Markets had to weather another choppy session yesterday with the Dow and S&P 500 closing in the green while pressure from the tech sector dragged the Nasdaq lower. Investors were closely watching the meeting of the European leaders, which ultimately came up with no solution to the region’s debt woes. The Dow’s day long choppy run ended with Hewlett-Packard’s earnings guiding the index into the positive zone. Separately, the initial claims reading came in positive and durable goods increased in April.
The Dow Jones Industrial Average (DJI) gained 0.3% to close at 12,529.75. The Standard & Poor 500 (S&P 500) slivered up 0.1% to finish yesterday’s session a mere 1.82 points higher at 1,320.68. The tech-laden Nasdaq Composite Index missed out on a finish in the green, dropping 0.4% to end at 2,839.38. The fear-gauge CBOE Volatility Index dropped 3.5% and settled at 21.54. Consolidated volumes on the New York Stock Exchange, Nasdaq and the American Stock Exchange were roughly 6.55 billion shares, lower than last year's daily average of 7.84 billion. The advancing stocks had an upper hand over the decliners on the NYSE; as for 56% of advancers, 41% stocks traded lower. The remaining 3% stocks were left unchanged.
The European summit that came to a close yesterday, failed to provide any definite decision on the lingering financial woes of the region. The proposal of the euro-bond failed to convince to make an agreement for spurring economic growth in the shorter term, said French President Francois Hollande. Hollande added: "Germany remains convinced that eurobonds can only be the end of a process, while we believe it's the start of a process. That's it, in a nutshell". As for Greece’s tough battle against its frail economic condition, the nation’s prime minister sounded cautious about exiting the euro. However, European Union president Herman Van Rompuy said: “"We want Greece to remain in the euro area while respecting its commitments".
The European summit went on for over five hours, ultimately failing to come out with concrete proposals and the markets struggled for direction. However, the Dow was guided by second quarter figures of its key component Hewlett-Packard Company (NYSE:HPQ). Hewlett-Packard surpassed the Street estimates on both counts, i.e., the top and bottom lines. Moreover, the company also surpassed its earnings per share guidance. However, the figures moved lower on a year-over-year basis. Nonetheless, that hardly had any impact and its shares rose 3.3%. Among other Dow components, The Home Depot, Inc. (NYSE:HD), Chevron Corporation (NYSE:CVX), The Coca-Cola Company (NYSE:KO) and AT&T, Inc. (NYSE:T) gained 2.0%, 1.1%, 1.4% and 0.8%, respectively.
As for the Nasdaq, pressure from the tech sector left the index lurking in the red. Most prominent among the losers was NetApp Inc. (NASDAQ:NTAP) which slumped 12.3% after projecting lower-than-expected revenues. Other tech shares like Apple Inc. (NASDAQ:AAPL), SanDisk Corporation (NASDAQ:SNDK), Oracle Corporation (NASDAQ:ORCL) and Adobe Systems Incorporated (NASDAQ:ADBE) declined by 0.9%, 2.0%, 2.1% and 2.0%, respectively.
Coming to economic reports, the U.S. Department of Labor’s report on first-time unemployment benefit claims was a positive as it showed a declining trend. According to the report, the advance figure for seasonally adjusted initial claims dropped 2,000 from the prior-week's revised figure of 372,000 to 370,000 for the week ending May 19. However, consensus estimates had projected that initial claims would come in at 366, 000.
Separately, the U.S. department of Commerce reported a rise in durable goods orders. The report noted: “New orders for manufactured durable goods in April increased $0.3 billion or 0.2 percent to $215.5 billion… This increase, up two of the last three months, followed a 3.7 percent March decrease. Excluding transportation, new orders decreased 0.6 percent”. The 0.2% increase was lower than consensus expectations of a 0.3% uptrend.