Stock Market News for March 13, 2015 – Zacks Investment Research
Benchmarks snapped two-day losses to end in the green on Thursday as mixed economic data reduced fears about sooner-than-expected rate hike. Moreover, mixed economic data put the brakes on dollar rally yesterday. Meanwhile, financial stocks posted solid gains after Fed’s stress tests. However, decline in energy shares following oil price slump limited some of yesterday’s gains. The Dow and S&P 500 registered biggest one-day gain since Feb 3.
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The Dow Jones Industrial Average (DJI) jumped 1.5% to close at 17,895.22. The Standard & Poor’s 500 (S&P 500) gained 1.3% to 2,065.95. The tech-laden Nasdaq Composite Index closed at 4,893.29; rising 0.9%. The fear-gauge CBOE Volatility Index (VIX) lost 8.6% to settle at 15.42. A total of about 3.42 billion shares were traded on Thursday on NYSE. Advancers outpaced declining stocks on the NYSE. For 71% stocks that advanced, 26% declined.
On Thursday, the U.S. Department of Commerce reported that retail sales declined 0.6% in February to $437.0 billion, compared to the consensus estimate of 0.3% rise. February’s decline was preceded by 0.8% drop in January and 0.9% decline in December. This is the first time since 2012 that retail sales have declined for three-straight months. Market watchers have speculated that harsh winter has had a negative impact on consumer spending in February.
Meanwhile, disappointing retail sales data eased the fears regarding earlier-than-anticipated rate hike to some extent. Investors speculated that the Fed may find it difficult to achieve its inflation rate target of 2% due to slowdown in consumer spending. Hence, it has been anticipated that the Fed will wait little longer than June before raising interest rate.
Moreover, disappointing retail sales data also dragged down dollar on Thursday against major currencies including euro. The euro recovered from 12-year low to register a gain of 0.6% against dollar yesterday. The European Central Bank’s (ECB) quantitative easing program of 1 trillion euro was the main reason behind the euro slide in recent times.
Separately, the U.S. Department of Labor reported that initial claims declined in the week ending Mar 7 after hitting 10-month high earlier week. It was reported that jobless claims reduced 36,000 from previous week to 289,000, also lower than the consensus estimate of 305,000. The 4-week moving average also declined 3,750 to 302,250. Encouraging initial claims data indicates the labor market is recovering at an impressive rate.
In a separate report, the labor department said that import price index rose 0.4% in February, higher than the consensus estimate of a gain of 0.1%. This was the first time in last nine months that the index registered monthly gains. However, excluding fuel, the index posted a loss of 0.3% in February, which was preceded by 0.6% decline in January.
Additionally, following the release of the Dodd-Frank Act supervisory stress test 2015 (DFAST 2015) results last week, the Federal Reserve approved the capital plans of 28 financial institutions out of 31 in the Comprehensive Capital Analysis and Review (CCAR). These banks now have the freedom to raise dividends and buy back shares. However, among 31 banks, capital plans of U.S. units of Germany-based Deutsche Bank AG (DB – Analyst Report) and Spain’s Banco Santander, S.A. (SAN – Snapshot Report) have been rejected by the Fed based on certain “qualitative” reasons.
The stress tests result had a positive impact on the Financial Select Sector SPDR (XLF) which gained 2.2%. The sector was the biggest gainer among the S&P 500 sectors on Thursday. Key companies from the sector including Morgan Stanley (MS – Analyst Report), Citigroup Inc. (C – Analyst Report), Wells Fargo & Company (WFC – Analyst Report) and The Goldman Sachs Group, Inc. (GS – Analyst Report) gained 6.1%, 3.3%, 3.5% and 3.1%, respectively. These financial institutions also passed the stress tests.
However, decline in oil price continue on Thursday after a report that said that there is a possibility of an increase of around 2.2 million barrels of crude inventories in Cushing, Oklahoma. The prices of WTI crude oil and Brent crude oil declined 2.3% and 0.8% to $47.05 a barrel and $57.08 per barrel, respectively.
The Energy Select Sector SPDR (XLE) declined 0.6% following the oil price slump. The sector was the only decliner among the S&P 500 sectors on Thursday. Key energy stocks including EOG Resources, Inc. (EOG – Analyst Report), Chevron Corporation (CVX – Analyst Report), Chesapeake Energy Corporation (CHK – Analyst Report) and Marathon Petroleum Corporation (MPC – Analyst Report) lost 1%, 1.1%, 2.6% and 1.2%, respectively.
On the earnings front, shares of Krispy Kreme Doughnuts, Inc. (KKD – Snapshot Report) dropped 6.5% after reporting fourth quarter revenues of $125 million, missing the Zacks Consensus Estimate of $126 million. Moreover, Intel Corporation’s (INTC – Analyst Report) shares declined 4.7% after forecasting first quarter revenues of around $12.8 billion, down from its previous guidance of about $13.7 billion.
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Stock Market News for March 13, 2015 – Zacks Investment Research
