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Stock Market News for July 07, 2016

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Benchmarks ended in the green on Wednesday after the FOMC minutes from June meeting showed that most of the Fed policymakers were in favor of keeping rates unchanged. Moreover, better-than-expected service data and gains in biotech stocks also pushed key U.S. indexes northward. Additionally, rally in oil prices boosted investor sentiment.

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) increased 0.4%, to close at 17,918.62. The S&P 500 rose 0.5% to close at 2,099.73. The tech-laden Nasdaq Composite Index closed at 4,859.16, gaining 0.8%. The fear-gauge CBOE Volatility Index (VIX) decreased 4% to settle at 14.96. A total of around 7.4 billion shares were traded on Wednesday, lower than the last 20-session average of 7.72 billion shares. Advancers outpaced declining stocks on the NYSE. For 62% stocks that advanced, 34% declined.

Investors shed “Brexit” fears yesterday after the FOMC minutes of June 14-15’s policy meeting indicated that most of the Fed policymakers decided to keep the rate unchanged. Per the minutes, "almost all participants judged that the surprisingly weak May employment report” raised uncertainty over the labor market outlook.

Moreover, the minutes highlighted that another reason for not hiking rates was policymakers’ decision to wait for the British referendum’s results. This was mainly because most of them anticipated that the outcome of the referendum “could generate financial market turbulence” that may weigh on “domestic economic performance.”

Additionally, the Institute for Supply Management reported that ISM Services Index advanced from 52.9% in May to 56.5% in June, its best rise in last seven months. Also, the reading was more than the consensus estimate of 53.3%. As per Markit, the final services PMI increased from 51.3 in May to 51.4 in June.

In company news, shares of Medivation, Inc. increased 0.9% after its board of directors said that Medivation has signed confidentiality agreements with several companies including Celgene Corporation ( (CELG - Free Report) , who are interested in acquiring the company.

Following the news, shares of Celgene rose 4.3%, becoming the biggest gainer among the healthcare sector. Gains in Celgene led the iShares Nasdaq Biotechnology ETF (IBB) to increase 2.4%. Key biotech stocks including, Biogen Inc. (BIIB - Free Report) , Gilead Sciences Inc. (GILD - Free Report) , Regeneron Pharmaceuticals, Inc. ( (REGN - Free Report) , Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Alexion Pharmaceuticals, Inc. (ALXN - Free Report) rose 2.3%, 2.2%, 3.3%, 3.6% and 3%, respectively.

Gains in biotech stocks helped the Health Care Select Sector SPDR ETF (XLV) to increase 1.1%, emerging as the best performer among the S&P 500 sectors. Dow components Merck & Co. Inc. (MRK - Free Report) and UnitedHealth Group Incorporated ( (UNH - Free Report) advanced 2% and 0.6%, respectively.

Further, oil prices rose after API reported a wider-than-expected decline in crude inventories. According to the report, crude inventories decreased by 6.7 million barrels to 520.9 million for the week ended July 1, wider than analysts' projections of a 2.3 million barrels decinel. Weakening dollar also boosted oil prices yesterday. Both WTI and Brent crude progressed 1.8% and 1.7% to $47.43 a barrel and $48.80 per barrel, respectively.

Increase in oil prices led the Energy Select Sector SPDR (XLE) to rise 0.4%. Dow components Exxon Mobil Corporation ( (XOM - Free Report) and Chevron Corporation (CVX - Free Report) surged 1.2% and 1%, respectively.

Meanwhile, the U.S. Census Bureau reported that trade deficit increased in May to $41.1 billion from April’s deficit of $37.38 billion, wider than the consensus estimate of a decrease to $40 billion. Moreover, it was the highest trade deficit in last three months.



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