Despite better-than-expected initial claims data, benchmarks closed in the red yesterday. The Dow Jones and S&P 500 had reached record levels this week on the back of encouraging international and domestic numbers, but retreated due to lack of any catalysts. Of the top ten S&P 500 industry groups, consumer discretionary stocks gained the most, while utilities were the biggest losers.
The Dow Jones Industrial Average (DJI) decreased 0.2% to close the day at 15,082.62. The S&P 500 lost 0.4% to finish yesterday’s trading session at 1,626.67. The tech-laden Nasdaq Composite Index declined 0.1% to end at 3,409.17. The fear-gauge CBOE Volatility Index (VIX) surged 3.7% to settle at 13.13. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.4 billion shares, marginally above 2013’s average of 6.36 billion shares. Declining stocks outnumbered the advancers. For the 34% that advanced, 62% declined.
The Dow and the S&P 500 retreated from their record levels in the absence of catalysts which could push up the markets further. During yesterday’s trading session, both the Dow and the S&P 500 had reached intra-day highs but fell lower as investors booked their profits. During the first quarter of 2013, robust corporate earnings played the role of a catalyst which guided benchmarks to record highs. This quarter, unlike the first quarter, weak volumes dominated the rally.
According to the U.S. Department of Labor, initial claims came in at 323,000 compared to previous week’s figure of 327,000 and the consensus estimate of 346,000. Owing to encouraging initial claims data, the average of the last month, for the first time, has reduced to a pre-recession level and is also the lowest recorded figures in the past five and a half years. The 4-week moving average came in at 336,750, lower than previous week’s revised average of 343,000.
The Bloomberg Consumer Comfort Index decreased to -29.5 from previous week’s figure of -28.9. This index has been primarily dominated by stock market movements and the housing sector. However, two out of three indices which act as a barometer for the consumer comfort index contracted. The index measuring the economic condition came in at -57.8, down from previous week’s index of -57.2 while index related to personal finance contracted to 0.8 from previous week’s level of 3.0. However, the index measuring buying conditions improved to -31.5 compared to previous week’s figure of -32.5.
On the earnings front, shares of News Corp (NASDAQ:NWSA) surged 4.5% after it posted fiscal third quarter earnings better than the Street’s estimates. Revenues increased 14% while earnings came in at $1.22 a share, compared to $0.38 a share in the previous year. Strong growth in the cable business offset weakness in the publishing segment, contributing to the company’s profits. Acquisition of a stake in Sky Deutschland and sale of a stake in SKY Network Television in New Zealand also contributed to the business. Financials of the company were benefitted by these transactions to the extent of $2.8 billion, however, were adversely affected by charges related to the phone-hacking scandal to the extent of $56 million.
Of the top ten S&P 500 industry groups, consumer discretionary stocks gained the most. The Consumer Discretionary SPDR (NYSE: XLY) gained 0.1%. Stocks such as the Walt Disney Company (NYSE:DIS), Viacom, Inc. (NASDAQ:VIAB), Netflix, Inc. (NASDAQ:NFLX) and the Home Depot, Inc. (NYSE:HD) gained 1.0%, 0.1%, 3.7% and 0.6%, respectively.
Utilities stocks were the biggest losers. The Utilities SPDR (XLU) lost 1.5%. Stocks such as Duke Energy Corp (NYSE:DUK), Dominion Resources, Inc. (NYSE:D), Xcel Energy Inc. (NYSE:XEL), American Electric Power Company, Inc. (NYSE:AEP) and PPL Corporation (NYSE:PPL) lost 1.2%, 1.7%, 2.0%, 2.6% and 0.6%, respectively.