The improving job market situation acted as a catalyst, lifting benchmarks into the green on Thursday. The Dow gained for the fifth straight day while the S&P 500 is just shy of its record high. Expectations that non-farm payroll data, due on Friday would be largely positive also added fuel to investor sentiment. Meanwhile, the trade deficit expanded for the month of January. Among the top ten S&P 500 industry groups, financial stocks emerged as the biggest gainer whereas utilities stocks were the biggest losers.
The Dow Jones Industrial Average (DJI) gained 0.2% to close the day at 14,329.49. The S&P 500 increased 0.2% to finish yesterday’s trading session at 1,544.26. The tech-laden Nasdaq Composite Index gained 0.3% to end at 3,232.09. The fear-gauge CBOE Volatility Index (VIX) dropped almost 0.5% to settle at 13.06. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.1 billion shares, well below the daily average of 6.48 billion shares. Advancing stocks outnumbered the decliners. For the 57% that advanced, 39% declined.
The Dow and the S&P continued their bull run for the fifth straight day. The S&P is about 1.3% shy of surpassing its previous record. Yesterday’s initial claims data fuelled investor sentiment following which the Dow finished yesterday’s trading session above 14,300. In 2013, the Dow has gained 9.4% till date while the S&P has gained 8.3%. The gains are attributable to better-than-expected earnings, the Federal Reserve’s support towards the stimulus package and encouraging economic data.
According to the U.S. Department of Labor, number of American citizens filing for unemployment benefits decreased 7,000 from previous week’s 347,000 to 340,000. This was significantly lower than the consensus estimate of 352,000. Initial claims data fell for the second week in a row, marking the lowest level in the last five years. The report came in before the release of non-farm payrolls data due on Friday. Following encouraging initial claims data, the investors are anticipating a positive non-farm payroll data. The consensus estimate for non-farm payroll additions is 161,000.
Meanwhile, the Bloomberg Consumer Comfort Index for the week was -32.4, above previous week’s -32.8. This is the highest point attained by this index since 2008. Factors such as a recovery in the housing market, improvements in hiring and an increase in consumer spending helped the consumer comfort index level to increase. According to the Federal Reserve, consumer credit rose at a seasonally adjusted annual rate of 7%. Revolving credit inched up 0.1% and non revolving credit surged 10%.
On the negative side, the U.S. Census Bureau and U.S. Bureau of Economic Analysis said the trade deficit of the country increased to $44.4 billion in January. This figure was well above December’s deficit figure of $38.1 billion. Imports in January amounted to $228.9 billion and exports amounted to $184.5 billion.
Financial stocks were the biggest gainers among the top ten S&P 500 groups. The Financial Select Sector SPDR (XLF) gained 0.7%. Stocks such as the Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC) and Goldman Sachs Group, Inc. (NYSE:GS) gained 2.9%, 1.0%, 1.2%, 1.0% and 1.6%, respectively.
Utilities stocks were the major losers among the top ten S&P 500 groups. The Utilities SPDR (XLU) lost 0.5%. Stocks such as Duke Energy Corp (NYSE:DUK), The Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), NextEra Energy, Inc. (NYSE:NEE) and American Electric Power Company, Inc. (NYSE:AEP) lost 0.5%, 0.2%, 1.0%, 0.3%, and 0.6%, respectively.