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 0.3% to close the day at 15,636.55. The S&P 500 decreased 0.2% to finish yesterday’s trading session at 1,722.34. The tech-laden Nasdaq Composite Index rose 0.2% to end at 3,789.38. The fear-gauge CBOE Volatility Index (:VIX) decreased 3.2% to settle at 13.16. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.74 billion shares, above 2013’s average of 6.24 billion shares. Declining stocks outnumbered the advancers. For 57% shares that declined, 40% advanced.
Recently, the Fed decided to continue with its massive $85 billion bond purchase program, triggering a rally. However, benchmarks finished mixed during yesterday’s trading session as investors waited for another major catalyst. Fed chairman Ben Bernanke said the Central Bank is looking for signs of stability in the economy. The timeline for tapering of the bond purchase program would be decided following confirmation of such stability. Benchmarks have gained in excess of 18% since the start of 2013 on the back of this stimulus program.
Numerous economic reports were also released yesterday, many of which were above estimates. However, such data also failed to boost investor sentiment. According to the US Department of Labor, the number of Americans applying for unemployment insurance increased 15,000 to 309,000. This is well above the consensus estimate of 342,000. However, this is above the previous week’s figure of 294,000. On a 4-week moving average basis, the figure came in at 314,750, down 7,000 from previous week’s figure of 321,750.
Meanwhile, according to the US Department of Commerce, the current account deficit dropped to $98.9 billion for the period between April and June. This is well below previous period’s figure of $104.9 billion but marginally higher than the consensus estimate of $97.2 billion. The current account deficit has decreased on the back of high exports. This is also the lowest level attained in past four years.
The Bloomberg Consumer Confidence Index dropped to -29.4. This reading is well below estimates since Americans’ outlook on the housing market declined. This decrease in the outlook is attributable to an increase in mortgage rates which might hamper the housing recovery. The recent unevenness witnessed in the labor and housing markets is the sole reason why the Fed has continued with the bond purchase program. The barometer measuring the buying climate increased to -36.3 from -38.9. Americans’ view on the country’s economy increased to -53.5 from previous week’s reading of -55.5.
According to the national Association of Realtors, existing home sales increased 1.7% to 5.48 million. This is above the consensus estimate of 5.25 million and previous year’s figure of 4.84 million. Housing inventory for the month of August increased 0.4% to 2.25 million units which are available for sale.
Industrials stocks gained the most during yesterday’s trading session. The Industrials SPDR (XLI) increased 0.3%. Stocks such as United Technologies Corporation (NYSE:UTX), Union Pacific Corporation (NYSE:UNP), United Parcel Service, Inc. (NYSE:UPS), Emerson Electric Co. (NYSE:EMR) and Honeywell International Inc. (NYSE:HON) gained 0.3%, 0.9%, 0.9%, 0.8%, 1.2% and 0.2%, respectively.
Utility stocks were the biggest losers among the top ten S&P 500 industry 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), Sempra Energy (NYSE:SRE) and PG&E Corporation (NYSE:PCG) lost 0.3%, 0.8%, 0.3%, 1.1% and 0.3%, respectively.
- Utility Industry