Benchmarks dropped for the second-consecutive day on Thursday as investors remained apprehensive about the timing of the tapering of the Federal Reserve’s bond repurchase plan. Meanwhile, jobless claims for the previous week dropped, but were slightly ahead of estimates. Among the S&P 500 industry groups, consumer discretionary stocks gained the most.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street
The Dow Jones Industrial Average (DJI) slipped 0.5% to close the day at 15,545.75. The S&P 500 declined 0.4% to finish yesterday’s trading session at 1,756.54. The tech-laden Nasdaq Composite Index fell 0.3% to end at 3,919.71. The fear-gauge CBOE Volatility Index (VIX) added 0.7% to settle at 13.75. Consolidated volumes on the New York Stock Exchange were 3.86 billion shares. Declining stocks outnumbered the advancers. For 59% shares that declined, only 38% advanced.
Previously, the Federal Reserve had decided not to taper its $85 billion bond buying program due to a series of weak domestic reports in recent days. However, the Fed gave a bearish growth outlook on Wednesday following the FOMC meet. Though the decision to keep the bond repurchase running at its present pace was exactly what markets had expected, the bearish view dragged benchmarks down on Wednesday.
We had noted yesterday in our Ahead of Wall Street article that the incremental source of uncertainty about the timing of the Fed’s tapering will likely impact market proceedings to a great extent. This is particularly significant because economic data has been hit by the shutdown and the earnings season is nearing its end. Investor apprehensions thus left the benchmarks swinging between modest gains and losses, before ending in negative territory.
According to the U.S. Department of Labor, initial claims for the week ending October 26 decreased 10,000 to 340,000 from previous week’s unrevised figure of 350,000. This was marginally above the consensus estimate of 338,000. The 4-week moving average was 356,250, an increase of 8,000 from the prior week’s unrevised figure of 348,250.
On the earnings side, Facebook Inc. (NASDAQ:FB) also exceeded the Street’s sales estimate due to strong growth in its mobile advertising business. Revenues (excluding the foreign exchange effect) surged 60.0% from the year-ago quarter to $2.02 billion, aided by robust advertising revenues that jumped 65.7% from the year-ago quarter. The mobile segment accounted for 49.0% of ad revenues, up from 41.0% in the previous quarter. Ad impressions were up 16.0% on a year-over-year basis, primarily driven by increased user engagement and effects of reduction in prices in the year-ago quarter. During the quarter, Facebook’s Monthly Active Users (MAU) numbers improved 18.0% year over year to 1.19 billion.
Exxon Mobil Corporation (NYSE:XOM), the world’s largest publicly-traded oil company, reported adjusted third quarter earnings that outpaced the Street’s expectations Shares increased 0.9% to $89.62 following the earnings release.
Also, Expedia Inc. (NASDAQ:EXPE) reported its third-quarter earnings that beat the Street’s estimates. However, net income dropped to $170.9 million in the third quarter compared with $171.5 million a year earlier. Shares of the online travel agency surged over 18% following the earnings beat.
The consumer discretionary sector was the biggest gainer among the S&P 500 industry groups and the Consumer Discretionary SPDR (XLY) gained 0.2%. Stocks such as the Home Depot, Inc. (NYSE:HD), CBS Corporation (NYSE:CBS), Time Warner Inc. (NYSE:TWX), Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC) added 0.01%, 0.9%, 0.3%, 1.1% and 2.8%, respectively.
The financial sector was the biggest loser among the S&P 500 industry groups and the Financial Select Sector SPDR (XLF) dropped 1.1%. Shares such as PNC Financial Services Group Inc. (NYSE:PNC), Goldman Sachs Group Inc. (NYSE:GS), Wells Fargo & Co. (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc. (NYSE:C) added 1.7%, 0.7%, 0.9%, 2.0% and 2.2%, respectively.