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Stock Market News for May 2, 2012

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Markets started May on a winning note following a report which stated that manufacturing had expanded at its fastest pace since June last year. Alongside, the data also suggested growth in hiring, orders and production. These reports enabled the Dow to touch its highest level since late 2007 and all of the 10 industry groups of the S&P 500 ended in the green.

The Dow Jones Industrial Average (DJI) gained 0.5% to settle the day at 13,279.32. The Standard & Poor 500 (S&P 500) jumped 0.6% to finish Tuesday’s trading session at 1,405.82. The tech-laden Nasdaq Composite Index edged up 0.1% to close at 3,050.44. The fear-gauge CBOE Volatility Index (VIX) decreased 3.2% to settle at 16.60. For 62% of the advancing stocks on the NYSE, 34% stocks traded lower. The remaining stocks were left unchanged. Total volume on the NYSE was 3.8 billion shares.

The Dow has now recorded its highest level since December 28, 2007. The index was hovering around its key level of 13, 000 and has now extended its gains over this level by precisely 279.32 points. Yesterday, 22 of the 30 Dow components ended in positive territory with Alcoa, Inc. (NYSE:AA), Bank of America Corporation (NYSE:BAC), Chevron Corporation (NYSE:CVX), Walt Disney Co. (NYSE:DIS), Hewlett-Packard Company (NYSE:HPQ) and JPMorgan Chase & Co. (NYSE:JPM) gaining 2.5%, 2.5%, 1.6%, 1.6%, 1.7% and 1.9%, respectively. Moreover, losses among the eight components were minimal with Cisco Systems, Inc.’s (NASDAQ:CSCO) 0.9% decline being the largest.

Stocks in the S&P 500 also chalked up gains and none of the 10 industry groups in the S&P had to settle in the negative zone. Energy and financials led the 10 industry groups with Energy Select Sector SPDR (XLE) jumping 1.4% and Financial Select Sector SPDR (XLF) gaining 1.0%. Among energy stocks, Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP) and Marathon Oil Corporation (NYSE:MRO) jumped 0.8%, 1.6%, 3.5% and 2.9%, respectively. Another bellwether, Chesapeake Energy Corporation (NYSE:CHK) soared 6.3% after it fired its chairman Aubrey McClendon, who was blamed for a controversial plan which enabled him to buy stakes in every well the company drilled.

As for the financial bellwethers, American Express Company (NYSE:AXP), Morgan Stanley (NYSE:MS) and Wells Fargo & Company (NYSE:WFC) joined the list of Bank of America and JP Morgan, as mentioned earlier, and they gained 1.3%, 1.2% and 2.0%, respectively.

Benchmarks did not have a healthy run in April. The Dow moved into the green with marginal gains of 1.5 points in April. On the other hand, the S&P 500 dropped 0.8% to reverse its four-month winning streak and end in the negative zone in April. The Nasdaq too finished in the negative zone, dropping 1.5% for the month.

In contrast, benchmarks have started this month on a winning note which was attributable to the manufacturing data released by the Institute for Supply Management. The PMI increased from 53.4% in March to 54.8% in April. This was the 33rd straight month of gains for the manufacturing sector with 16 of the 18 industries recording overall growth. The increase was also well ahead of consensus estimates of a reading of 52.9%. The PMI accounted for the 35th consecutive month of growth in the overall economy. Bradley J. Holcomb, chairman of Institute for Supply Management Manufacturing Business Survey Committee said: "The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (53.7 percent) corresponds to a 3.8 percent increase in real gross domestic product (GDP). In addition, if the PMI for April (54.8 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually".

Additionally, New Orders and the Production and Employment Indexes also increased. The New Orders Index increased by 3.7 percentage points to 58.2 percent in April from 54.5% in March. The Production Index gained 2.7 percentage points, reaching 61% in April, up from March’s reading of 58.3%. In addition, the Employment Index expanded for the 31st consecutive month, increasing by 1.2 percentage points from the 56.1% recorded in March to 57.3% in April.

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