Stock Market News for May 19, 2014 – Zacks Investment Research
Benchmarks enjoyed a late-day reversal to end in the green on Friday, boosted by gains in small-cap stocks and advances in the consumer discretionary sector. Markets also received mixed economic data on Friday. While a surge in construction of new U.S. homes in April lifted investor sentiment, an unforeseen fall in consumer sentiment in May adversely affected the mood. Despite Friday’s gains, the S&P 500 and the Dow finished in the red for the week.
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The Dow Jones Industrial Average (DJI) went up 0.3% to close Friday’s trading session at 16,491.31. The Standard & Poor 500 (S&P 500) gained 0.4% to finish at 1,877.86. The tech-laden Nasdaq Composite Index rose 0.5% to 4,090.59. The fear-gauge CBOE Volatility Index (VIX) dropped 5.5% to settle at 12.44. Total volume for the day was roughly 5.7 billion shares, lower than this month’s average of 6.1 billion. Advancers outpaced declining stocks on the NYSE. For 65% stocks that advanced, 32% declined.
Benchmarks closed in positive territory after small-cap stocks bounced back during the latter part of the trading session. The Russell 2000 Index of small-caps went up 0.6% on Friday after it had earlier declined 0.7%. The index was able to come out from its “correction zone”.
During the week, the Russell 2000 Index had dropped for three consecutive days. On Thursday, the index slipped 0.7% and remained below its 200-day moving average. The index was down 10% from its record high of 1,208.65 achieved on March 4. On Wednesday the small-cap index had declined 1.6% followed by a drop of 1.1% on Tuesday.
Additionally, gains in the consumer discretionary sector ensured a positive finish for the benchmarks. The Consumer Discretionary Select Sector SPDR (XLY) advanced 0.7%. Internet stocks from the consumer discretionary sector such as online retailer Amazon.com Inc. (NASDAQ:AMZN), Internet television network provider Netflix, Inc. (NASDAQ:NFLX) and online travel company The Priceline Group Inc. (NASDAQ:PCLN) increased 0.9%, 1.7% and 0.1%, respectively. Other key stocks from the sector such as The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), McDonald’s Corp. (NYSE:MCD) and Ford Motor Co. (NYSE:F) gained 0.3%, 1.5%, 0.6% and 0.5%, respectively.
Separately, telecom company Verizon Communications Inc. (NYSE:VZ) also had a positive impact on the benchmarks. Shares of Verizon Communications increased 2.3% a day, following reports that investor Warren Buffet’s Berkshire Hathaway had bought 11 million Verizon shares in the first quarter.
Benchmarks traded in the negative territory for most of the trading session on Friday following mixed economic reports. The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced privately owned housing starts in April were at 1,072,000, up from the previous month’s revised figure of 947,000. This was more than the consensus estimate of 981,000. Housing starts increased at the fastest rate in five months. Rise in apartment construction was cited to be the reason behind the surge in home-construction last month.
Also, privately owned housing units authorized by building permits surged 8.0% to a seasonally adjusted annual rate of 1,080,000 in April from March’s revised figure of 1,000,000. Separately, single family housing starts in April increased 0.8% above March’s revised figure of 644,000.
However, the University of Michigan and Thomson Reuters’ preliminary reading of consumer sentiment declined in May. The gauge was at 81.8 in May, which was in contrast to the consensus forecast of an increase to 84.5. Consumers’ anxiety over stagnant wage growth was cited to be the reason. The Labor Department reported that average hourly wage rate increased only 1.9% year on year in April.
For the week, the Dow dropped 0.6% and the S&P 500 slipped a meager 0.03%. However, the tech-heavy Nasdaq gained 0.5%. On Tuesday, the Dow and the S&P 500 closed at record highs of 16,715.44 and 1,897.45, respectively.
Benchmarks finished mostly lower for the week, dragged down by declines in small-cap stocks. Wal-Mart’s disappointing numbers, Cisco’s dismal fiscal third quarter results and Euro zone’s less-than-expected first quarter GDP growth weighed on the benchmarks. Also, selloffs in the consumer discretionary sector had a negative impact on the benchmarks.
However, gains in Internet and bio-tech stocks, merger and acquisition activity in the food industry, the new deal between Keurig Green Mountain and Coca-Cola, an upward revision of March’s retail sales data and encouraging small-business sentiment had positive impacts on the benchmarks.
Coming back to Friday, nine out of 10 sectors of the S&P 500 ended in the green. The SPDR S&P Homebuilders ETF (XHB) led the advance among the S&P 500 sectors. The sector gained 1.1%. Key housing stocks such as PulteGroup, Inc. (NYSE:PHM) and Lennar Corp. (NYSE:LEN) increased 0.1% and 0.1%, respectively.
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Stock Market News for May 19, 2014 – Zacks Investment Research
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