Stock Market News for August 19, 2014 – Zacks Investment Research
New deals, upbeat homebuilder confidence data and easing tensions between Russia and Ukraine handed markets strong gains on Monday. Meanwhile, investors waited for what Janet Yellen and Mario Draghi have to say at Jackson Hole, Wyo on Friday. The S&P 500 is now 1% away from its record high and Nasdaq closed above 4,500 points for the first time in 14 years. The blue-chip index registered its biggest one-day percentage gain since Aug 8.
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The Dow Jones Industrial Average (DJI) gained about 1.1%, or over 175 points, to close at 16,838.74. The Standard & Poor 500 (S&P 500) advanced 0.9% to settle at 1,971.74. The tech-laden Nasdaq Composite Index closed at 4,508.31; gaining almost 1%. The fear-gauge CBOE Volatility Index (VIX) dropped 6.3% to settle at 12.32. A total of 4.5 billion shares were traded on Monday, less than last five day’s average of 5.2 billion. Advancers outpaced declining stocks on the NYSE. For 76% stocks that advanced, 21% declined.
Deal news between Dollar General Corporation (DG – Analyst Report) and Family Dollar Stores Inc. (FDO – Analyst Report) was welcomed by investors. Dollar General offered to acquire the company in an all-cash deal valued at $78.50 per share or $8.95 billion. Shares of Family Dollar Stores and Dollar General jumped 4.9% and 11.6%, respectively. Both Dollar General and Family Dollar Stores turned out to be among the biggest percentage gainers among the S&P 500 components.
The NAHB/Wells Fargo Housing Market index rose 2 points to 55 in August, hitting its highest level in seven months. Homebuilder sentiment also rose for the third straight month in August.
Upbeat housing data boosted housing stocks and eventually the broader markets. The SPDR S&P Homebuilders (XHB) was the biggest gainer among the S&P 500 sectors. The sector gained 1.8%. Key stocks from the sector such as PulteGroup, Inc. (PHM – Analyst Report), Toll Brothers Inc. (TOL – Analyst Report), DR Horton Inc. (DHI – Analyst Report) and Lennar Corp. (LEN – Analyst Report) increased 2.8%, 1.7%, 1.4% and 1.7%, respectively. Overall, 9 out of 10 sectors of the S&P 500 ended in the green.
Airline stocks also gained on Monday due to a drop in oil prices. Brent crude oil prices plunged to a 14-month low of 101.11, before closing at 101.60. Oil prices took a hit on easing geopolitical tensions.
Shares of U.S. airline companies such as Delta Air Lines Inc. (DAL – Analyst Report), United Continental Holdings, Inc. (UAL – Analyst Report), The Boeing Company (BA – Analyst Report) and Southwest Airlines Co. (LUV – Analyst Report) gained 2.5%, 3.9%, 1.5%, and 3.6%, respectively.
Reportedly, an agreement was reached between Ukraine and Russian foreign ministers regarding humanitarian aid from Russia. Russia’s Foreign Minister Sergei Lavrov held talks with Germany, France and Ukraine over the weekend. He said: “Finally, all questions have been resolved … related to the Russian initiative to send 300 trucks with humanitarian aid.”
Last Friday, Russia had accused Ukraine of trying to halt Russia’s humanitarian aid mission in eastern parts of Ukraine. Ukraine retaliated by saying Russia is trying to ferry military personal through humanitarian convoys.
Meanwhile, investors remained focused on the annual symposium of central bankers scheduled to be held in Jackson Hole, Wyo on Friday. U.S. Federal Reserve Chairwoman Janet Yellen’s speech will possibly indicate whether the quantitative easing program will continue. European Central Bank President Mario Draghi’s speech will provide clues as to whether ECB will push for easy monetary policies in order to combat the perils of deflation.
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Stock Market News for August 19, 2014 – Zacks Investment Research
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