Benchmarks mostly finished in the green on Friday with the Dow posting its 21st record close of the year headed by gain in energy shares. Decline in consumer staple shares pared some gains on the broader markets after Amazon announced plans to purchase Whole Foods Market. Additionally, technology shares continued to decline as investors remained concerned about overvaluation. Meanwhile, investors digested soft economic data.
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) advanced 0.1% to a record close at 21,384.28. The S&P 500 gained 0.69 points to finish at 2,433.15. The tech-laden Nasdaq Composite Index fell 0.2% to close at 6,151.76. The fear-gauge CBOE Volatility Index (VIX) traded near 10.4. Advancers outnumbered declining stocks on the NYSE by a 1.33 to 1 ratio.
Energy Shares Rebound
Oil prices recovered on Friday from their lowest level since November, after U.S. rig additions declined and certain oil producing countries cut exports. Kazakhstan which earlier had agreed to slash supplies last year, declared that it would cut production in June and July. The gains in oil prices had a positive impact on energy shares which ultimately had a positive impact on the broader markets.
WTI crude prices gained by $0.28, or 0.6%, to $44.74 a barrel. The broader Energy Select Sector SPDR (XLE) advanced 1%, emerging as the only sector of S&P 500 to finish in the green. Some of its key holdings including Chevron Corp (CVX - Free Report) and Exxon Mobil Corp (XOM - Free Report) gained 1.9% and 1.5% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Consumer Staples Shares Decline
E-commerce giant Amazon (AMZN - Free Report) surprised broader markets on Friday by announcing plans to purchase organic grocery chain Whole Foods Market . The deal is valued at $13.7 billion and it is expected to be completed in the second half of this year. Amazon’s purchase of Whole Foods would allow Amazon to make a full investment into grocery services and the growing organic food market. (Read More)
Though, the deal resulted in gains for shares of Amazon and Whole Foods, by 2.4% and 29.1% respectively, it caused other grocery stocks such as Kroger (KR - Free Report) and Walmart (WMT - Free Report) to decline. The decline in shares of Whole Foods’s rivals had an adverse impact on the consumer staples sector. Shares of Kroger are down over 9.2% while Walmart’s shares experienced a fall of 4.7%. The broader Consumer Staples Select Sector SPDR (XLP) fell 1.8%, and emerged as the worst performing sector of S&P 500.
Technology Shares Decline
Technology shares continued to decline on Friday, as investors continued to sell off technology shares. A report from Goldman Sachs Group (GS - Free Report) that issued warnings on valuations of major tech stalwarts sparked off the tech sell-off. Over the last weekend, tech giant Apple (AAPL - Free Report) was downgraded by Mizuho Securities' Abhey Lamba, adding to tech stocks’s woes. .
The latest tech rout has already wiped out about $250 billion of the value of technology shares. The tech-heavy Nasdaq-100 ETF PowerShares QQQ Trust (QQQ) lost over 3.1% and tech behemoth Technology Select Sector SPDR Fund (XLK) dropped 3.3% in the last five days (as of June 15, 2017). The broader Technology Select Sector SPDR (XLK) dropped 0.6%.
As per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, privately-owned housing starts in May declined by 5.5% and were recorded at a seasonally adjusted annual rate of 1,092,000. This is the metric’s lowest level in eight months. Moreover, it came below the estimated consensus of 1,219,000.
Additionally, privately-owned housing units authorized by building permits in the previous month were recorded at a seasonally adjusted annual rate of 1,168,000. The figure came in 0.8% below the year ago rate of 1,178,000.
For the week, the Dow registered a gain of 0.5%, while the S&P 500 remained roughly flat. The Nasdaq posted a decline of 1% for the week. The Fed hiked the key interest rate on Wednesday by 25 basis points, as was widely anticipated. Retail sales declined in May, posting their biggest decline in sixteen months. Additionally, the consumer price index declined in May for the second time in three months. Meanwhile, technology shares suffered several setbacks throughout the week on overvaluation concerns.
Stocks that made Headlines
Energy Transfer's Dakota Pipeline Hits Another Legal Snag
Disregarding the censure from environmental groups and the Standing Rock Sioux Tribe, Texas-based pipeline operator Energy Transfer Partners L.P.’s (ETP - Free Report) $3.8 billion project – Dakota Access Pipeline – became operational on Jun 1 under an executive order of President Trump. (Read More)
Apple Hires Veteran TV Executives to Head Video Programming
Cupertino based tech giant, Apple Inc, has been ramping up its original content efforts. (Read More)
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