Benchmarks finished mixed on Friday over concerns on whether or not the monthly bond purchase program will continue at prevailing pace. Encouraging domestic data failed to boost investor sentiment. Meanwhile, Germany revised its growth forecast for the upcoming quarter. Of the top ten S&P 500 industry groups, consumer staples stocks gained the most. Utilities stocks suffered maximum losses.
The Dow Jones Industrial Average (DJI) gained 0.1% to close the day at 15,303.10. The S&P 500 decreased 0.1% to finish Friday’s trading session at 1,649.60. The tech-laden Nasdaq Composite Index slipped 0.27 points to end at 3,459.14. The fear-gauge CBOE Volatility Index (VIX) declined 0.6% to settle at 13.99. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.2 billion shares, well below 2013’s average of 6.36 billion shares. Declining stocks outnumbered the advancers. For the 40% that advanced, 56% declined.
Investor concerns over continuation of monetary stimulus prevented benchmarks from posting gains for the fourth consecutive week. Yesterday, the S&P 500 and the Nasdaq ended in the red but the Dow finished marginally in the green, powered by the Procter & Gamble Company (NYSE:PG). Corporate restructuring fuelled investor optimism towards the company.
Last week, major indices were dominated by comments by officials of the Federal Reserve and Bernanke’s testimony at Capitol Hill. However, there was no clarity on whether or not the monetary stimulus will end. But one thing is clear, if hiring numbers keep improving and encouraging domestic figures are reported, monetary stimulus will be decreased or even tapered sooner than expected. Benchmarks have risen more than 16% on the back of monetary stimulus since the start of 2013.
According to the U.S. Department of Commerce, new orders for durable goods for April increased 3.3% above the consensus estimate of 1.3% and a decline of 5.9% in March. New orders for transportation increased 8.1% while shipments decreased 0.6%. New orders fors inventories and capital goods increased 0.4% and 3.3%, respectively. Unfilled orders also increased 0.3% compared to a decrease of 0.5% in March. The numbers of new orders seem impressive in light of weak manufacturing and factory orders released on a domestic leve, as well as on an international level.
According to data released by Germany's DIHK Chambers of Commerce, the country’s Gross Domestic Product (GDP) forecast has been revised from 0.7% to 0.3% in the second quarter. This decline in the forecast is attributable to low expectations on the exports front. In the first quarter, Germany managed to post a GDP growth rate of 0.1% on the back of strong private consumption. According to a recent report released by the finance ministry sales tax has declined by 7.3%, indicating a weak private consumption in the second quarter. This shows GDP in the second quarter, unlike the first, will not be dominated by the private consumption data.
The German economy has been resilient considering the headwinds faced by the Euro Zone. The economy posted a marginal GDP growth of 0.1%. Automobile sales increased for the first time in 19 months. Private consumption added 0.4% while foreign trade added 0.1%.
Of the top ten S&P 500 industry groups, consumer staples stocks gained the most. Consumer Staples Select Sect. SPDR (XLP) gained 0.9%. Stocks such as the Procter & Gamble Company (NYSE:PG), the Coca-Cola Company (NYSE:KO), Wal-Mart Stores, Inc. (NYSE:WMT), CVS Caremark Corporation (NYSE:CVS) and PepsiCo, Inc. (NYSE:PEP) gained 4.0%, 0.7%, 1.3%, 1.5% and 0.6%, respectively.
Utilities stocks suffered maximum losses. The Utilities SPDR (XLU) lost 1.1%. Stocks such as Duke Energy Corp. (NYSE:DUK), the Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), NextEra Energy, Inc. (NYSE:NEE) and TECO Energy, Inc. (NYSE:TE) lost 1.3%, 0.7%, 2.3%, 1.2% and 0.8%, respectively.