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On a day devoid of major economic events, tepid housing data could do little to bolster the markets and benchmarks ended the day just slightly higher. It was yet another choppy trading session for the benchmarks, which started on a low note and recovered after Apple announced a dividend payout and share buyback. By the closing bell, benchmarks had lost some ground and dropped from the day’s highs.
The Dow Jones Industrial Average (DJI) edged up 0.05% and closed the day at 13,239.13. The Standard & Poor 500 (S&P 500) closed yesterday’s trading session 0.4% higher at 1,409.75. The tech-laden Nasdaq Composite Index jumped 0.8% and settled at 3,078.32. The fear-gauge CBOE Volatility Index (VIX) gained 3.9% to close at 15.04. Consolidated volumes on the New York Stock Exchange, the Nasdaq and Amex were 6.5 billion shares, modestly lower than the year’s daily average of 6.9 billion shares. On the NYSE, for nine stocks that advanced, five stocks traded lower.
Investors have been buoyed by robust economic data since late December. The labor and housing sectors have largely shown an uptrend, strengthening investors’ belief in an improving economy. These reports have also buoyed the markets and the Dow, S&P 500 and Nasdaq are trading 8.4%, 12.1% and 18.2% higher for the year so far.
Even last week, the benchmarks enjoyed a robust rally where encouraging labor data had a role to play. However, on the first day of this week, the housing data that came in was quite tepid. National Association of Home Builders/ /Wells Fargo Housing Market index of homebuilder sentiment remained flat in March at 28. The index had moved up during the previous five months and is currently at its highest level since June 2007. Additionally, the reading for the month of February was revised down to 28 from 29. Barry Rutenberg, chairman of the NAHB, said: "While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving”.
The report did not have a huge impact on the investors’ sentiment and the Homebuilder SPDR Series Trust SPDR (XHB) moved up by a mere 0.1%. Among the stocks, M.D.C. Holdings, Inc. (NYSE:MDC) gained 1.8%, while PulteGroup, Inc. (NYSE:PHM), Lennar Corporation (NYSE:LEN), Home Depot, Inc. (NYSE:HD) and Toll Brothers Inc. (NYSE:TOL) dropped 1.4%, 0.1%, 0.5% and 1.2%, respectively.
Nasdaq outperformed the other benchmarks yesterday in terms of percentage gains. The tech-laden index’s performance can be attributed to the 2.7% jump in shares of Apple Inc. (NASDAQ:AAPL). Apple finished over $600 a share for the first time in its history, and the uptrend was a direct result of its announcement which bolstered shareholders’ value. Apple announced a quarterly dividend of $2.65 per share, to be paid in the fourth quarter. Additionally, the company announced a three-year share buyback plan worth $10 billion, which will begin in fiscal 2013.
Apple sparked off the rally in Nasdaq and the tech-laden index ended at its highest levels since November 15, 2000. Separately, despite the small gains, the S&P 500 had its best closing since May 2008. Additionally, the S&P 500 is 10% short of its best closing level ever. In October 2007, S&P 500 had scaled to 1,565.15, recording its best-ever closing level, and the index is precisely 155.4 points short of the record high.
Coming to the S&P 500, the technology sector was one of the leading gainers among its 10 industry groups along with the financial sector. The Financial SPDR Select Sector Fund (XLF) gained 0.5% and stocks including The Goldman Sachs Group, Inc. (NYSE:GS), JP Morgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), American Express (NYSE:AXP) and Wells Fargo & Company (NYSE:WFC) gained 1.1%, 1.0%, 2.7%, 1.3% and 1.1%, respectively.
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