Stock Market News for January 05, 2015 – Zacks Investment Research
Benchmarks finished the first trading session of 2015 almost unchanged while investors received discouraging economic data. Weaker-than-expected reports on U.S. manufacturing and construction dented investor sentiment. The S&P 500 and the Nasdaq closed in negative territory, but the Dow ended its three-straight session losing streak and closed with meager gains on Friday. Meanwhile, benchmarks snapped a two-week winning streak and settled in the red for the holiday-shortened week.
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The Dow Jones Industrial Average (DJI) gained almost 0.1% to close at 17,832.99. The Standard & Poor 500 (S&P 500) declined a meager 0.03% to close at 2,058.20. The tech-laden Nasdaq Composite Index closed at 4,726.81; declining 0.2%. The fear-gauge CBOE Volatility Index (VIX) went down 7.3% to settle at 17.79. A total of about 5.29 billion shares were traded on Friday, significantly below last months’ average of 6.87 billion. Advancers outpaced declining stocks on the NYSE. For 54% stocks that advanced, 43% declined.
Volumes were light as many investors opted for an extended holiday session after the New Year Day. The composite volumes of the New York Stock Exchange and the Nasdaq fell short of their 30-day average. Nevertheless, benchmarks had started the day on a positive note. The S&P 500 went up almost 0.7% in the first hour of the trading session. The blue-chip index was also up as much as 129 points in the morning session. However, the indexes gave away their initial gains and ended little changed following a slowdown in U.S. manufacturing and construction spending.
Manufacturing sector expanded at the slowest pace since last six months in December. The Institute for Supply management reported its December PMI had dropped 3.2 percentage points from November’s reading of 58.7% to 55.5%. The drop to 55.5% in December was more than the consensus estimate of a decrease to 57.4%. Labor troubles at major West Coast ports was cited to be the reason behind this fall in manufacturing activity.
The ISM Manufacturing Index is based on surveys of 300 purchasing managers nationwide representing 20 industries regarding manufacturing activity. A drop in such a key index of the world’s largest economy unnerved investors immediately. Additionally, the New Orders Index declined 8.7% from November to 57.3% in December. The Production Index stood at 58.8%, plunging 5.6 percentage points from November’s reading of 64.4%.
The final Markit reading of US Manufacturing Purchasing Managers Index was better than its preliminary reading. The final reading showed Markit US manufacturing index came in at 53.9 in December, down from 54.8 in November. According to the preliminary reading, the Markit US manufacturing index was at 53.7 in December.
Separately, the US Census Bureau of the Department of Commerce reported construction spending of $975 billion in November. This was 0.3% lower than the revised October estimate of $977.7 billion. Moreover, this decrease in the payout by builders on residential and nonresidential structures was in contrast to the consensus estimate of an increase of 0.3%.
Meanwhile, shares of Denbury Resources Inc. (DNR – Analyst Report) declined 2.6%, the most among the S&P 500 sectors. However, the Energy Select Sector SPDR (XLE) advanced 0.5%, the highest among the S&P 500 sectors. Key energy stocks such as Chevron Corporation (CVX – Analyst Report), Schlumberger Limited (SLB – Analyst Report) and Kinder Morgan, Inc. (KMI – Analyst Report) increased 0.4%, 0.3% and 1.2%, respectively.
On the other hand, the consumer discretionary sector suffered the most among the S&P 500 sectors. The Consumer Discretionary Select Sector SPDR (XLY) declined 0.7%. Top holdings from this sector including Comcast Corporation (CMCSA – Analyst Report), The Walt Disney Company (DIS – Analyst Report), The Home Depot, Inc. (HD – Analyst Report), Amazon.com Inc. (AMZN – Analyst Report) and McDonald’s Corp. (MCD – Analyst Report) decreased 1.1%, 0.5%, 1.5%, 0.6% and 0.5%, respectively.
Separately, a drop in share price of Apple Inc. (AAPL – Analyst Report) had a negative impact on the Nasdaq. Shares of the tech behemoth went down almost 1%, settling below its 50-day moving average. The Technology Select Sector SPDR (XLK) declined 0.2%. Overall, 5 out of 10 sectors of the S&P 500 ended in the red.
Over the week, the S&P 500, the Dow and the Nasdaq declined 1.5%, 1.3% and 1.7%, respectively. Benchmarks settled in the negative territory for the week as renewed political unrest in Greece continued to weigh on investor sentiment. Greece is expected to head to polls in early 2015 after the country’s parliament rejected Prime Minister Antonis Samaras’s preferred presidential candidate in a third and final vote on Monday.
Disappointing economic reports on jobless claims and growth in business activity in 2014 too had a negative impact on investor sentiment. Separately, slump in oil prices weighed on energy shares on the last trading day of 2014. However, benchmarks finished in the green last month and for 2014, banking on overall positive economic scenario in the U.S.
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Stock Market News for January 05, 2015 – Zacks Investment Research
