Stock Market News for March 30, 2015 – Zacks Investment Research

Stock Market News for March 30, 2015 – Zacks Investment Research

Benchmarks ended the last trading session of the week on a positive note after Fed Chair Janet Yellen said there was a possibility of a gradual hike in interest rates sometime this year. The Nasdaq was boosted by a possible deal between Intel and Altera. Gains in bio-tech stocks also helped the Nasdaq end in positive territory. However, benchmarks reported steepest weekly loss since the end of January as investors remained concerned regarding first quarter earnings results due to overall strength of the dollar, over-valued bio-tech stocks and drop in durable orders in February.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) gained 0.2% to close at 17,712.66. The Standard & Poor’s 500 (S&P 500) also advanced 0.2% to 2,061.02. The tech-laden Nasdaq Composite Index closed at 4,891.22; increasing 0.6%. The fear-gauge CBOE Volatility Index (VIX) declined 4.6% to settle at 15.07. A total of about 3 billion shares were traded on NYSE on Friday. Advancers outpaced declining stocks on the NYSE. For 58% stocks that advanced, 38% declined.

Benchmarks snapped a four straight-session losing streak to end in the green on Friday following Federal Reserve Chairwoman Janet Yellen’s comments on monetary policy. At a conference sponsored by the San Francisco Fed, Yellen said: “I expect that conditions may warrant an increase in the federal funds rate target sometime this year.” Yellen added: “My FOMC colleagues and I generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years.”

Yellen emphasized that rise in inflation rate is not essential for the Fed to hike interest rates. She was “cautiously optimistic” that economic growth will touch 2.3% in 2015, unemployment rate will drop further and consumer spending is expected to increase “at a good clip”.

Meanwhile, Intel Corporation (INTCAnalyst Report) held talks to buy Altera Corp. (ALTRAnalyst Report). Intel is expected to buy Altera for about $10 billion, which will turn out to be Intel’s biggest acquisition ever. Shares of Intel and Altera surged 6.4% and 28.4%, respectively. Possibility of a new deal between the two chipmakers boosted the Nasdaq.

Gains among bio-tech stocks also had a positive impact on the Nasdaq. Bio-tech stocks including Biogen Idec Inc. (BIIBAnalyst Report), Celgene Corporation (CELGAnalyst Report), Vertex Pharmaceuticals Incorporated (VRTXAnalyst Report) and Regeneron Pharmaceuticals, Inc. (REGNAnalyst Report) and Amgen Inc. (AMGNAnalyst Report) increased 0.2%, 0.9%, 2.3%, 1.4% and 1.3%, respectively.

The SPDR S&P Homebuilders ETF (XHB) gained 1.5%, the highest among the S&P 500 sectors. Key holdings including Ryland Group Inc. (RYLSnapshot Report), Toll Brothers Inc. (TOLAnalyst Report), Lennar Corp. (LENAnalyst Report), and The Home Depot, Inc. (HDAnalyst Report) gained 3.4%, 2.3%, 2% and 1.3%, respectively.

On the other hand, energy shares took a beating due to drop in oil prices. Easing tensions in the Middle-East led to fall in oil prices on Friday. Saudi Arabia along with its allies had launched an air strike against advancing Iran-backed Shia tribal forces in Yemen on Thursday. The Energy Select Sector SPDR (XLE) decreased 0.8% and was the biggest loser among the S&P 500 sectors. Dow components Exxon Mobil Corporation (XOMAnalyst Report) and Chevron Corporation (CVX) both declined 1.9%.

Investors also assessed the final revision of the fourth quarter economic growth. According to the “third estimate” reported by the Bureau of Economic Analysis, the fourth quarter output of goods and services increased at an annual rate of 2.2%, less than the consensus estimate of an increase by 2.4%. The report on the fourth quarter GDP remained unchanged when compared to the “second” estimate issued last month. This rise in fourth quarter GDP was also less than the third quarter’s growth in real GDP by 5%.

Growth was hampered after business investment was trimmed, government spending dropped and trade balance deteriorated. Additionally, corporate profit after tax declined 3% from the third quarter, its biggest quarterly decline since first quarter of 2011. A stronger U.S. dollar and decline in global demand were cited to be the reasons responsible for the fall. However, real personal consumption expenditure, which accounts for almost two-third of the U.S. economy, accelerated 4.4% in the fourth quarter, its largest quarterly increase since the first quarter of 2006.

Separately, the University of Michigan and Thomson Reuters’ final reading of consumer sentiment was at 93 in March. This was more than the consensus forecast of an increase to 92.1.

For the week, the S&P 500, the Dow and the Nasdaq declined 2.3%, 2.3% and 2.7%, respectively. Benchmarks ended in the red for the week as fluctuations in the value of the U.S. dollar weighed on investor sentiment. Slump in biotech and technology stocks also sent benchmarks to negative territory. These sectors witnessed intense selling pressure as investors remained concerned that strength in the U.S. dollar will negatively impact earnings growth in upcoming quarters. Additionally, crisis in in the Middle-East following an air strike in Yemen dampened investor sentiment on Thursday. Separately, improved consumer-price index failed to cheer markets on Tuesday.

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Stock Market News for March 30, 2015 – Zacks Investment Research

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