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Markets snapped two days of losses and ended higher on Friday boosted by encouraging consumer spending data. However, benchmarks lost some of their initial gains as the bio-tech stocks adversely impacted markets in late afternoon. Microsoft’s strong gains following its announcement of launching Microsoft Office on iPads propelled the Dow to end in the green. 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) gained 0.4% to close Friday’s trading session at 16,323.06. The Standard & Poor (S&P 500) rose 0.5% to finish at 1,857.62. The tech-laden Nasdaq Composite Index went up 0.1% to 4,155.76. The fear-gauge CBOE Volatility Index (VIX) dropped 1.4% to settle at 14.41. Total volume for the day was roughly 5.7 billion shares, lower than this month’s average of 6.9 billion. Declining stocks were outnumbered by advancing stocks on the NYSE. For 28% stocks that declined, 69% advanced.
Benchmarks opened in the positive territory as investors cheered encouraging economic data on consumer spending. According to the Bureau of Economic Analysis, personal consumption expenditure increased 0.3% in February, in line with the consensus expectation. It rose more than the 0.2% increase in January. Rise in spending on health care and utilities were cited as the prime factors for the increase in consumer spending.
Also, personal income increased 0.3% in February. This was in line with consensus expectation and also with the rate of growth in January. Disposable personal income (DPI) too increased 0.3% in February, up from 0.2% increase in January.
However, another data from Thomson Reuters/University of Michigan survey of consumers showed consumers felt less confident about their financial and employment prospects as the March reading for consumer sentiment dipped to 80.0. The consumer sentiment index touched its lowest level since November 2013. This fall was more than the consensus estimate of 80.6. However, the drop in consumer sentiment was less than the University of Michigan and Thomson Reuters’ preliminary consumer sentiment reading of 79.9.
Microsoft Corporation (NASDAQ:MSFT) was the biggest gainer among the Dow components. Shares of the company went up 2.4% after it announced that it will bring Microsoft Office to the iPad. The company also spoke of shifting attention from Windows. This move was cheered by the investors. The news also boosted other technology companies such as Oracle Corporation (NYSE:ORCL), Cisco Systems, Inc. (NASDAQ:CSCO) and Intel Corporation (NASDAQ:INTC) as the shares of these companies advanced 0.8%, 1.4% and 1.2%, respectively. Overall, the Technology Select Sector SPDR (XLK) increased 0.4%.
In contrast to the technology stocks, bio-tech stocks had a poor day. Shares of bio-tech companies such as Gilead Sciences Inc. (NASDAQ:GILD), Biogen Idec Inc. (NASDAQ:BIIB) and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) plunged 4%, 5.1% and 4.2%, respectively. Overall, the Health Care Select Sector SPDR (XLV) fell 0.4%.
For the week, the S&P 500 slipped 0.5% and the Dow ended higher by 0.1%. The tech-heavy Nasdaq Composite Index dropped almost 3%, its worst performance since October 2012.
The S&P 500 and the Nasdaq Composite Index ended the week in red due to drop in bio-tech stocks. Declines in financial and material sectors also dragged the markets lower. On Thursday, investors’ concerns about possibility of sooner-than-expected rate hike had dragged down the S&P 500 to fall below the key technical level of 1,850 and Nasdaq dropped to its lowest point in six weeks. Earlier, Federal Reserve Chairwoman Janet Yellen had commented that interest rate hikes might happen in about six months after the end of the economic stimulus plan. She had said that the quantitative easing program is expected to end this fall. Throughout the week, escalating tension over Crimea dented investor sentiment.
Nine out of 10 sectors of the S&P 500 ended in the green. The SPDR S&P Homebuilders ETF (XHB) led the advance as the sector rose 1.8%. Key stocks from the sector such as USG Corporation (NYSE:USG), DR Horton Inc. (NYSE:DHI), Lennar Corp. (NYSE:LEN), Ryland Group Inc. (NYSE:RYL) and Lumber Liquidators Holdings, Inc. (NYSE:LL) surged 2.8%, 2%, 1.5%, 2.5% and 1.3%, respectively.
The Energy sector followed the S&P Homebuilders ETF sector. The Energy Select Sector SPDR (XLE) rose 1.3%. Top holdings from the sector such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Schlumberger Limited (NYSE:SLB), Occidental Petroleum Corporation (NYSE:OXY) and Pioneer Natural Resources Co. (NYSE:PXD) increased 1.5%, 0.7%, 1.1%, 0.9%, and 1.8%, respectively.