Lawmakers’ in Washington made progress towards ending the partial government shutdown and increasing the government’s borrowing limits, lifting benchmarks higher. Thursday’s big rally and Friday’s modest gains helped the Dow and the S&P 500 to finish in the green. However, the Nasdaq posted a weekly loss, ending its five consecutive weeks of gains. Meanwhile, consumer sentiment fell to its lowest level in nine months. On the earnings front, two major banks reported quarterly results. All ten sectors of the S&P 500 industry groups finished in the green, led by energy and consumer discretionary stocks.
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The Dow Jones Industrial Average (DJI) gained 0.7% to close the day at 15,237.11. The S&P 500 rose 0.6% to finish Friday’s trading session at 1,703.19. The tech-laden Nasdaq Composite Index climbed 0.8% to end at 3,791.87. The fear-gauge CBOE Volatility Index (VIX) declined 4.6% to settle at 15.72. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 4.8 billion shares, lower than 2013’s average of 6.0 billion shares. Advancing stocks outnumbered the decliners. For 71% shares that advanced, only 21% declined.
The Dow gained 1.1%, the S&P 500 added 0.8% and the Nasdaq declined 0.4%, over the week. Volatility has increased significantly in the last couple of weeks. At the beginning of the week, benchmarks declined due to concerns over the partial government shutdown and the approaching debt ceiling deadline. But lawmakers showed some progress on Thursday and Friday, lifting the markets sentiment higher. In the coming days, the movement of benchmarks will mostly depend on developments in Washington.
Lawmakers have little time on their hands to negotiate on the debt ceiling issue as the nation will default if the debt limit is not increased to $16.7 trillion by October 17. According to a report from AP, House Republicans were ready to make a fresh deal, ending the partial government shutdown and increasing the government’s borrowing limits in exchange for spending cuts.
On the earnings front, banking major JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) reported quarterly results. JPMorgan reported a rare quarterly loss attributable to $9.2 billion in legal expenses. However, the company still topped the Street’s estimates. On the other hand, Wells Fargo’s third-quarter profits jumped 13% as a fall in revenue from mortgage lending was overshadowed by reduced expenses and a lower number of bad loans. Share of both the companies ended almost flat.
On the home front, the Thomson Reuters/University of Michigan reported consumer sentiment numbers. The preliminary consumer sentiment index fell to 75.2 in September from previous month’s final reading of 77.5. This was marginally below the consensus estimate of 75.6. The consumer sentiment touched a nine-month low due to investor concerns about the partial government shutdown and the approaching debt ceiling deadline.
The energy sector was the biggest gainer among the S&P 500 industry groups and the Energy Select Sector SPDR (XLE) gained 1.2%. Stocks such as Chevron Corporation (NYSE:CVX), Devon Energy Corp (NYSE:DVN), Exxon Mobil Corporation (NYSE:XOM), EOG Resources Inc (NYSE:EOG) and Apache
Corporation (NYSE:APA) added 1.1%, 0.9%, 1.1%, 2.4% and 0.4%, respectively.
The consumer discretionary sector also had a good day and the Consumer Discretionary SPDR (XLY) gained
0.9%. Stocks such as Amazon.com, Inc. (NASDAQ:AMZN), Comcast Corporation (NASDAQ:CMCSA), The
Home Depot, Inc. (NYSE:HD), The Walt Disney Company (NYSE:DIS) and McDonald's Corporation
(NYSE:MCD) increased 1.9%, 1.6%, 1.1%, 1.0% and 0.3%, respectively.