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Benchmarks eked out gains after Federal Reserve Chairman Ben Bernanke’s said that the central bank’s bond purchase decisions “are by no means on a preset course”. Robust earnings from major U.S major companies also acted as a catalyst for the markets, lifting the major indices following Tuesday’s fall. Meanwhile, Federal Reserve’s released its latest “Beige Book” report which revealed that the U.S. economy expanded at a moderate pace in June and early July. On the negative side, housing starts declined surprisingly in the month of June. The materials sector was the biggest gainer among the S&P 500 industry groups. Utilities stocks were the only losers.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) gained 0.1% to close the day at 15,470.52. The S&P 500 added 0.3% to finish yesterday’s trading session at 1,680.91. The tech-laden Nasdaq Composite Index rose 0.3% to end at 3,610.00. The fear-gauge CBOE Volatility Index (VIX) declined 4.4% to settle at 13.78. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.7 billion shares, significantly below 2013’s average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 65% that advanced, only 32% declined.
On Wednesday, Federal Reserve Chairman Ben Bernanke emphasized yet again that the Central Bank’s plans to trim its bond buying program later this year. But the plan might change depending on the economic development. Speaking to the House Financial Services Committee Bernanke said: “Our asset purchases depend on economic and financial developments, but they are by no means on a preset course.” He went to add that “If the data are stronger than we expect, we’ll move more quickly” to decrease the bond buying program. If economic data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”
On the earnings front, internet giant Yahoo! Inc. (NASDAQ:YHOO) reported second quarter results after the close of market on Tuesday. The company’s earnings came in above the Street’s estimates. Yahoo decreased its revenue outlook for the year. The company is now expecting revenues between $4.45 billion and $4.55 billion in 2013 from the previous estimate of $4.5 billion to $4.6 billion. The decrease in the outlook was due to a 12% fall in advertisement prices in the second quarter. The company’s shares surged more than 10% after the declaration of results.
Another financial giant reported better-than-expected earnings. Bank of America Corp’s (NYSE:BAC) second quarter earnings surpassed the Street’s expectations. The company’s earnings increased 70%, boosted by lower operating costs. Revenues increased 3.5%.
A few economic reports were released on the home front yesterday. The Federal Reserve released its latest “Beige Book” report. The report revealed that the U.S economy has continued to expand at a “modest to moderate pace” in recent weeks. Manufacturing activity increased in most districts. The Fed Beige Book also revealed that “Residential real estate and construction activity increased at a moderate to strong pace in all reporting Districts.”
The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced building permits and housing starts numbers. According to the report, privately-owned housing starts came in at 836,000 for June from the previous month’s revised figure of 928,000. This was well below the consensus estimate of 959,000. Building permits also declined in the month of June. Building permits declined to 911,000 from the revised May figure of 985,000. This figure was also considerably below the consensus estimate of 980,000.
The materials sector was the biggest gainer among the S&P 500 industry groups and the Materials Select Sector SPDR (XLB) gained 0.9%. Stocks such as Air Products & Chemicals, Inc. (NYSE:APD), Monsanto Company (NYSE:MON), Praxair, Inc. (NYSE:PX), Ecolab Inc. (NYSE:ECL) and The Dow Chemical Company (NYSE:DOW) increased 0.9%, 1.3%, 0.4%, 0.4% and 2.2%, respectively.
The utilities sector was the only loser among the S&P 500 industry groups and the Utilities SPDR (XLU) lost nearly 0.1%. Stocks such as NRG Energy Inc (NYSE:NRG), Exelon Corporation (NYSE:EXC), Wisconsin Energy Corporation (NYSE:WEC), SCANA Corporation (NYSE:SCG) and PG&E Corporation (NYSE:PCG) lost 1.3%, 0.1%, 0.1%, 03% and 2.7%, respectively.