Stock Market News for June 23, 2014 – Zacks Investment Research

Benchmarks closed Friday’s trading session with modest gains as optimism from Wednesday’s policy statement spilled over into a second successive day. Friday’s modest gains helped the S&P 500 to close at a record high for the third straight day. The Dow also extended its winning streak to six sessions; it’s longest since December 2013. The blue-chip index also settled at a record high. The Nasdaq closed at a level last seen in April 2000. On Friday, volume was also higher than usual on a “quadruple witching” day. Benchmarks also ended the week with gains with S&P 500 recording its biggest weekly percentage gain since April 17.

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The Dow Jones Industrial Average (DJI) added almost 0.2% to close at 16,947.08. The Standard & Poor 500 (S&P 500) gained 0.2% to finish at 16,962.87. The tech-laden Nasdaq Composite Index also gained 0.2% and closed Friday’s session at 4,368.04. The fear-gauge CBOE Volatility Index (VIX) went up 2.2% to settle at 10.85. Total volume for the day was roughly 7.2 billion shares, lower than this month’s average of 5.5 billion. Advancers beat the declining stocks on the NYSE. For 56% stocks that advanced, 41% declined.

Optimism over the Federal Reserve’s commitment to keep interest rate low coupled with Federal Reserve Chairwoman Janet Yellen’s dovish comments on Wednesday helped benchmarks end higher on Friday. On Wednesday, the Federal Open Market Committee (FOMC) had decided in its two-day policy meeting to remain committed to low-interest rates. The FOMC released a statement that said benchmark interest rates were left unchanged at 0.00-0.25%. Further, the Fed reduced its monthly asset repurchase plan. The central bank trimmed its bond buyback plan for the fifth consecutive month, by $10 billion. The asset repurchase plan currently stands at $35 billion a month.

Federal Reserve Chairwoman Janet Yellen’s dovish comments after the release of the FOMC statement was also welcomed by investors. According to Yellen, the central bank will consider a “wide range of indicators” on the labor market for decisions on hikes in key interest rates. She was also optimistic about the present economic situation. She said: “Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter”.

On Friday, total volume on all stock exchanges was the largest since April 15 on a “quadruple witching” day. A quadruple witching refers to the third Friday of every March, June, September and December. On these days, market index futures, market index options, stock options and stock futures expire, usually resulting in increased volatility

Meanwhile, the health-care sector was somewhat boosted after Shire plc (NASDAQ:SHPG) rejected a $46.5 billion takeover bid from Illinois-based AbbVie Inc. (NYSE:ABBV). This was AbbVie’s third takeover bid. Shares of Shire plc surged 16.3%, whereas shares of AbbVie dropped 1.6%. Other health-care stocks such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Merck & Co. Inc. (NYSE:MRK), Gilead Sciences Inc. (NASDAQ:GILD) and Amgen Inc. (NASDAQ:AMGN) increased 1.4%, 0.6%, 1.1%, 1.8% and 2.7%, respectively. Overall, the Health Care Select Sector SPDR (XLV) gained 0.9%.

Separately, CarMax Inc. (NYSE:KMX) gained the most among the S&P 500 components. Shares of CarMax soared 16.5% after the company reported upbeat quarterly results. The company reported first quarter 2014 earnings per share of 76 cents, beating the Zacks Consensus Estimate of 66 cents per share. The used-car retailer’s net sales and operating revenues in the quarter also increased 13.3% to $3.75 billion.

Friday’s gains helped the S&P 500 record its biggest weekly percentage gain since April 17. The S&P 500 advanced 1.4%. The Dow and the Nasdaq too gained 1.0% and 1.3%, respectively, for the week.

Benchmarks ended in positive territory for the week as optimism from Wednesday’s policy statement continued. Gains in financial and small-cap stocks also ensured a positive finish for the benchmarks. Further, new deals between Medtronic, Inc. (NYSE:MDT) and Covidien plc (NYSE:COV), Williams Companies, Inc. (NYSE:WMB) and Access Midstream Partners, L.P. (NYSE:ACMP), Level 3 Communications, Inc.’s (NYSE:LVLT) and TW Telecom Inc. (NASDAQ:TWTC), and SanDisk Corp. (NASDAQ:SNDK) and Fusion-io, Inc. (NYSE:FIO) boosted investor sentiment. Encouraging data on manufacturing activity in the New York region, industrial production and U.S. homebuilders’ confidence also added to the bullish sentiment.

However, the gains were kept in check, owing to concerns over sectarian clashes in Iraq and its effect on crude oil prices. The Shiite group reportedly ignored Western calls for a discussion with the Sunnis to curb the uprising in the northern part of the country. On Monday, militants in Iraq published images of hundreds of executed Shiite Iraqi soldiers. The militants claimed to have executed the soldiers. The Wall Street Journal had reported that militant rebels and government forces continued their fight and killed 28 ISIS fighters. Iraq accounts for 3.3 million barrels of crude every day.

Coming back to Friday, 5 out of 10 sectors of the S&P 500 ended in the green. The energy sector notched significant gains on Friday and emerged as the best gainer among the S&P industry groups. The Energy Select Sector SPDR ETF (XLE) gained 1.0%. Key energy stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Schlumberger Limited (NYSE:SLB), Halliburton Company (NYSE:HAL), Transocean Ltd. (NYSE:RIG) and ConocoPhillips (NYSE:COP) increased 1.2%, 0.3%, 1.1%, 1.8%, 1.5% and 0.7%, respectively.

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Stock Market News for June 23, 2014 – Zacks Investment Research

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