Encouraging factory orders and impressive car sales growth pushed benchmarks higher initially on Tuesday. However, indices closed in negative territory later in the day as investors turned skeptical because of increasing political turmoil in Egypt. Meanwhile, investors are expecting a run-of-the-mill jobs report this week. Among the top ten S&P 500 industry groups, energy stocks were the biggest gainers. Industrial stocks suffered the most.
For a look at the issues facing today's markets, read our Ahead of Wall Street for July 3 article.
The Dow Jones Industrial Average (DJI) lost 0.3% to close the day at 14,932.41. The S&P 500 dropped 0.1% to finish yesterday’s trading session at 1,614.08. The tech-laden Nasdaq Composite Index declined 1.1 points to end at 3,433.40. The fear-gauge CBOE Volatility Index (VIX) increased 0.4% to settle at 16.44. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.1 billion shares, lower than 2013’s average of 6.4 billion shares. Declining stocks outnumbered the advancers. For the 60% that declined, 38% advanced.
Investor attention is now focused on employment numbers due for release on Friday. Job numbers will probably decide the direction of market trajectory going forward. Economists predict job numbers will come in around 155,000 and unemployment will fall to 7.5% from 7.6%. This report is very important in light of the volatility the market has experienced last month. The S&P 500 index is still 3% below its all-time high attained on May 21. The index is still 0.5% below the level it attained on June 22, when Bernanke said the bond buying program could be slowed by the end of 2013 and ended completely by mid-2014.
Benchmarks continued posting gains on the second day of the third quarter but closed in the red following investors concerns over raging political turmoil in Egypt. Positive car sales and encouraging factory orders acted as a catalyst during the early trading session. According to the U.S. Department of Commerce, factory orders increased 2.1%, above the consensus estimate of 2.0% and previous month’s figure of 1.3%. Shipments and unfilled orders increased 1.0% and 0.8%, respectively.
Another factor which fuelled investor sentiment was robust car sales figures. Companies like General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) have exceeded Street’s expectations in terms of sales. Chrysler group’s figures were in line with sales estimates. According to economists, yearly sales are expected to come in at 15.4 million. Sales for General Motors, Ford and Chrysler increased by 6%, 13% and 8%, respectively. Toyota experienced the highest growth numbers among all carmakers, of 14%. Gains from these figures, however, soon evaporated after investors grew skeptical over the political situation in Egypt.
Shares of Constellation Brands, Inc. (NYSE:STZ) declined nearly 3.6% after its sales and earnings missed the Street’s estimates. High restructuring costs are responsible for the low earnings of the company. The earnings of the company dropped 27%.
Among the top ten S&P 500 industry groups energy stocks were the biggest gainer. The Energy Select Sector SPDR (XLE) gained 0.3%. Companies such as Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Hess Corp. (NYSE:HES), Suncor Energy Inc. (USA) (NYSE:SU) and ConocoPhillips (NYSE:COP) gained 0.1%, 0.4%, 0.8%, 0.2% and 0.9%, respectively.
Shares of Industrial stocks suffered the most. Shares of Industrial Select Sector SPDR (XLI) lost 1.1%. Shares of General Electric Company (NYSE:GE), United Technologies Corporation (NYSE:UTX), Thermo Fisher Scientific Inc. (NYSE:TMO), 3M Co (NYSE:MMM) and Honeywell International Inc. (NYSE:HON) lost 1.9%, 1.0%, 1.6%, 0.5% and 3.0%, respectively.