U.S. MARKET AVERAGES

Market ignored the early morning weakness despite the higher July wholesale inflation at mid-day and stayed in the positive till the close. The positive push was largely driven by tech stocks and did not reached out to broader market.

Tech and semiconductor stocks led the rally on Nasdaq closing higher. Shares of HP jumped 13% on better than expected earnings. Intel, AMD and other DRAM manufacturers joined the rally in anticipation of Apple Computer launching flash memory based ipod music devices. Applied Materials stock jumped more than 6% on meeting the anlaysts’ estimates and on cautiously positive outlook.

Gold sector lost ground on strengthening dollar, falling 1.5%. Housing stocks also have a weak trading session losing 1%. Shares of Toll Brothers, D R Hortons, and Lennar traded lower by more than 1%.

Nordstrom stock jumped up 11% on better-than expected earnings and revised earnings outlook for the rest of the year. The company plans to open three stores during the rest of the year. Abercrombie & Fitch shares traded as low as 8% before rebounding to loss of 4%. Investors can not shake-off the worries related to higher denim inventories despite company delivered 40% increase in earnings and second-best gross margin ever.

Big Lots, liquidator and discount retailer’s shares jumped 4% on loss of 12 cents vs estimates of 13 cents loss for the quarter. Talbots shares dropped 1% on meeting the earnings estimates.

In the stock market

The tech sector rose as Hewlett-Packard reported 3Q earnings of 36 cents a share excluding special items and exceeded expectations of 31 cents a share. Quarterly sales rose 10% to $20.8 billion. The company projected 4Q revenue of $22.4 to $22.8 billion with earnings between 44 and 47 cents a share. Company’s shares rose 10%.

Applied Materials rose 5.9% after announcing a likely rise in orders. The chip maker posted 3Q 27% sales and 16% earnings decline on industry slowdown. The company earned $369.6 million, or 23 cents a share, down from $440.6 million, or 26 cents a share, beating estimates by a penny, but missing revenue forecasts of $1.65 billion.

The good news from Hewlett-Packard and Applied Materials spilled over to help other tech shares, with Intel up 7 cents to $26.11.

In the retail stock market Nordstrom rose 8% as the luxury retailer reported 2Q 39% profit rise of $148.9 million, or 53 cents a share vs. 37 cents a year ago on 7.8% revenue growth to 2.1$ billion with same-store sales increase of 6.2%.

The oil markets gyrated immediately upon release of the weekly petroleum report this morning at 10:30 AM.

In a tight supply and demand situation market is paying a close attention to the inventories situation. Over the last week, crude inventories increased by 0.3 million barrels and gasoline inventories declined by 5 million barrels. The crude inventory build up was expected to be $1.25 million barrels and gasoline inventory drawdown was expected to be less than 1.5 million.

ECONOMIC NEWS

The wholesale price index reported largest increase in nine months of 1% during July. Many of the factors driving the wholesale inflation are the same that are driving the consumer price inflation.

The wholesale index measures the rate of inflation before it reaches at the consumer level.

The only difference between the two reports was that the automobile prices declined in the consumer price inflation by 1% whereas at the wholesale level measurement they increased by 1%.

The PPI data showed that the prices rose for energy by 4.4%, electricity by 0.7%, gasoline by 10.9%, natural gas by 3.7% but for food dropped by 0.3%. The prices for pharmaceuticals rose by 1.3%.

INTERNATIONAL MARKET NEWS

Asian benchmarks closed broadly down, reflecting U.S. markets decline overnight, oil prices and profit-taking. The Nikkei had a day of volatile trading. It opened lower, following losses in Wall Street, later recovered on gains in banks and property developers and eventually finished the session down 0.35%. Among the decliners in the regional markets, Hong Kong’s Hang Seng was flat on blue chip losses, South Korea’s Kospi shed 0.3%, and Singapore’s Staits Times dropped 1.1%. The dollar traded in the upper 109-yen range.