Benchmarks ended mixed on Wednesday following World Bank’s downgrade of global growth estimates, which was partly overshadowed by strong earnings from two big banks. The Dow Jones’ five run of gains came to an end. Meanwhile, the Consumer Price Index remained unchanged in December whereas industrial production surged slightly. The energy sector was the biggest gainer among the S&P 500 industry groups whereas materials sector emerged as the major loser.
The Dow Jones Industrial Average (:DJI) lost 0.2% to close the day at 13,511.23. The Standard & Poor 500 (S&P 500) added 0.02% to finish yesterday’s trading session at 1,472.63. The tech-laden Nasdaq Composite Index gained 0.2% to end at 3,117.54.The fear-gauge CBOE Volatility Index (:VIX) lost 1.0% to settle at 13.42. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.6 billion shares, significantly lower than 2012’s daily average of 6.45 billion shares. Declining stocks outpaced advancers on the NYSE; as for 52% stocks that fell, 44% moved higher.
Goldman Sachs Group, Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) reported their quarterly results on Wednesday. Shares of Goldman Sachs jumped 4.1% to its highest level since May 2011 after the company reported better-than-expected earnings. Earnings nearly tripled in the fourth quarter boosted by strong growth in its investment banking business. JPMorgan earnings also came in above the Street’s estimates. The company’s net income increased 53% in the fourth quarter.
The World Bank reduced global growth estimates because of slow improvement in developed nations. It reduced its global growth rate forecast for 2013 to 2.4% from previous estimates of 3.0%. The World Bank also estimates that U.S growth will decrease by 0.5% in 2013. According to the World Bank:
”Overall, the global economic environment remains fragile and prone to further disappointment, although the balance of risks is now less skewed to the downside than it has been in recent years.”
Meanwhile, a report from the U.S. Bureau of Labor Statistics revealed that the Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in December. The gasoline index dropped in December for the third consecutive month. CPI surged 1.7% in 2012 following a 3.0% increase in 2011. The energy index surged 0.5% in 2012 whereas food index increased 1.8%.
Additionally, industrial production gained 0.3% in December following an increase of 1.0% in November. This was in line with consensus estimates of 0.3%. In the fourth-quarter, overall industrial production increased 1.0% annually. Manufacturing activity increased 0.8% in December after gaining 1.3% in November.
The Federal Reserve released its latest Beige Book on January 16 which noted that economic activity in the U.S. increased at a moderate pace in December and the early part of January. According to the report, “Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate.” Consumer spending increased in all twelve districts.
The energy sector was the biggest gainer among the S&P 500 industry groups and the Energy Select Sector SPDR (XLE) gained 0.5%. Stocks such as Chevron Corporation (NYSE:CVX), Marathon Oil Corporation (NYSE:MRO), Hess Corp. (NYSE:HES), Devon Energy Corporation (NYSE:DVN) and Apache Corporation (NYSE:APA) gained 0.5%, 1.2%, 0.6%, 0.4% and 0.5%, respectively.
The materials sector was the major loser among the S&P 500 industry groups and the Materials Select Sector SPDR (XLB) lost 0.7%. Stocks such as E I Du Pont De Nemours And Co (NYSE:DD), FMC Corporation (NYSE:FMC), PPG Industries, Inc. (NYSE:PPG), Cabot Corp (NYSE:CBT) and The Dow Chemical Company (NYSE:DOW) slipped 0.6%, 0.5%, 0.7%, 1.4% and 1.3%, respectively.
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