Stock Market News for April 17, 2014 – Zacks Investment Research
Benchmarks ended higher on Wednesday primarily boosted by encouraging industrial production data and better-than-expected Chinese economic data. Yahoo’s higher revenues also contributed to the bullish mood. Fed Chairwoman Janet Yellen’s speech in New York was another positive factor yesterday.
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The Dow Jones Industrial Average (DJI) gained 1% to close Wednesday’s trading session at 16,424.85. The Standard & Poor (S&P 500) rose 1.1% to finish at 1,862.31. The tech-laden Nasdaq Composite Index went up 1.3% to 4,086.23. The fear-gauge CBOE Volatility Index (VIX) plunged 9.2% to settle at 14.18. Total volume for the day was roughly 5.98 billion shares, lower than this month’s average of 6.95 billion. Declining stocks were outnumbered by advancing stocks on the NYSE. For 20% stocks that declined, 77% advanced.
Benchmarks ended in positive territory buoyed by encouraging economic data on industrial production. The Board of Governors of the Federal Reserve System reported that industrial production improved 0.7% in March after advancing 1.2% in February. This rise in industrial production in March was more than the consensus expectation of a rise by 0.5%. In March, manufacturing output improved 0.5% and mining output rose 1.5%. Separately, capacity utilization rose to 79.2%, more than the consensus expectations of a rise to 78.7%.
However, housing starts data reported by the U.S. Census Bureau and the Department of Housing and Urban Development was not that encouraging. According to the data, privately owned housing starts in March rose 2.8% to a seasonally adjusted annual rate of 946,000. The consensus estimate was expecting housing starts to be at 973,000. Also, privately owned housing units authorized by building permits dropped 2.4% to a seasonally adjusted annual rate of 990,000. Separate, single family housing starts surged 6.0%.
Investors also welcomed data on better-than-expected Chinese economic growth. The Chinese government reported that the world’s second-largest economy grew at 7.4% in the first quarter, more than the analysts’ expectation of an increase by 7.3%. However, this growth was less than 7.7% growth in the final quarter of last year.
Earlier, concerns over the strength of the Chinese economy rose after the Chinese government reported that March exports fell 6.6% from a year earlier and imports plunged 11.3% in the same period. However, in March there was a trade surplus of $7.71 billion in contrast to a deficit of $23 billion in February.
Yahoo! Inc.’s (NASDAQ:YHOO) higher revenues from display advertising and better-than-expected growth in Alibaba, in which Yahoo holds a 24% stake, added to the bullish mood. Yahoo reported display revenues (ex-TAC) of $409 million, up 2% year-over-year. Also, shares of the Internet staple company responded to the strength in Alibaba, climbing 6.3%. Sales figures of Alibaba grew 66% in the December quarter, to $1.84 billion.
Investors also got a boost from Federal Reserve Chairwoman Janet Yellen’s speech in the Economic Club of New York. She reaffirmed the central bank’s decision to hike interest rates only when they are sure about the economic recovery. Also, the central bank will rely on a ‘wide range of information’ on jobs as well as inflation and not just the unemployment rate while deciding on raising interest rates. Yellen was speaking after the release of the Fed’s Beige Book report.
The Federal Reserve’s Beige Book indicated that economic conditions expanded moderately in most of the 12 Federal Reserve Districts. Consumer spending increased in most districts due to improvement in weather conditions. Auto sales were up in districts such as New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco. Manufacturing too improved in most districts. Manufacturing activities in Chicago and Minneapolis were moderate. In districts such as New York, Atlanta, St. Louis, and Dallas manufacturing activities grew at a steady pace.
On the earnings front, Intel Corporation (NASDAQ:INTC) posted earnings of 38 cents per share, more than the Zacks Consensus Estimate of 37 cents per share. Shares of the semiconductor giant went up 0.6%. CSX Corp. (NYSE:CSX) reported first quarter 2014 earnings of 40 cents, beating the Zacks Consensus Estimate of 38 cents. However, earnings fell 11% from 45 cents earned in the year-ago quarter. Shares of CSX Corp. fell 1.8%. Bank of America Corporation’s (NYSE:BAC) shares fell 1.6% after the company reported first quarter net loss of 5 cents per share.
All the 10 sectors of the S&P 500 ended in the green. The Industrial Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) led the gains as both the sectors increased 1.5%. Top holdings from the Industrials select such as General Electric Company (NYSE:GE), United Technologies Corp. (NYSE:UTX), Union Pacific Corporation (NYSE:UNP), The Boeing Company (NYSE:BA) and 3M Company (NYSE:MMM) rose 1.2%, 1.9%, 1.4%, 1.4% and 2.0%, respectively.
Key stocks from the Materials sector such as E. I. du Pont de Nemours and Company (NYSE:DD), Monsanto Company (NYSE:MON), The Dow Chemical Company (NYSE:DOW), Praxair Inc. (NYSE:PX) and LyondellBasell Industries NV (NYSE:LYB) advanced 1.2%, 1.7%, 1.9%, 1.8% and 2.1%, respectively.
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Stock Market News for April 17, 2014 – Zacks Investment Research
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