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Stock Market News for February 1, 2013

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Investor apprehensions about Friday’s non-farm payroll data dragged benchmarks lower on Thursday. Benchmarks ended in the red for the second consecutive day. Meanwhile, initial claims showed weak signs after logging encouraging numbers in the previous two weeks. Personal income increased in December but failed to impress the markets. Materials were the major loser among the S&P 500 industry groups, while the biggest gainer was the utilities sector.

The Dow Jones Industrial Average (DJI) lost 0.4% to close the day at 13,860.58. The S&P 500 decreased 0.3% to finish yesterday’s trading session at 1,498.11. The tech-laden Nasdaq Composite Index decreased marginally by 0.18 point to end at 3,142.13. The fear-gauge CBOE Volatility Index (VIX) decreased 0.3% to settle at 14.28. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 7.1 billion shares, higher than the daily average of 6.45 billion shares in 2012. Advancing stocks were marginally higher than decliners on the NYSE. For 49% stocks that advanced, 47% declined.

Markets enjoyed a decent rally in the month of January following a solution to the Fiscal Cliff dilemma and encouraging numbers from the housing sector. Better-than-expected earnings for the fourth quarter coupled with a brighter employment scenario boosted the Street’s sentiments. On the international front, data showed that the Chinese manufacturing sector has improved the most in the past two years. The blue-chip index surged 5.8%, S&P 500 increased 5.1% and Nasdaq rose 4.1% over the month. The Dow registered its largest increase in January since 1994.

According to the U.S. Department of Labor, the number of Americans filing for unemployment benefits increased in the previous week after declining to its lowest level in five years in prior week. Seasonally adjusted initial claims rose by 38,000 to 368,000, from the prior week’s unrevised figure of 330,000. This was above the consensus estimate of 343,000. Investors are wary about non-farm payroll data, which is due to release on Friday, following the sharp rise in initial claims.

The U.S. Department of Commerce reported encouraging personal income data, which is at its highest level in more than eight years. Personal income increased 2.6% while disposable personal income rose 2.7% for December. Personal consumption expenditure also increased by 0.2% following the increase in personal income.

Earnings of United Parcel Service, Inc. (NYSE:UPS) failed to meet the Street’s estimates following which the company’s shares decreased nearly 2.4%. The profits of the company were adversely affected due to low demand in shipping globally. Shares of the Dow Chemical Company (NYSE:DOW) plunged 7%, after earnings of the company missed analysts’ expectations. Earnings of the company decreased following lower sales in Europe.

Meanwhile, the Chicago Purchasing Managers released some encouraging news. According to the Chicago PMI, the business barometer increased to 55.6 in January from 50 in December. This increased was boosted by improvements in employment, production and new orders. This index has climbed to its highest level since April 2012.

Utilities emerged as the biggest gainer for second consecutive day among the S&P 500 industry groups. The Utilities SPDR (XLU) increased 0.3%. Stocks such as Public Service Enterprise Group Inc. (NYSE:PEG), NRG Energy Inc (NYSE:NRG), Exelon Corporation (NYSE:EXC), Duke Energy Corp (NYSE:DUK) and Wisconsin Energy Corporation (NYSE:WEC) increased 1.0%, 0.6%, 0.6%, 0.4% and 0.7%, respectively.

The materials sector was the biggest loser among the S&P 500 industry groups. The Materials Select Sector SPDR (XLB) lost 1.0%. Stocks such as E I Du Pont De Nemours And Co. (NYSE:DD), Monsanto Company (NYSE:MON), FMC Corporation (NYSE:FMC) and Eastman Chemical Company (NYSE:EMN) decreased 0.4%, 1.3%, 0.1% and 0.5%, respectively.

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