Benchmarks ended lower on Thursday after investors were hesitant to take any positions ahead of the Federal Reserve’s policy meeting next week. This marked the end of the seven consecutive days of gains for the S&P 500. Despite the ongoing tensions between the U.S. and Syria, stocks had a good run on the back of encouraging domestic and international economic reports. Meanwhile, the number of Americans filing for unemployment benefits declined to its lowest level in more than 7 years. On the international front, Euro Zone’s industrial production declined more than expected in the month of July. The materials sector was the biggest loser among the S&P 500 industry groups. Technology stocks ended marginally higher.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (:DJI) lost 0.2% to close the day at 15,300.64 The S&P 500 slipped 0.3% to finish yesterday’s trading session at 1683.42. The tech-laden Nasdaq Composite Index decreased 0.2% to end at 3715.97. The fear-gauge CBOE Volatility Index (:VIX) climbed 3.4% to settle at 14.29. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.5 billion shares, above 2013’s average of 6.24 billion shares. Declining stocks outnumbered the advancers. For 32% shares that declined, only 65% advanced.
All eyes will be fixed on the outcome of the Federal Reserve’s next week policy meeting. Policy makers will closely monitor recent domestic reports. Except August non-farm payroll numbers, most of the other domestic reports in recent days has been fairly good. Markets expectations about the Fed trimming its bond buying program has increased.
Meanwhile, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov met in Geneva to discuss the ongoing crisis in Syria. Kerry said before the two-day meeting that he expects that diplomacy can prevent a military attack on Syria. He further added: “President Obama has made clear that should diplomacy fail, force might be necessary to deter and degrade Assad's capacity to deliver these weapons.”
On the domestic front, the U.S. Department of Labor released initial claims numbers. According to the report, initial claims dropped 31,000 to 292,000 from the prior week’s unrevised figure of 323,000. This was considerably below the consensus estimate of 330,000. Sharp decline in the initial claims was mostly due to processing problems. Two states reportedly had problems processing initial claims numbers, so were not added to the final figure. The four week moving average declined 7,500 to 321,250 from the earlier week's revised figure of 328,750.
On the international front, Euro Zone’s industrial production declined well below what economists had expected. According to the EU's statistics office Eurostat, industrial production declined 1.5% in the month of July. Economists had expected industrial production to rise 0.1%. Germany’s industrial production declined 2.3% in July from the previous month.
The material sector was the biggest loser among the S&P 500 industry groups and the Materials Select Sector SPDR ( XLB) lost 1.0%. Stocks such as E I Du Pont De Nemours And Co (NYSE:DD), LyondellBasell Industries NV (NYSE:LYB), Air Products & Chemicals, Inc. (NYSE:APD), The Dow Chemical Company (NYSE:DOW) and FMC Corp (NYSE:FMC) slipped 1.3%, 0.8%, 0.5%, 2.5% and 0.2%, respectively.
The technology sector was the biggest gainer among the S&P 500 industry groups and the Technology SPDR ( XLK) gained 0.1%. Stocks such as Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM), Super Micro Computer, Inc. (NASDAQ:SMCI), Cray Inc. (NASDAQ:CRAY) and Nokia Corporation (:ADR) (NYSE:NOK) added 1.1%, 0.02%, 0.8%, 1.3% and 6.9%, respectively.
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