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Stock Market News for May 09, 2014

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Benchmarks ended Thursday’s choppy session mostly lower, dragged down by late selloffs in the utilities and energy sectors. The S&P 500 and the Nasdaq closed in the red, while Dow managed to finish in the green. The late selloff eroded the day’s earlier gains that came on the back of encouraging initial claims data and dovish comments from ECB President Mario Draghi.

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The Dow Jones Industrial Average (DJI) gained just 0.2% to close Thursday’s trading session at 16,550.97. The Standard & Poor 500 (S&P 500) dropped 0.1% to finish at 1,875.63. The tech-laden Nasdaq Composite Index declined 0.4% to 4,051.50. The fear-gauge CBOE Volatility Index (VIX) went up 0.2% to settle at 13.43. Total volume for the day was roughly 6.7 billion shares, higher than this month’s average of 6.1 billion. Decliners outpaced advancing stocks on the NYSE. For 56% stocks that declined, 41% advanced.
Utilities and energy sectors weighed on the broader markets yesterday. The Utilities Select Sector SPDR (XLU) declined 1.1%. 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 1.3%, 0.8%, 1.6%, 1.5% and 0.8%, respectively.
The Energy Select Sector SPDR (XLE) led the decline among the S&P 500 sectors. The sector dropped 1.4%. Top holdings from the sector such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Schlumberger Limited (NYSE:SLB), ConocoPhillips (NYSE:COP) and Occidental Petroleum Corporation (NYSE:OXY) decreased 0.8%, 0.9%, 1.6%, 1.4% and 1.1%, respectively.
Selling pressure also intensified in high-growth stocks in the later part of the day. Momentum stocks from the technology sector such as Facebook, Inc. (NASDAQ:FB), FireEye, Inc. (NASDAQ:FEYE) and Google Inc. (NASDAQ:GOOG) decreased 1.1%, 4.2% and 0.4%, respectively. Shares of online retailer Inc. (NASDAQ:AMZN) and online travel company TripAdvisor Inc. (NASDAQ:TRIP) declined 1.5% and 0.9%, respectively.
Shares of The Priceline Group Inc. (NASDAQ:PCLN) dropped 2.1% after the company’s current-quarter earnings per share forecast fell short of analysts’ expectations. The travel-services company expects its earnings per share, excluding special items, for the quarter ending June to be between $11.22 and $12.02. Analysts expect earnings per share to be at $12.27.
Also, shares of Tesla Motors, Inc. (NASDAQ:TSLA) plunged 11.3%, a day after the electric car maker reported adjusted loss (including stock-based compensation expenses) of 14 cents per share in the first quarter of 2014.This was wider than the Zacks Consensus Estimate of a loss of 10 cents. The loss was also in contrast to the break-even results reported in the year-ago quarter.
Bio-tech stocks too suffered losses yesterday. Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) Amgen Inc. (NASDAQ:AMGN) and Biogen Idec Inc. (NASDAQ:BIIB) decreased 0.1%, 2.1%, 1.8% and 0.4%, respectively. Overall, the Health Care Select Sector SPDR (XLV) decreased 0.5%.
These losses eroded the day’s initial gains that were sparked by encouraging economic data and ECB president’s dovish comments. On the economic front, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 26,000 to 319,000 in the week ending May 3. This decrease in applications for unemployment benefits reached the lowest level in a month. The fall was more than the consensus estimate of initial claims decreasing to 324,000.
Separately, the European Central Bank kept monetary policy unchanged. ECB President Mario Draghi said at a press conference that for the purpose of promoting economic growth and stability, the central bank might lower lending rates or provide more economic stimulus during their June policy meeting.
Meanwhile, in a testimony before the Senate Budget Committee, Federal Reserve Chairwoman Janet Yellen reiterated the central bank’s intentions to keep interest rates low. Yellen commented: “Interest rates are unlikely to begin rising until we are in a strong economic recovery”.
On Tuesday, Yellen had said that the economy was still in need of support from the central bank given the “considerable slack” in the labor market. She stated that the central bank intends to keep the federal funds rate low for some time, even after employment and inflation rates return to the desired level. Yellen also acknowledged the fact that “there is no mechanical formula or time table” to raise interest rates.

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