July 30, 2012

Dow, Nasdaq up in early trading

Stocks edged higher Monday as investors remained cautious ahead of two big meetings by U.S. and European central bankers.

The Dow Jones industrial average added 10 points, or 0.1%, the S&P 500 added 1 point, or 0.1%, and the Nasdaq gained 10 points, or 0.4%.

Expectations are high for the U.S. Federal Reserve and the European Central Bank to announce new measures to boost the economy when they meet later this week. The Fed's two-day meeting culminates in an announcement on monetary policy Wednesday.

Once the Fed wraps up, the ECB will take center stage, with its Governing Council meeting in Frankfurt on Thursday. Last week ECB president Mario Draghi said the central bank would do "whatever it takes" to preserve the euro. Investors now want to see if he'll put those words into action.

"The markets are very sensitive to the commentary that comes the central banks, and that will be the big focus this week," said Hamed Khorsand, analyst at BWF Financial. "But I think we'll just hear a lot more promises -- no action."

Ahead of the meetings, U.S. Treasury Secretary Timothy Geithner is scheduled to meet with German finance minister Wolfgang Schaeuble and Draghi on Monday, although no press statement is expected.

While the central bank meetings will be the the forefront, investors will also be digesting all the earnings results that have come out over the past couple of weeks, and those that are due in the week ahead, said Khorsand.

Nearly 60% of the S&P 500 have already reported, and results have been lackluster. Excluding the financials sector, second quarter earnings are expected to decline 0.4%, according to Thompson Reuters, makring the end to a ten-quarter winning streak.

Stocks rallied Friday on talk that the ECB may intervene in the bond market to ease borrowing costs for Spain and Italy.

The Dow Jones industrial average ended above 13,000 for the first time since early May. The S&P 500 also ended at its highest level since May.

World markets: Britain's FTSE 100 rose 0.8%, the DAX in Germany added 0.9%, while France's CAC 40 gained 0.5%.

Spain's economy continued to shrink for a third straight quarter. The struggling country's GDP fell 0.4% during the second quarter.

Spain has been in the spotlight thanks to its high debt and soaring borrowing costs. The Spanish 10-year yield neared 8% last week, but has since pulled back amid hopes that the ECB will intervene to help bring down the country's borrowing costs.

Italy sold €5.48 billion of bond 3-, 5- and 10-year government notes, slightly less than the €5.5 billion target. Yields fell in comparison to a previous auction, with the benchmark 10-year yield easing to 5.96% compared to 6.19% a month ago.

Asian markets ended mixed. The Shanghai Composite slid 0.9%, while the Hang Seng in Hong Kong gained 1.6% and Japan's Nikkei rose 0.8%.

Companies: HSBC said it put aside about $2 billion to compensate U.K. customers for misselling of payment-protection insurance, and to pay costs in the U.S. related to accusations it failed to prevent billions of dollars worth of money transfers linked to drug cartels and terrorist groups.

Apple and Samsung begin their patent battle in court Monday. Apple filed a lawsuit against Samsung last year alleging that the company's smartphones and tablets are knockoffs of its iPhone and iPad, and an infringement on its patents. Apple is seeking $2.5 billion in damages.

Currencies and commodities: The dollar rose against the euro and the British pound, but fell slightly versus the Japanese yen.

Oil for September delivery dipped 20 cents to $89.93 a barrel.

Gold futures for August delivery fell $2.40 to $1,615.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell slightly, and the yield edged up to 1.56%.

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