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Stock Market News for May 05, 2014

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Escalating tension between Russia and Ukraine dragged the benchmarks down to the negative zone on Friday. The geopolitical tension also outweighed upbeat nonfarm payroll data, which had helped benchmarks open in the green. The S&P 500 and Dow ended in the negative territory after reaching intraday all-time highs. Despite Friday’s losses, markets were able to finish in the green for the week.

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The Dow Jones Industrial Average (DJI) slipped 0.3% to close Friday’s trading session at 16,512.89. The Standard & Poor 500 (S&P 500) dropped 0.1% to finish at 1,881.14. The tech-laden Nasdaq Composite Index too dropped 0.1% to 4,123.90.  The fear-gauge CBOE Volatility Index (VIX) plunged 2.6% to settle at 12.91. Total volume on the New York Stock Exchange was 3.1 billion shares. Advancers outpaced declining stocks on the NYSE. For 55% stocks that advanced, 41% declined.
Mounting tension between Russia and Ukraine weighed on the benchmarks on Friday. Ukraine’s military entered Slavyansk in order to recapture a city that has been a stronghold for pro-Russian rebels. This incident prompted Russia to call for an emergency meeting of the United Nations Security Council. Russia described  the  incident  as  a  “criminal”  assault  by  Ukraine  that  has jeopardized  the  peace  process.  Earlier on Friday, during an “anti-terror” operation in the eastern city of Sloviansk, pro-Russian militants reportedly shot down two of Ukraine’s army helicopters.
A week earlier, the U.S. President Barack Obama and four of his European allies France, Germany, Italy and UK had agreed to “impose costs” on Russia after  Russian  President  Vladimir  Putin  failed  to  observe  the  Geneva accord.
The geopolitical crisis offset the day’s initial bullish mood sparked by a rise in total nonfarm payroll jobs. Benchmarks had opened higher after the U.S. Bureau of Labor Statistics said total nonfarm payroll employment had risen to 288,000 in April. This is significantly more than the consensus estimate of 214,000. The economy added the most number of jobs in April since January 2012.
Investors also focused on the other part of the data that showed unemployment rate dropped to 6.3% in April from 6.7% in March. The consensus estimate had forecasted the unemployment rate to be at 6.6%. The unemployment rate touched the lowest level since September 2008. It was also the biggest one-month decline in 31 years. The unemployment rate dropped due to low participation rate.
Meanwhile, the construction sector added 32,000 jobs over the month, following a 17,000 increase in March. Employment in other major industries such as manufacturing, transportation and warehousing, information, financial activities and government, improved little over the month.
However, the nonfarm payroll report also stated that the labor force dropped a staggering 806,000 in April, its biggest drop in six months and second largest decline in 32 years.
The rise in nonfarm payroll jobs and the decrease in unemployment rate came in after the national employment report from Automatic Data Processing, Inc. (NASDAQ:ADP) showed private sector hiring improved in April. Last Wednesday, the ADP report stated 220,000 private jobs were added in April.
Separately, the U.S. Department of Commerce reported a 1.1% increase in new orders for manufactured goods in March. However, this was below the consensus estimate of 1.5%. This reading follows an increase of 1.5% in February. Excluding transportation, new orders increased 0.6% in March. Also, unfilled orders, shipments and inventories data were up 0.6%, 0.3% and 0.1%, respectively.
For the week, the benchmarks ended in the green. The S&P 500, Dow and Nasdaq gained 1.0%, 0.9% and 1.2%, respectively.
Benchmarks advanced for the week after a new deal between AstraZeneca PLC (NYSE:AZN) and Pfizer Inc. (NYSE:PFE) boosted investor sentiment. Also, upbeat quarterly-results by Merck & Co. Inc. (NYSE:MRK), Sprint Corporation (NYSE:S), Ameriprise Financial, Inc.  (NYSE:AMP) and Cummins Inc. (NYSE:CMI) had a positive impact on the benchmarks. Further, the Federal Reserve’s decision to trim the monthly bond repurchase plan helped benchmarks end higher. The Federal Open Market Committee (FOMC) also indicated  that  economic  activity  has  picked  up  since  its  last  meeting  in March. 
The  tech-heavy  Nasdaq closed  in  the  green  boosted  primarily  by gains in Internet stocks such as Inc. (NASDAQ:AMZN), Netflix,Inc. (NASDAQ:NFLX), TripAdvisor Inc. (NASDAQ:TRIP), The Priceline Group Inc.(NASDAQ:PCLN), Facebook, Inc. (NASDAQ:FB), Google Inc. (NASDAQ:GOOG),Yahoo! Inc. (NASDAQ:YHOO) and Yelp, Inc. (NYSE:YELP).
Additionally,  the week’s  encouraging economic numbers on pending home sales, private-sector  hiring  and  manufacturing  activity  were  welcomed  by  the investors.
Coming back to Friday, 5 out of 10 sectors of the S&P 500 ended in the red. The Utilities Select Sector SPDR (XLU) led the decline as the sector dropped 2.1%. Key stocks from the sector such as Duke Energy Corporation (NYSE:DUK), NextEra Energy, Inc. (NYSE:NEE), Dominion Resources, Inc. (NYSE:D), Southern Company (NYSE:SO) and Exelon Corporation (NYSE:EXC) decreased 2.3%, 1.9%, 2.2%, 2.3% and 0.4%, respectively.
On the other hand, the SPDR S&P Homebuilders ETF (XHB) led the advance among the S&P 500 sectors. The sector rose almost 1.5%. Key housing stocks such as PulteGroup, Inc. (NYSE:PHM), Lennar Corp. (NYSE:LEN), DR Horton Inc. (NYSE:DHI) and Beazer Homes USA Inc. (NYSE:BZH) increased 0.9%, 1.3%, 1.3% and 0.7%, respectively.

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