30

Summary

The S&P 500 and Nasdaq ended higher on Tuesday, primarily because of gains in the tech sector, while Potash shares were the day's downer. The tech sector index rose 0.7 percent, leading the S&P 500's advance. Shares of Facebook rose 6.2 percent to close at $37.63, within striking distance of its $38 IPO price. The stock - the most actively traded on Nasdaq - rose as much as 7 percent to a session high of $37.96. Facebook has gained 42 percent since the company reported blowout quarterly results last Wednesday.

Pfizer, a Dow component, gained 0.4 percent to $29.67 after reporting earnings that slightly exceeded expectations. Cost controls helped Pfizer's bottom line. The company also has lined up a business split that could lead to the spinoff of its generics division.

At the same time, Mosaic was among the biggest drags on the S&P 500, sinking 17.3 percent to $43.81 after Russia's Uralkali dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will drive global potash prices down 25 percent. The shakeup in the potash sector pushed shares of Potash down 16.5 percent to $31.63.

The Street was cautious ahead of the Wednesday statement from the Federal Reserve, which is expected at the end of a two-day policy meeting of the Federal Open Market Committee. Wall Street will scrutinize the statement for any additional hints of when the central bank may begin to pare its $85 billion a month in bond purchases.

Shares of Verizon ended the day down 2.1 percent at $50.42, and were the largest drag on the Dow.

After the bell, shares of Symantec rose 4.5 percent to $25.45. The company, which makes Norton anti-virus software, posted better-than-expected quarterly results. An increase in hacking attacks led businesses to spend more on Symantec's security and data storage products.

The day's earnings news was mixed overall. Occidental Petroleum fell 2.4 percent to $88.32 after the company reported a smaller-than-expected quarterly earnings number, hurt by lower oil prices in the Middle East and North Africa.

Coach fell 7.9 percent to $53.30 after the leather goods maker reported soft sales at its North American stores and disclosed the departures of two more executives amid a flurry of recent changes in top management.

In contrast, Goodyear Tire & Rubber rose 8.9 percent to $18.56. The company reported that its quarterly earnings more than doubled, citing lower raw material costs and stabilizing sales in Europe as major reasons for its jump in net income.

Sprint posted a wider quarterly loss on costs from shutting down its Nextel network, but revenue grew as customers spent more on wireless services. Sprint's stock ended the day up 7.3 percent to close at $6.16.

More companies continued to beat earnings expectations compared with revenue forecasts. With results in from 60 percent of the S&P 500 companies, 67.4 percent have exceeded earnings expectations - in line with the average beat over the last four quarters. About 55 percent of companies have topped revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons but below the historical average, Thomson Reuters data showed.

Volume saw approximately 5.89 billion shares change hands on the three major equity exchanges, below the average daily closing volume of about 6.4 billion shares this year.

Home Price Up

Home prices rose in May, suggesting the housing market recovery pushed ahead during the spring buying season, though the pace of gains did slow down. Home prices gained 1 percent on a seasonally adjusted basis, according to the S&P/Case Shiller composite index of 20 metropolitan areas. That was shy of April's 1.7 percent rise.

The report did not alter the view that the housing sector's recovery is progressing, making it a bright spot for an economy that likely saw growth slow sharply in the second quarter. However, economists did flag the potential for higher mortgage rates to dampen the speed of the rebound down the line.

Without seasonal adjustment, prices rose 2.4 percent in May and on a national average they were back at their spring 2004 levels. A moderation in price gains was to be expected, given the acceleration of home values. A tightening of inventory available for sale, fewer foreclosures and buying from investors have helped push prices higher over the past 1-1/2 years as the battered housing sector has gotten back on its feet.

Home prices compared to last May also fell short of expectations, though they still chalked up a strong12.2 percent increase, the largest annual gain since March 2006.

Borrowing costs have risen in anticipation of the Federal Reserve's plans to start winding down its economic stimulus later this year if the economy progresses as expected. Since early May, mortgage interest rates have climbed about one percentage point. Data on Monday suggested the increase cut into pending home sales, which dropped in June.

Still, rates remain low by historical standards and most economists do not expect the higher costs to derail the housing market. In the short-term, it could also spur potential buyers to act before rates rise further.

The ramifications of the housing market's far-reaching collapse after prices peaked in 2006 are still visible, as illustrated by separate data on Tuesday that showed the homeownership rate fell to a 17-1/2 year low in the second quarter.

Home prices in all 20 cities covered by the Case Shiller survey rose on a yearly basis in May, led by a 24.5 percent surge in San Francisco. Two cities - Dallas and Denver - reached record levels, surpassing their peaks reached during the housing boom. It was the first time any city has racked up an all-time high, the survey said.

Consumer Confidence Down

Consumer confidence waned in July as Americans took a dimmer view of the outlook for the economy and labor market, separate data on Tuesday showed. Still, their view of current conditions was more upbeat, rising to the highest level in five years.

The Conference Board said its index of consumer attitudes slipped to 80.3 in July from an upwardly revised 82.1 in June. The report was shy of economists' expectations for the index to hold steady at June's original reading of 81.4.

The expectations index dropped to 84.7 from 91.1. Still, consumers were not so gloomy about current conditions, with the present situation index rising to 73.6 from 68.7, the highest level since May 2008.