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Dow Jones Industrial Average Comes Roaring Back as Bulls Cheer Portuguese Bank Bailout

Crude snapped its recent losing streak, while gold resumed its recent downtrend

by 8/4/2014 4:30:29 PM
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The Dow Jones Industrial Average (DJI) bounced back from last week's 2.8% drop, as traders weighed earnings from Berkshire Hathaway Inc. (NYSE:BRK.B) and Michael Kors Holdings Ltd (NYSE:KORS) against a bailout for Portugal's troubled Banco Espirito Santo. After spending time on both sides of breakeven, the day's action eventually resolved to the upside, with the blue-chip barometer notching a nearly 76-point gain -- and coming within a chip-shot of positive year-to-date territory -- by the close.

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After edging back into the black on a year-to-date basis, the Dow Jones Industrial Average (DJI - 16,569.28) pared a portion of these earlier gains to close 75.9 points, or 0.5%, higher -- just shy of its 2014 breakeven mark of 16,576.66. All but five of the DJI's 30 components finished in the black, paced by The Walt Disney Company (NYSE:DIS), which tacked on 2.2%. Bringing up the rear was The Procter & Gamble Company (NYSE:PG), which shed 0.5% by the close. Wal-Mart Stores, Inc. (NYSE:WMT) finished flat.

The S&P 500 Index (SPX - 1,938.99) found support at its 80-day moving average today, eventually settling 13.8 points, or 0.7%, higher. Similarly, the Nasdaq Composite (COMP - 4,383.89) gained a foothold from its 50-day moving average, ending the session with a gain of 31.3 points, or 0.7%.

The CBOE Volatility Index (VIX - 15.12) shed 1.9 points, or 11.2%, today, but managed to finish atop 15 for a third consecutive session.

CLOSING SUMMARY – INDICES

CLOSING SUMMARY – NYSE AND NASDAQ

5 Items on Our Radar Today:

  1. The Bank of Portugal announced over the weekend it will rescue Banco Espirito Santo, and split the beleaguered bank into two separate arms: one each for its troubled and healthy assets. While the Portuguese government will pony up the majority of the 4.9 billion euros needed to bail out the lender, Banco Espirito Santo shareholders and creditors will also carry some of the financial burden. (The New York Times)
  2. The U.S. Department of Justice slapped GM's lending arm with a subpoena for possible violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The subpoena is seeking information on the securitization, underwriting criteria, and warranties of subprime auto loans originated at GM Financial since 2007. In response, a spokesperson from GM said, "There are no allegations set forth in the subpoena and GMF is cooperating with the request." (Bloomberg)
  3. KORS kicked off this week's earnings calendar on a mixed note -- banking a fiscal first-quarter profit of 91 cents per share on $919.15 million in sales. Both numbers beat consensus estimates, and the retailer raised its full-year outlook; however, a tepid forecast for the current quarter sent the shares 5.9% lower on the day. (FOX Business)
  4. Neutral-to-bullish YHOO traders set their sights on this level to hold as support through week's end.
  5. Recapping three of the day's biggest market movers.
EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

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