Stock Market News for May 19, 2015 – Zacks Investment Research
Benchmarks ended higher on Monday after dismal housing report pushed back the possibility of rate hike in near term. Fed Chicago President Charles Evans also recommended that the Fed should hold back from hiking interest rates until 2016. Gains in Apple’s shares too boosted the broader markets. Monday’s gains helped the S&P 500 close at a record level for the third consecutive session and the Dow closed at its highest level. Separately, the Nasdaq settled in the green helped by gains in biotechnology stocks. Meanwhile, Greece’s debt crisis and rise in bond yields failed to dent investor sentiment.
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The Dow Jones Industrial Average (DJI) increased 0.1% to close at 18,298.88. The Standard & Poor’s 500 (S&P 500) gained 0.3% to 2,129.20. The tech-laden Nasdaq Composite Index closed at 5,078.44; gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) advanced 2.8% to settle at 12.73. A total of about 5.3 billion shares were traded on Monday, lower than last five trading days’ average of 6.4 billion. Advancers outpaced declining stocks on the NYSE. For 54% stocks that advanced, 42% declined.
Benchmarks started the week on a positive note after weak housing data increased expectations that the Federal Reserve may delay hiking interest rates in the near term. The National Association of Home Builders said the NAHB/Wells Fargo Housing Market index dropped from 56 in April to 54 in May. The figure was in contrast to analysts’ expectations that the index would increase to 57.
The decline in homebuilder’s confidence comes after mixed economic data last week gave no clear indication on the timing of a rate hike. While industrial production, producer price index and consumer sentiment declined, claims for unemployment benefits touched a 15-year low.
Meanwhile, Fed Chicago President Charles Evans said: “It likely will not be appropriate to begin raising the fed-funds rate until sometime in early 2016”. He finds no compelling reason to tighten financial conditions as he believes inflation is unlikely to touch Fed’s target rate of 2% until 2018. Charles Evans is one of the two Fed officials who said the central bank should wait till next year to raise interest rates.
Gains in Apple Inc.’s (AAPL – Analyst Report) shares also had a positive impact on the broader markets. Shares of Apple gained 1.1% after Carl Icahn, one of the top 10 shareholders, said the stock was “still dramatically undervalued”. He said the stock should be traded at $240 per share.
Separately, gains in bio-tech shares boosted the Nasdaq. Biotech stocks such as Celgene Corporation (CELG – Analyst Report), Amgen Inc. (AMGN – Analyst Report), Gilead Sciences Inc. ( (GILD – Analyst Report), Regeneron Pharmaceuticals, Inc. (REGN – Analyst Report) and Biogen Inc. (BIIB – Analyst Report) increased 0.7%, 0.7%, 1.6% 1.6% and 1.1%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) gained 1.3%, while the broader Health Care Select Sector SPDR (XLV) advanced 0.6%, the second highest among the S&P 500 sectors.
The SPDR S&P Homebuilders ETF (XHB) advanced 1% and was the biggest gainer among the S&P 500 sectors. Key holdings including Ryland Group Inc. ( (RYL – Snapshot Report), Toll Brothers Inc. (TOL – Analyst Report) and The Home Depot, Inc. (HD – Analyst Report) increased 1.1%, 1.4% and 0.9%, respectively. Overall, 8 out of 10 sectors of the S&P 500 ended in the green.
Meanwhile, Greek two-year sovereign bond yields moved north following investor concerns that the country may not be able to repay its debt to the International Monetary Fund (IMF) next month. A leaked IMF memo admitted that Greece has less chance of making its debt payment, scheduled on Jun 5.
Greece’s 10-year bond yields surged 7%. Spain and Italy’s bond yields also soared more than 7%, while German bund yield increased 3%. In U.S., benchmark U.S. 10-year Treasury note yields briefly climbed to 2.23% and the 30-year Treasury note yields went up as high as 3.03%. However, investors ignored discouraging news from Greece and renewed surge in global bond yields, which helped the markets settle in positive territory.
Original article –
Stock Market News for May 19, 2015 – Zacks Investment Research
