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Major indices finished mixed following better-than-expected retail sales data and discouraging economic reports from China. Investors are also concerned that, in light of encouraging economic data, the Federal Reserve might withdraw the monetary stimulus implemented since 2008. Of the top ten S&P 500 industry groups, health care stocks were the biggest gainers while materials stocks lost the most.

The Dow Jones Industrial Average (DJI) lost 0.2% to close the day at 15,091.68. The S&P 500 gained 0.07 points to finish yesterday’s trading session at 1,633.77. The tech-laden Nasdaq Composite Index rose 0.1% to end at 3,438.79. The fear-gauge CBOE Volatility Index (VIX) decreased 0.3% to settle at 12.55. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.3 billion shares, well below 2013’s average of 6.36 billion shares. Declining stocks outnumbered the advancers. For the 37% that advanced, 59% declined.

According to the U.S. Department of Commerce, retail sales for the month of April increased to 0.1% compared to the consensus estimate of a decline of 0.3%. This was also better than the previous month’s decline of 0.5%. Retail sales grew unexpectedly on the back of robust car sales and expenditure incurred on building supplies. Car sales, without which retail sales would have declined by 0.1%, grew 1.0% in April. While expenditure on gardening materials and building materials grew 4.7%, growth in departmental store sales increased 0.3%. Sales at grocery stores decreased 1.2% while at gasoline stations by 4.7%.

According to another report released by the U.S. Department of Commerce, manufacturers’ and trade inventories in March remained flat on a sequential basis. This data came in below the consensus estimate of 0.3%. However, on a year over year basis it grew 4.5%. The inventory/sales ratio increased to 1.29 from March 2012’s figure of 1.26.

According to a Wall Street Journal report released over the weekend, the Federal Reserve is looking to create an “exit strategy” for its monetary stimulus program. Since 2008, the Federal Reserve has been purchasing $85 billion worth of treasuries and mortgage-backed-securities every month to boost the economy. Now that the unemployment level is the same as it was in the pre-recessionary period and important economic indicators have remained positive over past two quarters, the Fed is considering discontinuing or changing the pace of its monetary stimulus.

No specific timeline has been provided by the Fed for these changes. However, last month the Central bank did declare its willingness to "increase or reduce the pace" of monetary stimulus. The increase or decrease of the stimulus will depend on unemployment and the inflation numbers, released from time to time. Currently, officials are deciding on their future course of action. This is to ensure that panic does not dominate the markets while withdrawing or changing the pace of stimulus.

On the international front, China released a bunch of discouraging economic reports. Industrial output increased 9.3% year over year, higher than previous month’s figure of 8.9%, but lower than the expected figure of 9.5%. Factory orders for the world’s second largest economy dropped in April. Decrease in new export orders is largely responsible for the contraction.

A sub-index which measures new export orders contracted to 48.4. This is the first time since October 2012 that the index has fallen below 50. Non-rural fixed asset investment from January to April period came in at 20.6%, compared to estimates of 21% and also below January to March’s figure of 20.9%. A string of discouraging numbers recently reported by China has reinforced fears of a global slowdown in the minds of investors.

On the earnings front, shares of Perion Network Ltd (NASDAQ:PERI) surged 10.6% after its earnings comfortably surpassed the Street’s expectations. The company reported earnings of $0.22 a share, higher than the $0.04 cents a share reported in the previous year. Strong earnings of the company are attributable to its new Incredimail unified messaging application for Apple Inc.'s iPad.

Of the top ten S&P 500 industry groups, health care stocks gained the most. The Health Care SPDR (XLV) gained 0.8%. Stocks such Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Merck & Co., Inc. (NYSE:MRK), Gilead Sciences, Inc. (NASDAQ:GILD) and Amgen, Inc. (NASDAQ:AMGN) increased 0.1%, 2.3%, 0.5%, 3.0% and 0.2%, respectively.

Materials stocks were the biggest losers. The Materials Select Sector SPDR (XLB) lost 0.7%. Stocks such as Monsanto Company (NYSE:MON), E I Du Pont De Nemours And Co. (NYSE:DD), FMC Corp. (NYSE:FMC), the Dow Chemical Company (NYSE:DOW) and Praxair, Inc. (NYSE:PX) lost 1.2%, 1.0%, 2.0%, 0.3% and 0.8%, respectively.

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