Stock Market News for March 25, 2015 – Zacks Investment Research
Improved consumer-price index failed to cheer markets as the benchmarks settled in the red for the second consecutive day. While utilities sector dragged benchmarks lower, strong housing numbers could only boost the housing stocks. Benchmarks had gained momentarily, but they gave up all their initial gains after the dollar started moving higher against the euro. Tuesday also marked the second lowest trading volume of the year.
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The Dow Jones Industrial Average (DJI) dived nearly 105 points, or 0.6%, to close at 18,011.14. The Standard & Poor’s 500 (S&P 500) decreased 0.6% to 2,091.50. The tech-laden Nasdaq Composite Index closed at 4,994.73; losing more than 0.3%. The fear-gauge CBOE Volatility Index (VIX) gained 1.6% to settle at 13.62. A total of about 5.8 billion shares were traded on Tuesday, which was 13% lower than the three-month average. Decliners outpaced advancing stocks on the NYSE. For 43% stocks that advanced, 54% declined.
Markets slipped for the second consecutive day yesterday. The S&P 500 has now registered 25 trading days without ending in the green for two consecutive days. This is the longest stretch of failing to register back-to-back advances since the 25-day stretch recorded in 2001. However, the S&P 500 had gained 0.2% during the day, before losing all of those gains post noon. The Nasdaq too had gained 0.4% and was 20 points short of hitting an all-time high.
The strength in dollar was largely attributed for erasing the gains yesterday. The dollar had started loer against the euro, but it later strengthened and drove the equities lower. The euro dropped 0.2% against the dollar to $1.0926 yesterday in late New York trading. The correlation between stronger dollar and equities ending in the red has been prominent in recent days. Stronger dollar has sparked fears of multinationals being adversely affected.
While fluctuations in dollar remain a key issue for markets, investors have also been jittery about the timing of the US central bank hiking rates. The two were somewhat related yesterday, as the rally was also spurred by consumer-price index moving up.
U.S. consumer prices registered first increase since October, which also turned out to be the biggest monthly gain since last June. According to the U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U) gained 0.2% in February. This was in line with the consensus estimates. Excluding food and energy, the index gained 0.2% in February. The all-item index was flat year on year, but excluding food and energy it increased 1.7%.
This data is crucial as the Federal Reserve is looking at inflation as an important data point among others for deciding on rate hikes. The central bank’s inflation target is 2%. Shifting focus to the dollar again, higher rates will spur demand for dollar, as dollar-denominated assets would provide higher returns.
Separately, U.S. Census Bureau and the Department of Housing and Urban Development jointly reported a 7.8% gain in sales of new single-family houses in February to 539,000. The new-home sales jumped to the highest level in seven years. This was also way above the consensus estimate of sales increasing to 465, 000.
The strong housing data helped the housing stocks end in positive territory. The SPDR S&P Homebuilders ETF (XHB) gained almost 1%. Key holdings including Ryland Group Inc. (RYL – Snapshot Report), Toll Brothers Inc. (TOL – Analyst Report), Lennar Corp. (LEN – Analyst Report), and The Home Depot, Inc. (HD – Analyst Report) gained 1.5%, 1.5%, 1.8% and 0.1%, respectively.
Homebuilders were the rare gainers as all S&P industry groups ended in the red. Utilities sector was the biggest drag as Utilities Select Sector SPDR ETF (XLU) slumped 1.1%. Key holdings such as Duke Energy Corporation (DUK – Analyst Report), NextEra Energy, Inc. (NEE – Analyst Report), Dominion Resources, Inc. (D – Snapshot Report), Southern Company (SO – Analyst Report) and Exelon Corporation (EXC – Analyst Report) slumped 1%, 0.9%, 1%, 1.4% and 0.5%, respectively.
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Stock Market News for March 25, 2015 – Zacks Investment Research
