Stock Market News for August 21, 2014 – Zacks Investment Research

Benchmarks finished its choppy session on a mixed note yesterday after Fed minutes showed officials debated about the timing of rate hike. S&P 500 and Dow finished in the green for the third straight day after they were able to pare losses following jitters from the Fed minutes. However, Nasdaq snapped its five-session rally.

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The S&P 500 is now 5 points away from its record high. The S&P 500 and the Dow gained for three-straight days. The Nasdaq snapped a five-session winning streak and settled in the red.

The Dow Jones Industrial Average (DJI) gained almost 0.4% to close at 16,979.13. The Standard & Poor 500 (S&P 500) advanced almost 0.3% to settle at 1,986.51. The tech-laden Nasdaq Composite Index closed at 4,526.48; declining a meager 0.02%. The fear-gauge CBOE Volatility Index (VIX) dropped 3.5% to settle at 11.78. A total of 4.5 billion shares were traded on Wednesday, less than last five day’s average of 5.2 billion. Advancers outpaced declining stocks on the NYSE. For 49% stocks that advanced, 47% declined.

Benchmarks slipped once the Fed minutes were released at 2 p.m. Minutes from the Federal Reserve’s July 29-30 policy meeting revealed Fed officials debated whether they need to hike key interest rates sooner-than-expected on the backdrop of an improving economy.

The Fed minutes showed some Fed officials were in favor of tightening monetary policy. They debated the timing of a rate hike following a recovery in the job market and pickup in inflation. The minutes also stated that “some” policymakers said “actual and expected progress” toward 5.5% unemployment and 2% annual inflation rate are “sufficient to call for a relatively prompt move” towards increasing interest rates.

However, there were other Fed officials who contradicted these views and sought further indications before deciding on hiking federal funds rate. At the end of the meeting, “most” of the policy makers agreed that timing of a hike “would depend on further information on the trajectories of economic activity, the labor market and inflation.”

Meanwhile, investors waited for what Janet Yellen and Mario Draghi have to say at Jackson Hole, Wyo on Friday. 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 policy in order to combat the perils of deflation.

Shares of The Home Depot, Inc. (HD – Analyst Report) gained 2.9% and closed at a record high of $90.75 a day after the company reported strong earnings results. Home Depot turned out to be the biggest percentage gainer among the Dow components.

Lowe’s Companies Inc. (LOW – Analyst Report) closed with gains of 1.6% after hitting an intra-day record high of $52.65. The company’s second-quarter earnings of $1.04 per share were a couple of cents ahead of the Zacks Consensus Estimate.

Target Corp. (TGT – Analyst Report) reported second-quarter adjusted earnings of 78 cents a share, in line with the Zacks Consensus Estimate. Shares of the discount retailer increased 1.8%.

Shares of American Eagle Outfitters, Inc. (AEO – Analyst Report) surged almost 12% after the company posted second-quarter 2014 earnings per share of 2 cents. The Zacks Consensus Estimate expected it to be break even. The Consumer Discretionary Select Sector SPDR (XLY) advanced 0.5%, the second-highest among the S&P 500 sectors.

Seven out of 10 sectors of the S&P 500 ended in the green. The Industrial Select Sector SPDR (XLI) gained almost 1.1%, the highest among the S&P 500 sectors. Key stocks from the sector such as General Electric Company (GE – Analyst Report), United Technologies Corp. (UTX – Analyst Report), Union Pacific Corporation (UNP – Analyst Report), 3M Company (MMM – Analyst Report) and Honeywell International Inc. (HON – Analyst Report) increased 1.2%, 1.1%, 1.1%, 0.8% and 1.1%, respectively.

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Stock Market News for August 21, 2014 – Zacks Investment Research

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