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Better-than-expected results from major companies along with optimism created by Bernanke’s speech helped benchmarks reach all-time highs on Thursday. Among the domestic reports released yesterday, the business outlook survey topped forecasts. Of the top ten S&P 500 industry groups, financials stocks gained the most. Technology 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 0.5% to close the day at 15,548.54. The S&P 500 added 0.5% to finish yesterday’s trading session at 1,689.37. The tech-laden Nasdaq Composite Index rose 1.28 points to end at 3,611.28. The fear-gauge CBOE Volatility Index (VIX) declined marginally to settle at 13.77. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.1 billion shares, below 2013’s average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 65% that advanced, 32% declined.
For the first time since May 22, the S&P 500 and the Dow Jones have touched all-time highs in one trading session. Benchmarks have attained this record on the back of strong corporate results, especially from financial companies. The S&P 500 has gained nearly 19% in 2013. Investor sentiment gained momentum post Bernanke’s semi-annual testimony on Wednesday and Thursday. He said no definitive timeline has been set for the tapering of the bond purchase program. He added that the decision depends on domestic economic data. If economic performance is not as expected, the bond purchase program may be extended and, if necessary, increased.
A series of mixed domestic reports were released yesterday. The Bloomberg Confidence Index and initial claims came in below expectations. However, according to the Federal Reserve Bank of Philadelphia, business activities in the Mid-Atlantic region for July came in well above the Street’s expectations. According to the U.S. Department of Labor, initial claims came in at 334,000, above previous week’s figure of 358,000 but below the consensus estimate of 341,000. On a four-week moving average basis, the figure came down 5,250 to 346,000. Additionally, claims numbers were at their lowest level since May.
The Bloomberg Consumer Confidence Index retreated marginally after reaching a five-year high last week. The index came in at -28.4. The barometer measuring economic expectations for July came down to -5 from previous week’s measure of -1. A rise in gasoline prices and a stagnation in wages despite rising inflation dampened investor sentiment. The gauge measuring the buying climate remained unchanged, while the index measuring economic conditions dropped to -55.3 from previous week’s -54.5.
According to the Federal Reserve Bank of Philadelphia, barometer measuring business activities in the Mid-Atlantic region came in at 19.8, well above consensus estimate of 8.5 and previous month’s figure of 12.5. Promising improvements were seen in the shipments index which was 14.3 and number of employees’ index which came in at 7.7.
On the earnings front, shares of banking giant, Morgan Stanley (NYSE:MS) surged 4.4% after it posted earnings that topped the Street’s expectations. Revenues of the company increased to $8.5 billion, compared to $6.9 billion last year. Profits of the company came in at 43 cents share. The investment management and institutional securities businesses have been major revenue drivers for this company.
Shares of leading technology company, Intel Corporation (NASDAQ:INTC) fell 3.8% after posting lower-than-expected revenue. Revenues of the company came in at $12.8 billion while profits came in at $2 billion. However, revenues witnessed a fall of 7.5%. Shares of International Business Machines Corp. (NYSE:IBM) gained 1.8% despite reporting lower results than estimates. Profits of the company plunged 17% to $3.2 billion while revenue fell 3% to $24.9 billion. Lower profits are primarily attributable to a $1 billion restructuring expenses.
Financial stocks gained the most among the top ten S&P 500 industry groups. The Financials SPDR (XLF) gained 1.3%. Stocks such as Goldman Sachs Group Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC) and PNC Financial Services Group Inc. (NYSE:PNC) gained 1.6%, 2.0%, 3.1% and 3.2%, respectively.