On Friday, markets overcame fears of any near-term slide in the wake of global issues to end higher as materials and energy helped the indices post gains. The mass destruction caused by the earthquake and tsunami in the third largest economy of the world, Japan, failed to unnerve US markets. Protests in Saudi Arabia also fizzled out letting investors share a cheerful mood.
The Dow Jones Industrial Average (DJIA) closed at 12,044.40 and gained 0.5% for the day. The Standard & Poor 500 gained 0.7% and the Nasdaq Composite Index was up 0.5% to close at 1,304.28 and 2,715.61, respectively. However, earlier losses in the week limited the markets from ending higher for the week as the Dow inched down 1%, S&P 500 shed 1.3% and Nasdaq lost 2.5%. On Friday, combined volumes on the New York Stock Exchange, Nasdaq and AMEX was at roughly 7.13 billion shares, below last year's daily average of 8.47 billion. The CBOE Volatility Index (VIX) fell over 6% to end slightly lower than 20.
Japan, the third largest economy of the world was hit by an earthquake recorded at 8.9 on the Richter scale. Additionally, a 30-foot tsunami engulfed parts of northern Japan, leading the Prime Minister to declare this as “the biggest crisis Japan has encountered in the 65 years since the end of World War II. The worsening situation at the nuclear power plant in Fukushima has led to concerns that a further disaster might derail the country’s economic recovery. However, these tremors left US markets unshaken even though images of the destruction caused some jitters among investors during the early session.
Traders were of the opinion that the act of rebuilding will provide a boost to economically sensitive companies. Industry shares, heavy infrastructure companies and the materials sectors are likely to benefit in the process. AK Steel Holding Corporation (NYSE:AKS), Fluor Corporation (NYSE:FLR), Titanium Metals Corporation (NYSE:TIE) and United States Steel Corp. (NYSE:X) gained 5.8%, 4.2%, 4.3% and 4.5%, respectively. Nonetheless, Japanese shares traded on the NYSE fell sharply including iShares MSCI Japan Index (NYSE:EWJ), Honda Motor Co., Ltd. (NYSE:HMC), Toyota Motor Corp. and Sony Corporation which shed 1.7%, 2.4%, 2.1% and 2.4%, respectively.
The energy sector also benefited as analysts opined that the current nuclear crisis in Japan will create opportunities for many companies from the sector. As nuclear plants start to shut down, coal, Liquefied Natural Gas (LNG), fuel oil and crude will have to fill up the resulting gap. Major energy indexes moved higher including NYSE Arca Natural Gas Index, NYSE Arca Oil Index and Philadelphia Oil Service Index. Energy shares that rose included Tesoro Corporation (NYSE:TSO), Valero Energy Corp. (NYSE:VLO), Exxon Mobil Corp. (NYSE:XOM), Alcoa, Inc. (NYSE:AA) and Chevron Corp. (NYSE:CVX), which gained 8.5%, 6.3%, 0.9%, 1.5% and 0.9%.
Friday was also observed as the “Day of Rage in Saudi Arabia by protestors and thousands signed up on a social networking site in support. The crisis in the country had earlier intensified when on Thursday police opened fire on protesters. However, investors were relieved to see a peaceful situation as the hundreds of protesters that gathered on the streets of al-Hofuf and Awamiya in Saudi Arabia appeared orderly and helped not to stir any further unrest. This also helped ease concerns about another spike in crude prices and U.S. light sweet crude price dipped lower to close at slightly over $101 per barrel.
On the domestic front, a survey released by Thomson Reuters and the University of Michigan showed US consumer sentiment has declined at the fastest rate since October 2008. The consumer sentiment index fell to 68.2 in March from 77.5 last month and was at a five month low. Consumer expectations leapt to 58.3 this month from 71.6 in February. In other news, the Commerce Department reported retail sales had increased 1% in February, up from 0.7% in January 2011. This also marked the eighth consecutive month of gains and the biggest jump in four months. Compared with February 2010, the seasonally adjusted sales figure of $387.1 billion, posted an increase of 8.9%. The Commerce Department also reported a surge of 0.9% in business inventories and business sales went up 2% in January.
The technology sector was led higher by National Semiconductor Corporation (NYSE:NSM) and other chip-manufacturers. NSM reported in-line results and its shares gained 3.8% to close at $14.70. Other gainers include Xilinx Inc., Micron Technology Inc. (NASDAQ:MU), LSI Corporation (NYSE:LSI) and Texas Instruments Inc. (NYSE:TXN). Shares of Apple Inc. (NASDAQ:AAPL) jumped 1.5% after its recently launched iPad 2 went on sale.