Back to top

Stock Market News for May 06, 2014

Read MoreHide Full Article
Benchmarks finished in the green on Monday as encouraging services sector data outweighed concerns emanating from escalating Ukraine-Russia geopolitical tension. The increase in ISM Services Index also offset jitters related to weak Chinese manufacturing data. The S&P 500 and Nasdaq were also boosted by Apple’s stock closing above $600 for the first time in over a year.

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) went up 0.1% to close Monday’s trading session at 16,530.55. The Standard & Poor 500 (S&P 500) gained 0.2% to finish at 1,884.66.  The tech-laden Nasdaq Composite Index rose 0.3% to 4,138.06. The fear-gauge CBOE Volatility Index (VIX) went up 2.9% to settle at 13.29. Total volume for the day was roughly 5.0 billion shares, lower than this month’s average of 6.7 billion. Declining stocks outnumbered the advancers on the NYSE. For 49% stocks that declined, 47% advanced.
A positive finish for benchmarks was ensured by encouraging report on the services sector. The Institute of Supply Management (ISM) reported that the non-manufacturing index increased 2.1 percentage points to 55.2% in April from March’s reading of 53.1%. This also outperformed the consensus estimate of 54.4%.
Non-manufacturing business activity index was up 7.5 percentage points from March to 60.9% in April. Also, the New Orders Index advanced 4.8 percentage points from March to 58.2% in April. Increase in production and new orders helped the U.S. service sector and non-manufacturing companies to grow at the fastest pace in the last six months.
Further, Apple Inc.’s (NASDAQ:AAPL) shares closing above $600 for the first time since late 2012 helped the S&P 500 and Nasdaq end higher. Shares of Apple rose 1.4% to $600.96 after the company reported better-than-expected phone sales in China. The company sold 43.7 million iPhones in the second quarter, outpacing analysts’ expectations of 37 million units.
Apple’s stock has surged 15% since the company posted upbeat second quarter results on April 23. The tech-giant reported quarterly earnings of $11.62 per share, which surpassed the Zacks Consensus Estimate of $10.21 per share by 13.8%. The earnings per share also improved from the year-ago earnings of $10.09 per share.
Meanwhile, investors kept an eye on the lingering tension between Russia and Ukraine. Ukrainian forces confronted the pro-Russian rebels in the outskirts of Slavyansk; a day after pro-Russian militants attacked a police station in Odessa and freed 67 of their allies.  The Ukrainian forces were ambushed during the operation.
Last Friday, during an “anti-terror” operation in the eastern city of Sloviansk, pro-Russian militants shot down two of Ukraine’s army helicopters. Two crewmembers were killed during the operation.
Ukraine’s military entered Sloviansk on Friday, 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 hampered the peace process.
Investors were also concerned about a possible slowdown in China’s economy despite improvement in factory activity. The final HSBC Manufacturing Purchasing Managers’ Index (PMI) edged up to 48.1 in April from March’s reading of 48.0. However, the final PMI was less than the preliminary reading of 48.3. Also, the PMI remained below the key level of 50. A level below 50 suggests a contraction. China’s manufacturing contracted for the fourth straight month in April.
Seven out of 10 sectors of the S&P 500 ended in the green. The Utilities Select Sector SPDR (XLU) led the advance as the sector increased 0.9%. Key stocks from the sector such as Duke Energy Corporation (NYSE:DUK), Dominion Resources, Inc. (NYSE:D), Southern Company (NYSE:SO), Exelon Corporation (NYSE:EXC) and American Electric Power Co., Inc. (NYSE:AEP) gained 0.9%, 0.4%, 0.7%, 1.1% and 1.0%, respectively.
The Health Care sector followed the Utilities sector. The Health Care Select Sector SPDR (XLV) increased 0.7%. Major stocks from the sector such as Johnson & Johnson (NYSE:JNJ), Merck & Co. Inc. (NYSE:MRK), Gilead Sciences Inc. (NASDAQ:GILD), Amgen Inc. (NASDAQ:AMGN) and Bristol-Myers Squibb Company (NYSE:BMY) gained 0.7%, 0.7%, 2.7%, 0.7% and 0.5%, respectively.

More from Zacks Market News

You May Like