Stock Market News for May 21, 2015 – Zacks Investment Research

Stock Market News for May 21, 2015 – Zacks Investment Research

Benchmarks ended mixed yesterday after Fed minutes showed officials looked past a June rate hike amid slow economic growth. While the S&P 500 and Dow ended in negative territory, Nasdaq ended in the green boosted by gains in biotech stocks. These three benchmarks had briefly touched their respective closing highs before settling lower.

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) declined almost 0.2% to close at 18,285.40. The Standard & Poor’s 500 (S&P 500) decreased 0.1% to 2,125.85. The tech-laden Nasdaq Composite Index closed at 5,071.74; gaining a meager 0.03%. The fear-gauge CBOE Volatility Index (VIX) went up 0.2% to settle at 12.88. A total of about 5.8 billion shares were traded on Wednesday, lower than this months’ average of 6.3 billion. Decliners outpaced advancing stocks on the NYSE. For 50% stocks that declined, 46% advanced.

Minutes from the Federal Open Market Committee’s (FOMC) Apr 28-29 meeting stated officials opined that a rate hike in June is “unlikely” as they remained concerned about weak economic growth in the first quarter. Federal Reserve officials are unsure about raising short-term interest rates in June. They want to wait to see further improvement in labor market conditions and inflation touching its target rate of 2%.

Fed officials believed “transitory” factors were affecting the economy. While housing numbers and employment growth picked up in April, industrial production, producer price index, consumer sentiment and retail sales numbers were discouraging.

Meanwhile, some long-term factors still continue to weigh on Fed officials’ decision on the timing of a rate hike. The minutes said: “A number of participants suggested that the damping effects of the earlier appreciation of the dollar on net exports or of the earlier decline in oil prices on firms’ investment spending might be larger and longer-lasting than previously anticipated.”

However, the Fed minutes also stated hiking federal funds rates isn’t completely off the table. Few officials believe they had enough confidence to increase interest rates from near zero levels at the June 16-17 meeting. Following Fed’s minutes release, the S&P 500 and the Dow touched record highs before finishing in the red. The Nasdaq also briefly touched its record close of 5,092.09. However, the tech-laden index bucked the declining trend and ended in positive territory. The last time the three indexes had touched record high levels on the same day was on Dec 31, 1999.

Gains in bio-tech stocks boosted the Nasdaq. Biotech stocks such as Amgen Inc. (AMGNAnalyst Report), Regeneron Pharmaceuticals, Inc. (REGNAnalyst Report) and Biogen Inc. (BIIBAnalyst Report) increased 0.3% 1.7% and 1.5%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) gained 0.9% and outperformed the broader Health Care Select Sector SPDR (XLV) that advanced 0.1%.

The Energy Select Sector SPDR (XLE) gained 0.2%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( (XOMAnalyst Report) and Chevron Corporation (CVXAnalyst Report) both gained 0.2%. Other key energy stocks from the sector, Schlumberger Limited (SLBAnalyst Report) and ConocoPhillips ( (COPAnalyst Report) increased 0.2%, and 0.6%, respectively.

On the other hand, the SPDR S&P Homebuilders ETF (XHB) declined 0.5% and was the biggest loser among the S&P 500 sectors. Key holdings including KB Home (KBHAnalyst Report) and The Home Depot, Inc. (HDAnalyst Report) decreased 0.1% and 0.2%, respectively. Overall, 6 out of 10 sectors of the S&P 500 ended in negative territory.

Among earnings news, shares of Lowe’s Companies Inc. (LOWAnalyst Report) dropped 4.6% after the company reported first quarter earnings per share of 70 cents that fell short of the Zacks Consensus Estimate of 74 cents. Revenues of $14,129 million also fell below the Zacks Consensus Estimate of $14,227 million.

Target Corp. (TGTAnalyst Report) posted first quarter earnings per share of $1.10, more than the Zacks Consensus Estimate of $1.03. Revenues of $17,119 million also came in ahead of the Zacks Consensus Estimate of $17,079 million. Target’s shares gained 0.3%.

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Stock Market News for May 21, 2015 – Zacks Investment Research

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