Stock Market News for August 18, 2014 – Zacks Investment Research
Benchmarks ended Friday’s session on a mixed note after renewed tension between Ukraine and Russia unnerved investors. Ukraine forces destroyed part of a Russian armored column after it entered Ukrainian soil. However, benchmarks recorded their second-straight week of gains.
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The Dow Jones Industrial Average (DJI) declined 0.3% to close at 16,662.91. The Standard & Poor 500 (S&P 500) decreased a meager 0.01% to settle at 1,955.06. The tech-laden Nasdaq Composite Index closed at 4,464.93; gaining 0.3%. The fear-gauge CBOE Volatility Index (VIX) went up 5.9% to settle at 13.15. Total volume on the New York Stock Exchange was 3 billion. Decliners outpaced advancing stocks on the NYSE. For 49% stocks that declined, 47% advanced.
Benchmarks reversed initial gains after Ukrainian President Petro Poroshenko informed British Prime Minister David Cameron that Ukrainian artillery demolished a “significant” part of the Russian armored column that crossed into Ukrainian soil. A Ukrainian military spokesman said that they had tracked the column soon after it entered Ukraine.
However, Russia denied that no armored vehicles had entered into Ukrainian territory. Instead, they accused Ukraine of trying to halt Russia’s humanitarian aid mission in eastern parts of Ukraine.
Russian foreign minister said: “We draw attention to the sharp intensification of military action by Ukrainian forces with the apparent aim to stop the path, agreed on with Kiev, of a humanitarian convoy across the Russia-Ukraine border”. Ukraine retaliated by saying Russia is trying to ferry military personal through humanitarian convoys.
The incident unnerved investors as they took money out of equities and parked them into safe-haven assets.
This news on Russian incursion into Ukrainian soil comes a day after Russian president Vladimir Putin said that Russia will try its level best to curb the conflict in Ukraine. He also added there is a need for ‘consolidation and mobilization’, but not at the expense of confrontation with other countries.
On the domestic front, Monster Beverage Corporation’s (MNST – Analyst Report) shares climbed 30.5% after beverage giant The Coca-Cola Company (KO – Analyst Report) agreed to buy a 16.7% stake in the company. The deal is valued at $2.15 billion. Monster Beverage gained the most among the S&P 500 components. Applied Materials, Inc. (AMAT – Analyst Report) closely followed Monster Beverage. Its shares surged 6.3% a day after the company declared upbeat third-quarter earnings results.
However, shares of Nordstrom Inc. (JWN – Analyst Report) declined 5.2% after the largest U.S. luxury department-store chain fell short of same-store sales estimates for the recent quarter.
Economic data came in mixed on Friday. The Board of Governors of the Federal Reserve System reported industrial production rose 0.4% in July. This rise in industrial production in July was more than the consensus expectation of a rise by 0.3%. Separately, capacity utilization edged up to 79.2%, less than consensus expectations of a rise to 79.3%.
The monthly survey of manufacturers in New York State by the Federal Reserve Bank of New York showed modest improvement in business conditions. However, the improvement was less than that in the previous month. General business conditions index retreated to 14.7 in August. Consensus estimates had pegged it to be at 20.67. New orders slipped to 14.1 and unfilled orders index remained in the negative territory in August.
The University of Michigan and Thomson Reuters’ preliminary reading of consumer sentiment declined in August. The gauge was at 79.2 in August, which was in contrast to the consensus forecast of an increase to 82.6.
Separately, the U.S. Bureau of Labor Statistics reported that the U.S. Producer Price Index (PPI) for finished goods increased 0.1% in July, in-line with the consensus estimate.
Six out of 10 sectors of the S&P 500 ended in the green. The Energy Select Sector SPDR ETF (XLE) led the advance. The sector gained 0.7%. Key stocks from the sector such as Chevron Corporation (CVX – Analyst Report), Schlumberger Limited (SLB – Analyst Report) and EOG Resources, Inc. (EOG – Analyst Report) increased 0.2%, 0.6% and 2.1%, respectively.
Despite Friday’s losses, benchmarks ended with weekly gains. The S&P 500, the Dow and the Nasdaq gained 1.2%, 0.7% and 2.2%, respectively.
Benchmarks had gained on Monday following hopes that tensions between Russia and Ukraine would recede. On Thursday, Russian President Vladimir Putin’s comments eased concerns related to geopolitical tensions.
Positive earnings results, gains in biotech stocks, ceasefire agreement in Gaza and subdued Chinese inflation data also boosted the markets.
Downbeat European growth numbers, discouraging retail sales numbers and disappointing Germany’s investor confidence data were some of the negatives for the week.
Original article:
Stock Market News for August 18, 2014 – Zacks Investment Research
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