Benchmarks ended mixed on the final trading day of the month as the Federal Reserve’s two-day FOMC meet had little to suggest about any changes in the pace of the bond purchase program. Nonetheless, the month-long bullish momentum helped the Dow and S&P 500 to log their best month since January 2013. A number of domestic reports were released yesterday. Gross domestic product advance estimate for the second quarter came in better than expected. Meanwhile, a job report showed that hiring in the private sector increased in July. The utilities sector was the biggest loser among the S&P 500 industry groups. The consumer discretionary stocks were the best performers.
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) lost 0.1% to close the day at 15,499.54. After an all-day volatile run, the S&P 500 slipped 0.01% to finish yesterday’s trading session at 1,685.73. The tech-laden Nasdaq Composite Index gained 0.3% to end at 3,626.37. The fear-gauge CBOE Volatility Index (VIX) rose 0.5% to settle at 13.45. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 7.0 billion shares, higher than 2013’s average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 51% that advanced, 46% declined.
Markets began yesterday’s trading session on a positive note propelled by couple of encouraging domestic reports. However, markets erased those early gains after the central bank stated in the afternoon that it would continue with its bond purchase program. The comments, made after the two-day Federal Open Market Committee (FOMC) meeting, noted that “economic growth will pick up from its recent pace”. However, what affected the mood was that Fed did not have anything new to share, rather investors were kept waiting for more clues. Also, the Fed showed concerns over the rising mortgage rates and the inflation rate falling short of expectations. They further said economy is expanding at a “modest” rate, a downgrade from its prior statement issued in June.
The FOMC statement said: “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term”.
The U.S Department of Commerce reported a 1.7% annual increase in the real GDP in the second quarter, in line with the consensus estimate of 1.7%. GDP growth for the first quarter was revised down to 1.1% from the previous estimate of 1.8%. Positive contributions from personal consumption expenditures, exports, nonresidential fixed investment, private inventory investment, and residential investment drove the second-quarter GDP higher. However, these positives were somewhat offset by negative contribution from federal government spending.
As for the jobs data, Automatic Data Processing (NASDAQ:ADP) noted that hiring in the private sector increased at a faster pace than the economists expected. The report revealed that the private sector added 200,000 jobs in July. Small business added 82,000 jobs, whereas medium and large business added 60,000 and 57,000 more jobs, respectively. Investors will now fix their eyes on the key government jobs data, which is scheduled to be released on Friday.
On the earnings front, Comcast Corporation (NASDAQ:CMCSA) reported better-than-expected second quarter earnings. The company’s earnings were boosted by increased internet customer base. Comcast’s net income jumped 29% to $1.7 billion. Shares of the company surged 5.6% taking cue from the promising results.
The utilities sector was the biggest loser among the S&P 500 industry groups and the Utilities SPDR (XLU) lost 0.7%. Stocks such as NRG Energy Inc (NYSE:NRG), Exelon Corporation (NYSE:EXC), Wisconsin Energy Corporation (NYSE:WEC), SCANA Corporation (NYSE:SCG) and PG&E Corporation (NYSE:PCG) slipped 0.7%, 2.8%, 0.4%, 0.6% and 0.9%, respectively.
The consumer discretionary stocks were the best performers yesterday and the Consumer Discretionary SPDR (XLY) added 0.5%. Stocks such as The Walt Disney Company (NYSE:DIS), CBS Corporation (NYSE:CBS), Time Warner Inc (NYSE:TWX) and DISH Network Corp (NASDAQ:DISH) gained 0.7%, 1.0%, 0.3% and 3.1%, respectively.