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Benchmarks chalked gains on the back of initial claims data, which was in line with market expectations. The Bloomberg Confidence Index reached a five year high. Meanwhile, North Dakota emerged as the fastest growing region within the U.S. China’s leaders said they would wait for growth to touch 7% before introducing stimulus in the country. All the top ten S&P 500 industry groups finished in the green within which financial stocks emerged as the biggest gainer.
The Dow Jones Industrial Average (DJI) gained 0.5% to close the day at 15,040.62. The S&P 500 increased 0.9% to finish yesterday’s trading session at 1,622.56. The tech-laden Nasdaq Composite Index rose 0.7% to end at 3,424.05. The fear-gauge CBOE Volatility Index (VIX) decreased 5% to settle at 16.63. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.9 billion shares, well above 2013’s average of 6.36 billion shares. Advancing stocks outnumbered the decliners. For the 74% that advanced, 24% declined.
Major indices oscillated between huge profits and losses during Thursday’s trading session. The Dow Jones was trading within a range of 196 points. Yesterday, for a brief period the S&P 500 went below the technical support level of 1,604. Since the Federal Reserve’s chairman Ben Bernanke indicated a tapering or slowing of the bond purchase program, benchmarks have turned volatile. The uncertainties over the Fed’s continuation of monetary stimulus have seeped into the markets. Investors are expected to pay close attention to non-farm payrolls data due for release on Friday. The consensus estimates for the payroll data is 164,000, below April’s figure of 165,000.
According to the U.S. Department of Commerce, North Dakota emerged as the fastest growing state among the U.S., achieving 13.4% in 2012. This is more than five times the growth rate of the national economy. The growth has been achieved owing to a boom in oil production. Affordable drilling equipment and increasing oil prices have helped the state grow. Texas came in second with 4.8% followed by Oregon with a 3% growth rate. Growth in Texas was fuelled by the boom in oil and gas and robust manufacturing growth. Among the decliners, Connecticut topped the list with the growth falling by 0.1%. The domestic economy is dominated by the finance and insurance sectors. Sharp decline in both the sectors led to a decline of 0.1%.
According to the U.S. Department of Labor, the number of Americans filing for unemployment benefits dropped 11,000 to 346,000. This figure was in line with consensus estimates. The 4-week moving average increased 4,500 to 352,500. The Bloomberg Consumer Confidence Index came in at -29.7, the best level the index has attained since January 2008. The rally in stock markets and an improving housing industry have helped investors to recover money lost during the recession. However, wages have not increased compared to the rise in inflation and interest rates, which in turn might affect consumer spending in the future.
In light of weak domestic reports released by China in past two weeks, it is clear that growth will slow down in the second quarter. Yesterday, Chinese leaders said if the country’s growth slips below 7%, the government will introduce stimulus measures. This does not mean that they will wait for the situation to worsen. The first quarter of 2013 witnessed a growth of 7.7% compared to fourth quarter 2012’s growth of 7.9%. Sluggish numbers in April coupled with weak data released in the past two weeks, clearly indicate a slowdown.
Among the top ten S&P 500 industry groups, financials stocks gained the most. The Financial Select Sector SPDR (XLF) gained 1.4%. Stocks such as Bank of America Corp. (NYSE:BAC), Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC) and KeyCorp (NYSE:KEY) increased 0.8%, 0.9%, 0.9%, 2.3% and 1.1%, respectively.