Stock Market News for May 22, 2012

The Dow and S&P 500 finally snapped their six-day losing streak and the Nasdaq also chalked up gains as investors chose to focus on positive signs from China rather than being bogged down yet again by European concerns. China's Premier Wen Jiabao has prioritized spurring economic growth over curbing inflation. Elsewhere the G8 meeting ended with no clear decisions regarding the prevailing economic situation. Luckily this failed to dent investors’ mood. On the other hand, Facebook continued to lose its sheen for the second consecutive day as it closed in the red zone yesterday.

The Dow Jones Industrial Average (DJI) inched down 1.1% to end at 12,504.48. The Standard & poor 500 (S&P 500) jumped 1.6% and signed off yesterday’s trading session at 1,315.99. The tech-laden Nasdaq Composite Index soared 2.5% and closed at 2,847.21. After rallying higher all through last week, the fear-gauge CBOE Volatility Index (VIX) slumped 12.3% yesterday to settle at 22.01. Consolidated volumes on the New York Stock Exchange, Nasdaq and the American Stock Exchange were roughly 6.77 billion shares, lower than last year's daily average of 7.84 billion.

Yesterday’s gains came after a series of losses for the benchmarks. Investors finally witnessed a positive rally, where each benchmark jumped by over a percent, after the markets ended in the red on every single day last week. Consequently, it was the markets’ worst weekly drop since last November. The Dow registered its first-triple digit gains since April 26th and reversed its six-consecutive days of losses. Only seven of the 30 Dow components ended in the red yesterday and stocks like Alcoa, Inc. (NYSE:AA), The Boeing Company (NYSE:BA), Caterpillar Inc. (NYSE:CAT), E. I. du Pont de Nemours and Company (NYSE:DD), Hewlett-Packard Company (NYSE:HPQ) and United Technologies Corp. (NYSE:UTX) jumped 2.0%, 3.8%, 3.7%, 1.9%, 2.0% and 1.8%, respectively, to let the Dow notch up its third finish in the green this month.

The S&P 500 and Nasdaq also shared the laurels, as the former snapped its six-day losing streak while the Nasdaq rebounded after suffering losses for five-straight days. The S&P 500 has suffered a heavy battering at the hands of European financial woes amidst a mixed bag of economic readings. Since the end of April, the S&P 500 has lost 7.8%. However, things were better yesterday and the S&P 500 had its best day in almost two months. As for Nasdaq, the tech-laden index enjoyed its best one-day percentage gain since December last year.

Movement in the Nasdaq is often guided by its biggest component - Apple Inc. (NASDAQ:AAPL). The iPhone and iPad maker, which is also the largest company in terms of market value, jumped 5.8% yesterday and made a significant contribution in enabling the Nasdaq to outperform the fellow benchmarks. A similar trend was also noticed in the benchmarks’ last quarterly performance, where a significant surge in Apple’s shares boosted Nasdaq that emerged as the biggest winner. Yesterday’s gains in Apple were the largest since April 25, a day after Apple reported its quarterly results.

However, the new Nasdaq component Facebook, Inc.’s (NASDAQ:FB) fortunes on the Street seems to be gloomy for the moment. Last Friday, all the hoopla about its debut on the Street quickly faded, and the company’s shares which gained 10% in the morning, ended with a mere 0.6% gain on its first-day of trading. Its second day of trading was even more disappointing as it crashed by 11% to close at $34.03 a share.

Nonetheless, this hardly affected the broader markets, as investors were buoyed by Chinese Premier Wen Jiabao’s stance on economic growth being more important than curbing inflation. Jiabao said: “We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth”. He could well sense the urgency the economy needs amidst the growing global financial woes and said: "To prevent the economy from slowing down too rapidly is of great urgency". He further added: "No matter the fiscal policy or the monetary policy, we cannot afford to wait and see and miss the right timing… We must implement the policies in a timely manner if we believe they're right". These comments were sufficient encouragement for investors and were clearly reflected in the markets’ uptrend.

However, while the leader of the second-largest economy sparked off hopes, the G-8 meeting failed to create optimism as it provided no clear indication on financial issues. The weekend summit held in Washington and consisting of leaders from U.S., German and Britain, did suggest that leaders would want Greece to stay in the euro, but no concrete plan was announced regarding the same. Therefore, with enough ambiguity among investors, news from the G-8 summit could hardly boost the markets.