Benchmarks finished mixed following a small increase in retail sales and marginally upbeat earnings reports. The State of the Union speech from U.S. President Barack Obama focused on infrastructure spending, economic growth and employment. Industrial stocks were the major gainer among the top 10 S&P 500 industry groups, while financials were the biggest losers.
The Dow Jones Industrial Average (DJI) decreased 0.3% to close the day at 13,982.91. The S&P 500 increased marginally, by 0.1%, to finish yesterday’s trading session at 1,520.33. The tech-laden Nasdaq Composite Index gained 0.3% to end at 3,196.88. The fear-gauge CBOE Volatility Index (VIX) increased 2.7% to settle at 12.98. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.9 billion shares, well below the daily average of 6.45 billion shares in 2012. Advancing stocks outnumbered the decliners on the NYSE. For 57% stocks that advanced, 39% declined.
President Barack Obama delivered the State of the Union address late on Tuesday. The President’s main concerns were slow economic growth and high unemployment numbers. This was his first State of the Union speech since he got elected in 2012. He also emphasized increasing the minimal wage rate prevailing across the country and increasing infrastructure spending by building roads and bridges.
The President also commented on government spending cuts. He claimed the government has gone “more than halfway” towards covering the $4 trillion deficit the government had. This has been done by increasing the tax rate on rich U.S. American citizens. President Obama said: “Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion, mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.”
According to the U.S. Department of Commerce, retail and food services sales for January 2013 stood at $416.6 billion. This is an increase of 0.1% from December’s figure and 4.4% higher than January 2012’s figure. Non-store retail sales increased 15.7 year over year while auto and motor vehicle dealer sales gained 9.4%.
A report from the U.S. Department of Labor shows imports increased 0.6% in January 2013 compared to declines of 0.7% and 0.5% in November and December respectively. The rise in imports is attributable to an increase in fuel prices. U.S. export prices increased 0.3% in January 2013 versus a decline in 0.6% and 0.1% in November and December respectively.
Shares of mining major Cliffs Natural Resources Inc (NYSE:CLF) lost 20% after it reported a loss and reduced its dividend by 76%. Shares of the country’s largest farm equipment maker Deere & Company (NYSE:DE) lost 3.5% even after posting quarterly results that beat the Street’s estimates. The company’s mediocre guidance despite strong demand due to the biggest corn crop in fifty six years was largely responsible for the decline. The company guided net income in fiscal 2013 to $3.3 billion against previously estimates of $3.2 billion.
Among the top ten S&P 500 groups, industrial stocks emerged as the biggest gainer. Industrial stocks such as General Electric Company (NYSE:GE), Union Pacific Corporation (NYSE:UNP), United Parcel Service, Inc. (NYSE:UPS), United Technologies Corporation (NYSE:UTX) and Emerson Electric Co. (NYSE:EMR) gained 3.6%, 0.5%, 0.2%, 0.1% and 0.8%, respectively.
Financial stocks were the major loser among the S&P 500 groups. Stocks such as Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C) and PNC Financial Services (NYSE:PNC) lost 0.6%, 1.0%, 1.1%, 0.8% and 0.9%, respectively.