This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
Major indices finished in the green as the majority of investors were of the view that the Federal Reserve will keep buying bonds. Such sentiments eclipsed apprehensions about the health of economy and China’s housing market. The Dow Jones is less than 50 points away from the record close achieved on October 9, 2007. Utilities stocks were the biggest gainer among the S&P 500 industry groups whereas the energy sector had a bad day.
The Dow Jones Industrial Average (DJI) gained 0.3% to close the day at 14,127.82. The S&P 500 increased 0.5% to finish yesterday’s trading session at 1,525.20. The tech-laden Nasdaq Composite Index rose 0.4% to end at 3,182.03. The fear-gauge CBOE Volatility Index (VIX) dropped almost 8.8% to settle at 14.01. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.01 billion shares, below the daily average of 6.48 billion shares. Advancing stocks outnumbered the declining stocks. For the 52% that advanced, 44% declined.
Investor concerns about China’s housing market pushed benchmarks lower at the start of the session and remained in the red for most of the morning. But benchmarks rebounded from early losses and finished the day on a positive note. The blue-chip index finished yesterday’s trading session on a high and is less than 50 points behind its record close of 14,164.
Meanwhile, the China State Council stated new rules for the housing sector aimed at greater control over home prices. According to the new rules, individuals selling their homes will have to pay income tax of 20% of the income made on the deal. Earlier, homeowners had to pay income tax in the range of 1% to 2% on the selling price. The State Council also said: “For cities that are seeing overheating in their housing prices, the local branches of the central bank will need to raise the down payment and mortgage rates for second home buyers according to the respective local governments' housing price targets and policy needs.”
On the international front, the Street had more discouraging news from China. The Purchasing Managers Index of the non-manufacturing sector came in at 54.5 in February from 56.2 in the month ago period. The index has declined for the first time since October. This news came in after the official Purchasing Managers' index survey which was released in the previous week stated the manufacturing index had decreased to 50.1 from 50.4 in January.
Stocks have rallied this year following better-than-expected earnings and the Federal Reserve’s continuous support to the economy through its bond buying program. In recent days, Chairman of the Federal Reserve Ben Bernanke’s encouraging comments about the bond buying program overshadowed spending cuts which have taken effect from March 1. Democrats and Republicans have failed to reach common ground on the issue. As a result, the government has decided to implement budget cuts of $1.2 trillion over nine years and $85 billion over a seven month period in this fiscal year. The Congressional Budget Office has forecasted that the budget cuts which were implemented will reduce growth of the economy by 0.6% this year.
The energy sector had a bad day yesterday and the Energy Select Sector SPDR (XLE) lost 0.2%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Suncor Energy Inc. (NYSE:SU), Marathon Oil Corporation (NYSE:MRO), Occidental Petroleum Corporation (NYSE:OXY) and Questar Corporation (NYSE:STR) declined 0.5%, 0.9%, 1.6%, 1.2% and 1.1%, respectively.
The utilities sector was the biggest gainer among the S&P 500 industry groups and the Utilities SPDR (XLU) gained 1.0%. Stocks such as Duke Energy Corp (NYSE:DUK), The Southern Company (NYSE:SO), NextEra Energy, Inc. (NYSE:NEE), Public Service Enterprise Group Inc. (NYSE:PEG) and NRG Energy Inc (NYSE:NRG) added 0.7%, 0.5%, 1.7%, 1.1% and 0.5%, respectively.