Robust results from a technology company along with a bunch of encouraging domestic reports helped benchmarks recover from yesterday’s lows. Even so, indices ended marginally in the red. Meanwhile, a flash reading of Euro Zone’s Purchasing Managers’ sentiment indicated a marginal improvement. Of the top ten S&P 500 industry groups, materials stocks gained the most while the utilities sector suffered maximum losses.
The Dow Jones Industrial Average (DJI) lost 0.1% to close the day at 15,294.50. The S&P 500 decreased 0.3% to finish yesterday’s trading session at 1,650.51. The tech-laden Nasdaq Composite Index slipped 0.1% to end at 3,459.42. The fear-gauge CBOE Volatility Index (VIX) gained 1.8% to settle at 14.01. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 7 billion shares, well above 2013’s average of 6.36 billion shares. Declining stocks outnumbered the advancers. For the 39% that advanced, 58% declined.
Yesterday’s market witnessed a volatile session as investors turned skeptical over global economic growth and whether the bond purchase program would continue. China’s weaker-than-expected Purchase Managers’ Index, released yesterday, and Federal Reserve’s comments on ending or slowing monetary stimulus gave rise to fresh concerns. However, a couple of encouraging domestic reports offset fears to some extent. Initial claims data, new home sales data and the Bloomberg Consumer Index came in above the consensus estimates.
According to the U.S. Department of Labor, initial claims decreased by 23,000 to 340,000 compared to the consensus estimate of 346,000 and previous week’s figure of 363,000. The 4-week moving average also decreased to 339,500 lower than last week’s 4-week moving average of 340,000. Meanwhile, according to the U.S. Department of Housing and Urban Development, sales of new-single family houses for April improved 2.3% to 454,000. This figure is above previous week’s figure of 444,000 and consensus estimate of 424,000. On a year over year basis, the increase of new home sales came in at 29%.
The weekly Bloomberg Consumer Comfort Index improved to -29.4, for May 19, compared to previous week’s reading of -30.2. The index has improved on the back of ascending stock prices and an increase in property values. The barometer measuring personal finances has improved for six weeks in a row, a feat last accomplished more than the five years ago. The barometer for U.S. opinion on current economic conditions improved to -55 from previous week’s -57.9. The index measuring buying conditions improved marginally to -34.4 from -34.6.
On the international front, a flash reading of Euro Zone’s purchasing managers’ sentiment came in below the 50.0 mark. The index increased marginally to 47.7 from previous month’s reading of 46.9. The figure has decreased for the 16th month in a row. Germany has managed to post positive GDP growth this quarter but France and other major economies of the Euro Zone are still in recession. The European Central Bank has cut interest rates to 0.5% hoping to revive the economy. But the interest-rate deduction seems to have no effect on the economy. In light of discouraging domestic reports this quarter, there are high chances that the Euro Zone’s GDP might contract in the second quarter of 2013.
On the earnings front, shares of technology major Hewlett-Packard Company (NYSE:HPQ) surged 17.1%, reaching a 52-week high on the back of better-than-expected quarterly results. Investors were encouraged after the company improved its 2013 earnings outlook.
Of the top ten S&P 500 industry groups, materials stocks gained the most. The Materials Select Sector SPDR (XLB) gained 0.1%. Stocks such as Monsanto Company (NYSE:MON), FMC Corp (NYSE:FMC), Praxair, Inc. (NYSE:PX), International Paper Company (NYSE:IP) and Mosaic Co. (NYSE:MOS) gained 0.9%, 1.0%, 0.1%, 1.5% and 1.2%, respectively.
Utilities stocks suffered maximum losses. The Utilities SPDR (XLU) lost 0.7%. Stocks such as Duke Energy Corp. (NYSE:DUK), the Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), NextEra Energy, Inc. (NYSE:NEE) and Sempra Energy (NYSE:SRE) lost 0.6%, 0.5%, 0.5%, 1.2% and 2.7%, respectively.