Benchmarks finished mixed on Wednesday after the Fed Minutes failed to boost investor sentiment. Below-than-expected economic data from Japan once again called into question Prime Minister Shinzo Abe’s policies. Meanwhile, China said trade data may be disappointing. These comments come on the heels of below-than-expected export and import figures for June. Of the top ten S&P 500 industry groups, health care stocks gained the most. Energy stocks were the biggest losers.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 0.1% to close the day at 15,291.66. The S&P 500 increased marginally to finish yesterday’s trading session at 1,652.62. The tech-laden Nasdaq Composite Index rose 0.5% to end at 3,520.76. The fear-gauge CBOE Volatility Index (VIX) declined 1.0% to settle at 14.21. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.7 billion shares, lower than 2013’s average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 52% that advanced, only 45% declined.
Benchmarks rose for a brief period after the Fed Minutes were released. However, gains were trimmed as soon as investors realized the Fed Minutes was similar to statements issued by Bernanke as well as many Fed officials last month. According to the Fed Minutes, a majority of the twelve Fed officials supported the need for further signs of improvement in the employment scenario before bond purchases are tapered off. Benchmarks were rattled post Bernanke’s testimony in May. However, benchmarks gained ground to a major extent following strong economic numbers. The S&P 500 has gained 2% in the past five trading sessions and is just shy of its all-time high.
Meanwhile, disappointing economic numbers may call into question strategies deployed by Prime Minister Shinzo Abe to fight deflation. “Abenomics” was created with the sole intention of ending the deflation which Japan has been facing since past 15 years. Household sentiment which constitutes income, livelihood, spending capacity and jobs, dropped 1.4 points to 44.3. The barometer measuring income growth contracted 0.6 points to 41.6. In its early days, “Abenomics” did lead to indications of an economic revival. However, the economy hasn’t witnessed any growth in wages yet.
China has cautioned that trade figures may be disappointing. The statement follows posted weak export and import figures for the month of June. Exports for the month dropped 3.1% well below the estimate of an increase of 4%. Export figures have dropped for the first time in more than a year. Exports to the U.S dropped 5.4% while those to the European Union contracted 8.3%. Imports of the country declined 0.7% compared to the estimates of an increase of 8%. Trade surplus, however, came in at $27.1 billion, marginally above the estimates of $27 billion.
Health care stocks gained the most among the top ten S&P 500 industry groups. The Health Care SPDR (XLV) gained 0.7%. Stocks such as Johnson & Johnson (NYSE:JNJ), Masimo Corporation (NASDAQ:MASI), Medtronic, Inc. (NYSE:MDT), Stryker Corporation (NYSE:SYK) and Varian Medical Systems, Inc. (NYSE:VAR) gained 0.4%, 1.1%, 0.2%, 0.4% and 1.0%, respectively.
Energy stocks were the biggest losers. The Energy Select Sector SPDR (XLE) lost 0.6%. Stocks such as Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Marathon Petroleum Corp (NYSE:MPC), Occidental Petroleum Corporation (NYSE:OXY) and Devon Energy Corp (NYSE:DVN) declined 0.3%, 0.6%, 2.6%, 0.7% and 0.6%, respectively.