Benchmarks finished in the green on Thursday following encouraging U.S. private sector jobs data and gains in healthcare stocks. Moreover, late rebound in oil prices following a decline in crude inventories also boosted investor sentiment. All the three key U.S. indexes ended in positive territory with the S&P 500 settled at its highest level since Nov 3, 2015 and the Nasdaq registered seven straight session rise.
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The Dow Jones Industrial Average (DJI) increased 0.3%, to close at 17,838.56. The S&P 500 also rose 0.3% to close at 2,105.26. The tech-laden Nasdaq Composite Index closed at 4,971.36, gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 4% to settle at 13.63. A total of around 6.4 billion shares were traded on Thursday, lower than the last 20-session average of 7 billion shares. Advancers outpaced declining stocks on the NYSE. For 63% stocks that advanced, 34% declined.
Yesterday, a report from Automatic Data Processing, Inc. (ADP) revealed that private sector employers added 173,000 jobs in May, which was higher than April’s readings. Also, job additions for April were revised up by 10,000 to 166,000.
The U.S Department of Labor reported that seasonally adjusted initial claims decreased 1,000 to 267,000 in the week ending May 28, posting third straight weekly fall. Initial claims were also less than the consensus estimate of 268,000.
Initial claims remained below 300,000 for 65 consecutive weeks, its longest stretch since 1973. Also, the 4-week moving average came in at 276,750 last week, lower than 278,500 reported for the week ending May 21. Rise in number of jobs in the private sector and decline in initial claims highlighted economic growth, which in turn had a positive impact on investor sentiment.
In company news, Johnson & Johnson’s (JNJ) shares increased 1.5% after the company said that it will buy Vogue International LLC for $3.3 billion cash. Moreover, shares of Humana Inc. (HUM) and Aetna Inc. (AET) jumped 5.6% and 4.1%, respectively, on news that the latter have sold $13 billion bonds to help its $34 billion deal to acquire Humana. Gains in Johnson & Johnson, Humana and Aetna led the Health Care Select Sector SPDR ETF (XLV) to increase 1.3%, becoming the biggest gainer among the S&P 500 sectors.
Key stocks from the healthcare sector including AbbVie Inc. (ABBV), Medtronic plc ( MDT), Bristol-Myers Squibb Company (BMY), Allergan plc (AGN) and Amgen Inc. (AMGN) increased 3.6%, 3.1%, 1.6%, 2% and 1.2%, respectively. Dow components Merck & Co. Inc. (MRK), Pfizer Inc. (PFE) and UnitedHealth Group Incorporated (UNH) rose 0.9%, 0.4% and 1.1%, respectively.
Gains in healthcare stocks offset losses in energy stocks. Earlier on the day, oil prices declined after OPEC members failed to come to any agreement regarding crude production freeze in yesterday’s meeting in Vienna, which weighed on energy sector.
However, oil prices made a late recovery to end in positive territory after the U.S. Energy Information Administration (EIA) reported that the U.S. commercial crude oil inventories fell 1.4 million barrels to 535.7 million for the week ended May 27. It was in contrast to an increase of 2.4 million barrels reported by the American Petroleum Institute (API) a day earlier.
Moreover, total motor gasoline inventories declined by 1.5 million barrels last week. Fall in oil and gasoline inventories had a positive impact on oil prices. Both the WTI and Brent crude increased 0.3% and 0.6% to $49.17 per barrel and $50.04 a barrel, respectively.
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AUTOMATIC DATA (ADP): Free Stock Analysis Report
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HUMANA INC NEW (HUM): Free Stock Analysis Report
AETNA INC-NEW (AET): Free Stock Analysis Report
ABBVIE INC (ABBV): Free Stock Analysis Report
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