Positive investor sentiment towards
encouraging economic data released throughout last week ensured that
major indices posted record gains on Friday. The day was also marked by
major corporate developments and profits booked by energy and industrial
stocks. Meanwhile, the Euro Zone had a sliver of positive news after
car registrations for April increased marginally. All the top ten
S&P 500 industry groups finished in the green, among which energy
stocks outperformed others.
The Dow
Jones Industrial Average (:DJI) gained 0.8% to close the day at
15,354.40. The S&P 500 increased 1.0% to finish Friday’s trading
session at 1,666.12. The tech-laden Nasdaq Composite Index rose 1.0% to
end at 3,498.97. The fear-gauge CBOE Volatility Index (:VIX) dropped
4.8% to settle at 12.45. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.33 billion
shares, marginally below 2013’s average of 6.36 billion shares.
Advancing stocks outnumbered the decliners. For the 68% that advanced,
28% declined.
Benchmarks posted
gained for the fourth week in a row. The Federal Reserve’s monetary
stimulus coupled with strong corporate earnings and encouraging domestic
data fuelled the rally. The Dow Jones, the S&P 500 and the Nasdaq
have advanced 17.2%, 16.8% and 15.9%, respectively since the start of
2013. This week, the Dow, S&P 500 and the Nasdaq gained 2.0%, 1.5%
and 1.7%, respectively. In comparison with level which was prevailing
during March 2009, the S&P 500 has gained nearly 1000 points. A
removal of monetary stimulus might curb U.S. economic growth in the
second quarter. However, markets seem to be buoyant thanks to
encouraging retail sales and job market numbers.
On the domestic front, according to a report, released by Thomson
Reuters and University of Michigan, the consumer confidence index in May
improved to 83.7, above the consensus estimate of 77.6 and previous
month’s reading of 76.4. Meanwhile, another report released by the
Conference Board, indicated an improvement in the Conference Board
Leading Economic Index (LEI) for April. The index increased 0.6% compared to a marginal decline during the previous month.
Major components of this index are building permits, initial claims,
average work week in manufacturing and ISM new orders. For the six
months ending April 2013, the index has improved 1.7% compared to 0.5%
during previous six months. The Conference Board Coincident Economic
Index (:CEI) improved marginally 0.1%. However, for the six months
ending April 2013, the index advanced at much faster pace of 1.3%
compared to 0.4% in the previous six months.
On the international front, according to figures released by the
European Automobile Manufacturers' Association, new car registrations
for the month of April increased marginally for the first time in 19
months, by 1.7%. The increase is attributable to growth in Spain and
Germany. This report comes after the Euro Zone slipped into recession
for the first quarter. Germany’s Volkswagen gained 2% out of 27% market
share in Europe, compared to April 2012. Car sales have slumped in the
recession hit Euro Zone mainly because of low income and high
unemployment.
Energy stocks were the biggest gainers. The Energy Select Sector SPDR (XLE)
gained 1.7%. 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) increased
1.2%, 0.5%, 0.8%, 2.0% and 5.3%, respectively.
Read the analyst report on XOM Read the analyst report on CVX
Read the analyst report on HES
Read the analyst report on OXY
Read the analyst report on MPC
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