Stock Market News for May 13, 2011

With the lack of any major events and the fading out of the earnings season, volatility in commodities has swung the markets over the past few days. On Thursday, a rebound in commodities lifted the benchmarks higher. Moreover, investors chose to negate mixed economic data as crude prices gained strength to pull indices up from the previous day’s loss. 

The Dow Jones Industrial Average (DJIA) increased 0.5% to settle at 12,695.92. The Standard & Poor 500 (S&P 500) also gained 0.5% to finish the day at 1,348.65. The Nasdaq Composite Index ended at 2,863.04 after gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) dropped to roughly 16. On the New York Stock Exchange consolidated volumes were 3.6 billion shares.

Since late last week, commodities have been fluctuating and this phenomenon had subsequently led to volatility in the markets. While last week ended with a sharp decline in commodities, markets opened with strong gains on Monday. Markets witnessed a massive sell off in commodities last week as investors chose to take the exit route, unnerved by volatility. Stocks had to shoulder the consequences and benchmarks inched down by more than 1%.  However, on Monday the markets bucked the trend and such fluctuation carried on through the week.

On Thursday, markets opened with commodities making a slow start, but by the end, crude and gold futures surged higher though silver was left in the red. Light, sweet crude oil for June delivery settled at $98.97 per barrel, gaining 0.8%. Crude prices had reached a high of $100.49 per barrel during intra-day trading. Gold futures reached $1,506.80 an ounce, gaining $5.40 or 0.4%.

Energy shares have also moved in line with crude prices. Meanwhile, executives from major oil companies had to appear before a Senate committee to explain why the industry needs tax breaks at a time when consumers are paying a hefty $4 a gallon for gasoline. Executives from companies like ConocoPhillips (NYSE:COP - Analyst Report), Exxon Mobil Corporation (NYSE:XOM - Analyst Report), BP plc (NYSE:BP - Analyst Report) had to face this committee and these companies’ shares dipped 1.4%, 0.1% and 0.9%, respectively. However, shares of Chevron Corp. (NYSE:CVX - Analyst Report) jumped 0.5%.

On the economic front, the Labor Department reported that initial jobless claims benefits had dropped 44,000 to a seasonally adjusted level of 434,000 last week. This figure is marginally higher than economists’ expectations of unemployment benefits declining to a seasonally adjusted 428,000. However, the figure is not yet strong enough to suggest an improving economy. A figure above 400,000 is considered to be significantly high and is therefore reason for concern. Unemployment concerns draws reference to Federal Reserve Chairman, Ben Bernanke’s statements last month about job data posing a bigger threat than short-lived inflationary pressures. 

Separately, the Commerce Department reported retail sales had posted their smallest improvement in nine months in April.  According to the Commerce Department, retail sales surged only 0.5% last month to $389.4 billion. Economists had expected an increase of 0.6%. However, this rise also marks the tenth consecutive month of increases. Additionally, producer prices gained 0.8% last month versus a 0.7% increase in March.

The consumer discretionary, the SPDR S&P Retail was up 1.6%. Among retail stocks Macy's, Inc. (NYSE:M - Analyst Report), Target Corp. (NYSE:TGT - Analyst Report), Best Buy Co. Inc. (NYSE:BBY - Analyst Report), BJ's Wholesale Club Inc. (NYSE:BJ), Costco Wholesale Corporation (NASDAQ:COST - Analyst Report) and Nike Inc. (NYSE:NKE - Analyst Report) jumped 0.9%, 1.9%, 4.1%, 0.8%, 2.0% and 2.3%, respectively.

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