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Benchmarks finished Tuesday’s session with meager losses as investors awaited the outcome of Thursday’s ECB meeting and the monthly US jobs report on Friday. Encouraging reports on factory orders and upbeat monthly car sales numbers failed to boost investor sentiment. Tuesday’s losses caused the S&P 500 and the Dow to retreat from their previous day’s record highs, while the Nasdaq extended its losing streak for the third consecutive session. 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) declined 0.1% to close Tuesday’s trading session at 16,722.34. The Standard & Poor 500 (S&P 500) dropped a meager 0.04% to finish at 1,924.24. The tech-laden Nasdaq Composite Index dropped 0.1% to 4,234.08. The fear-gauge CBOE Volatility Index (VIX) went up 2.5% to settle at 11.87. Total volume on the New York Stock Exchange was 2.8 billion shares. Decliners outpaced advancing stocks on the NYSE. For 60% stocks that declined, 37% advanced.
On Tuesday, investors took a breather and chose to focus on the European Central Bank’s (ECB) policy meeting scheduled on Thursday. ECB President Mario Draghi had urged banks on Monday to be “particularly watchful” for any “pernicious negative spiral” of low inflation rate and weak lending rates derailing the eurozone’s recovery. His comments hinted that ECB might cut rates and provide more economic stimulus during the next policy meeting. Currently, policy makers are debating on a reduction of 10 to 15 basis points in both benchmark and deposit rates.
Investors are also waiting for the May’s jobs report; scheduled for release on Friday. In May, the U.S. Bureau of Labor Statistics said total nonfarm payroll employment had risen to 288,000 in April. The economy added the most number of jobs in April since January 2012. The unemployment rate also dropped to 6.3% in April from 6.7% in March. The unemployment rate touched its lowest level since September 2008. It was also the biggest one-month decline in 31 years.
Promising numbers on factory orders failed to boost markets. According to the U.S. Department of Commerce, new orders for manufactured goods increased 0.7% in April. This was above the consensus estimate of 0.5%. This reading follows an increase of 1.5% in March. Excluding transportation, new orders increased 0.5% in April. Separately, unfilled orders, shipments and inventories data were up 0.9%, 0.3% and 0.4%, respectively.
Positive sales report from the auto industry was also overlooked by investors. Shares of General Motors Company (NYSE:GM) gained 1.2% after the company overcame recent recalls over safety measures and posted the best monthly sales figures since August 2008. The company sold 284,694 vehicles in U.S. in May, up from year-ago sales figure of 252,894.
Ford Motor Co. (NYSE:F) sold 254,084 car and pick-up trucks in the US, up 3% year on year. This was Ford’s best sales numbers for the month of May in 10 years. Shares of Ford Motor increased 0.7%.
Chrysler Group LLC’s sold 194,421 units in May, up from 166,596 a year ago. This was the auto maker’s best sales figure for the month of May since 2007.
Overall, U.S. car sales data was positive. Total vehicle sales increased to an annualized rate of 16.8 million in May, above the consensus estimate of a rise to 16.1 million. Domestic-made vehicle sales also climbed to an annualized rate of 13.3 million in May, the highest rate since January 2006.
Five out of 10 sectors of the S&P 500 ended in the red. The Consumer Staples Select Sector SPDR (NYSE:XLP) led the decline. The sector declined 0.4%. Key stocks from the sector such as The Procter & Gamble Company (NYSE:PG), Philip Morris International, Inc. (NYSE:PM), CVS Caremark Corporation (NYSE:CVS), Walgreen Co. (NYSE:WAG) and Colgate-Palmolive Co. (NYSE:CL) decreased 0.5%, 0.5%, 0.8%, 0.6% and 1.4%, respectively.
The Materials sector followed the Consumer Staples sector. The Materials Select Sector SPDR (XLB) declined 0.2%. Major stocks from the sector such as E. I. du Pont de Nemours and Company (NYSE:DD), Monsanto Company (NYSE:MON), LyondellBasell Industries NV (NYSE:LYB), Praxair Inc. (NYSE:PX) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) decreased 0.6%, 0.9%, 0.3%, 0.3% and 0.2%, respectively.