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Benchmarks eked out gains during Wednesday’s trading session following mixed domestic economic reports. Meanwhile, Euro zone’s distressed economy received a ray of hope after the Purchase Manager’s Index (PMI) grew month over month. Of the top ten S&P 500 industry groups, technology stocks gained the most. Utilities sector suffered maximum losses.
For a look at the issues facing today's markets, read our Ahead of Wall Street for July 5 article.
The Dow Jones Industrial Average (DJI) gained 0.4% to close the day at 14,988.55. The S&P 500 increased 0.1% to finish Wednesday’s trading session at 1,615.41. The tech-laden Nasdaq Composite Index rose 0.3% to end at 3,443.67. The fear-gauge CBOE Volatility Index (VIX) decreased 1.5% to settle at 16.20. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 3.37 billion shares, well below 2013’s average of 6.4 billion shares. Declining stocks outnumbered the advancers. For the 58% that declined, 39% advanced.
Wednesday’s shortened trading session witnessed volatility after a bunch of mixed domestic economic reports were released. The Bloomberg Consumer Confidence Index, initial claims data and ADP employment report all provided positive news. However, below than expected ISM services numbers dampened investor sentiment.
According to the U.S. Department of Labor number of Americans filings for unemployment benefits dropped by 5,000 to 343,000. This figure came in above the consensus estimate and previous month’s figure of 348,000. On a 4-week moving average basis, the figure dropped by 750 to 345,500. Another job report showed an increase in employment in the private sector. According to the ADP Research Institute, a total of 188,000 people were added in the private sector. Of the 188,000, 84,000 were employed by small businesses while 55,000 and 49,000 were employed in medium business and large business, respectively.
Another factor which boosted investor sentiment was the Bloomberg Consumer Confidence Index. The index increased to -27.5 from -28.3 recorded in the previous week. This figure is also the highest level attained since January 2008. Consumer confidence is gaining ground on the back of an improving employment scenario and home valuations. These factors are also responsible for an increase in demand for automobiles and housing. The barometer for measuring buying climate index increased to -34.9 from -37.4. The index measuring Americans take on the current economic situation dropped for the second week to 51.9 from 51.3.
Among other encouraging news, figures of auto sales for the month of June came in above the Street’s expectations. June auto sales came in at 15.9 million, above the consensus estimate of 15.5 million. Sales growth for companies like Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) also beat estimates, growing by13% and 6.5%, respectively.
According to data released by Institute for Supply Management, Non-Manufacturing ISM for June 2013 came in at 52.2, below the consensus estimate of 53.7. The non-manufacturing business activity index and new orders index declined to 51.7% and 50.8% from previous month’s figures of 56.5% and 56.0%, respectively. Although the 14 components have either declined or remain flat, the index has increased over on a year-on-year basis.
On the international front, recession-ridden Euro Zone may finally be seeing a ray hope. Markit's final Composite Eurozone Purchasing Managers' Index (PMI) came in at 48.7 for the month of June. Although the index is below the 50-mark, on a month over month basis the index has increased by 1 point. According to PMI data, the economy has contracted by 0.2% from April through June. Germany managed to avoid a huge decline in PMI but Spain and Italy witnessed the largest declines.
On the other hand, rising political instability in Portugal may add to investor woes. Resignation of top two ministers in Portugal triggered a sell-off in bonds, resulted in a sharp increase in 10-year borrowing costs to 8.1%,
Among the top ten S&P 500 industry groups technology stocks were the biggest gainers. The Technology SPDR (XLK) gained 0.6%. Stocks such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Intel Corporation (NASDAQ:INTC), Google Inc. (NASDAQ:GOOG) and Adobe Systems Incorporated (NASDAQ:ADBE) gained 0.6%, 0.2%, 0.2%, 0.5% and 0.9%, respectively.
Utility stocks suffered maximum losses. Shares of Utilities SPDR (XLU) lost 0.2%. Stocks such as the Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), TECO Energy, Inc. (NYSE:TE), NextEra Energy, Inc. (NYSE:NEE) and Sempra Energy (NYSE:SRE) lost 0.5%, 0.1%, 0.8%, 0.3% and 0.1%, respectively.