Quiet day for stocks with the major market indices closing mixed. The Dow ($INDU) gained 26.62 points to close the session at 11,412.87. The S&P 500 ($SPX) tacked on 4.67 points to 1,271.51. The Nasdaq ($COMPQ) declined 3.62 points to 2,361.97. Volume remained very light on the session with 856.3 million shares traded on the NYSE and 1.47 billion shares exchanged on the Naz. Market breadth was positive by a 20-to-11 and 15-to-13 margin on the Big Board and Naz respectively.

The economy was the focus Tuesday, although traders weren’t in the mood to make large bets. Data on consumer confidence, new home sales, house prices and the FOMC minutes from the August 5 meeting. Oil prices continue to get plenty of attention with the commodity showing volatility on the session.

Crude prices fell as much as 2.4 percent Tuesday, but ultimately closed with a gain of $1.16 a barrel to $116.27. Concerns about Hurricane Gustav pushed crude higher Tuesday despite the fact demand forecasts continue to ease. The FOMC minutes showed that the Fed does expect slower growth ahead, which was already evident from comments made by Fed Chairman Bernanke last week.

The housing sector was in focus today with data on new home sales rising, but falling short of expectations. For the month of July, new home sales came in at 515,000 annualized units, 10K below estimates. At the same time, home sales in May and June were revised lower by a combined 46,000 units. In the past year, new home sales are down 35, which has put downward pressure on home prices.

The Case-Shiller home price index showed a decline of 15.9 percent in June 2008 compared with 2007. A combination of excess inventory and a problems and difficulties getting credit have put hurt home prices. However, consumer sentiment moved higher than expected in August as measured by the Conference Board. This index rose to 56.9 from 51.9 in July with consumers pleased to see lower energy prices.

So far, volumes have not returned, but should shortly after the summer ends and traders return to full work schedules. Wednesday’s session will be highlighted by data on weekly petroleum inventory levels and the durable goods orders reports. Despite losses for the Naz Tuesday, this index remains above its 50-day moving average, something the SPX and Dow have been unable to hold.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site