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Stock Market News for May 3, 2013

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Encouraging jobless claims numbers along with a move by the European Central Bank (ECB) to cut key interest rates gave a boost to major indices on Thursday. The S&P 500 recouped yesterday’s losses and touched a new all-time high following these positive developments. Among the top ten S&P 500 industry groups, energy shares led the gains while utilities shares were the only losers.

The Dow Jones Industrial Average (DJI) increased 0.9% to close the day at 14,831.58 The S&P 500 gained 0.9% to finish yesterday’s trading session at 1,597.57. The tech-laden Nasdaq Composite Index rose 1.3% to end at 3,340.62. The fear-gauge CBOE Volatility Index (VIX) lost 6.2% to settle at 13.59. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.02 billion shares, below 2013’s average of 6.36 billion shares. Advancers stocks outnumbered the decliners. For the 73% that advanced, 24% declined.

Benchmarks gained almost 1% after the jobless claims report was released. According to the U.S. Department of Labor, seasonally adjusted initial claims were reported at 324,000. This figure indicated a decrease of 18,000 from previous week’s figure of 342,000. The 4-week moving average witnessed a drop of 16,000 to 342,250. This week, jobless claims nose-dived to its lowest level which was prevailing during the “early days” of the recession. On the back of this encouraging report, the consensus estimate for nonfarm payrolls has been set at 145,000. 

Meanwhile, the Bloomberg Consumer Comfort Index rose to its highest level in more than five years. The Bloomberg Consumer Comfort Index was recorded at -28.9 compared to a -29.9 in the previous week. The buying climate gauge also improved to -32.5, the best reading since November 2007. The improvement in consumer sentiment is attributable to high income from an improving housing market, better-than-expected corporate gains and an improving job scenario.

Investors also welcomed a move made by the ECB to reduce key interest rates. This is the first rate-cut since July 2012. This move was made with an intention to improve the health of the ailing Euro economy. ECB reduced the refinancing rate by 25 basis points to 0.5%. Commenting on the security of the banking system, Mario Draghi, the President of the European Central Bank said, “The fixed rate full allotment will basically represent liquidity insurance for the banking system, so frankly, there can't be fears of lack of funding for not lending.” He further added: “In other words, this is a kind of measure that benefits all banks.”

On the earnings front, shares of General Motors Company (NYSE:GM) increased 3.3% after reporting better-than-expected earnings. The company’s business improved in North America while in Europe it registered losses smaller than the Street’s expectations.

Of the top ten S&P 500 industry groups, energy stocks gained the most. The Energy Select Sector SPDR (XLE) gained 1.3%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Hess Corp. (NYSE:HES), Occidental Petroleum Corporation (NYSE:OXY) and Marathon Petroleum Corp (NYSE:MPC) gained 1.3%, 1.5%, 2.1%, 0.6% and 3.2%, respectively.

Utilities shares were the only loser among the top ten S&P 500 industry groups. The Utilities SPDR (XLU) lost 0.1%. Shares such as Duke Energy Corp (NYSE:DUK), the Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), NRG Energy Inc. (NYSE:NRG) and Xcel Energy Inc. (NYSE:XEL) declined 0.2%, 0.2%, 0.1%, 1.6% and 0.3%, respectively.

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