Stock Market News for May 22, 2014 – Zacks Investment Research

Benchmarks ended higher on Wednesday boosted primarily by the encouraging minutes from the FOMC meeting. Fed officials discussed monetary tightening while remaining flexible on such a measure. They also discussed approaches to hiking rates, but clarified this was not an indication that rates would be hiked immediately. Meanwhile, gains from consumer discretionary and energy stocks also helped benchmarks finish in the green. These positives helped the Dow post its largest daily percentage jump in a month.

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The Dow Jones Industrial Average (DJI) gained almost 1.0% to close Wednesday’s trading session at 16,533.06. The Standard & Poor 500 (S&P 500) went up 0.8% to finish at 1,888.03. The tech-laden Nasdaq Composite Index rose 0.9% to 4,131.54. The fear-gauge CBOE Volatility Index (VIX) plunged 8.1% to settle at 11.91. Total volume on the New York Stock Exchange was 2.7 billion shares. Advancers outpaced declining stocks on the NYSE. For 63% stocks that advanced, 34% declined.

Benchmarks were positively impacted after minutes from the Federal Open Market Committee’s (FOMC) April meeting indicated that the central bank decided to remain flexible when it comes to raising short term interest rates. Federal Reserve officials in its April 29-30 meeting discussed “several approaches” to tighten monetary policy but made no decisions on which tools to apply.

The minutes also stated that according to a number of Federal Reserve officials it is essential for the Fed to “communicate still more clearly about the Fed’s policy intentions as the time of the first increase in the federal funds rate moves closer”.

Many Federal Reserve officials opined that the inflation rate was stabilizing and will gradually reach the central bank’s target of 2%. Only few officials were anxious about the risk of low inflation.

Earlier in May, Federal Reserve Chairwoman Janet Yellen in a testimony before the Senate Budget Committee had mentioned the central bank’s intentions to keep interest rates low. Yellen commented: “Interest rates are unlikely to begin rising until we are in a strong economic recovery”.

In her testimony before the Joint Economic Committee, Yellen also stated that the central bank intends to keep federal funds rate low for some time, even after employment and inflation rates return to the desired level.

Coming back to yesterday’s events, gains in the consumer discretionary sector also had a positive impact on benchmarks. Tiffany & Co. (NYSE:TIF) led the advance after its shares surged 9.2% on upbeat quarterly results. The luxury-jewelry maker reported first-quarter fiscal 2014 earnings of 97 cents per share, significantly more than the Zacks Consensus Estimate of 77 cents per share and prior year quarter’s adjusted earnings of 70 cents. The company also posted net sales of $1,012.1 million during the quarter, up 13% from the prior-year quarter. Total revenue was also more than the Zacks Consensus Estimate of $953 million.

Variety store retailer Target Corp.’s (NYSE:TGT) shares also increased 1.0% after the retailer’s first-quarter fiscal 2014 adjusted earnings of 70 cents a share came in line with the Zacks Consensus Estimate. The company’s total revenue increased 2.1% year on year to $17,050 million, ahead of the Zacks Consensus Estimate of $17,010 million.

Internet stocks from the consumer discretionary sector such as online retailer Amazon.com Inc. (NASDAQ:AMZN), Internet television network provider Netflix, Inc. (NASDAQ:NFLX), online travel company TripAdvisor Inc. (NASDAQ:TRIP) and The Priceline Group Inc. (NASDAQ:PCLN) increased 1.3%, 5.1%, 2.7% and 2.4%, respectively.

Other key stocks from the sector such as Comcast Corporation (NASDAQ:CMCSA), The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), McDonald’s Corp. (NYSE:MCD) and Ford Motor Co. (NYSE:F) gained 1.4%, 1.4%, 0.2%, 1.0% and 0.9%, respectively. The Consumer Discretionary Select Sector SPDR (XLY) advanced 1.2%, the highest among the S&P 500 sectors. Overall, all the 10 sectors of the S&P 500 ended in the green.

Additionally, gains made by energy stocks ensured a positive finish for the benchmarks. The Energy Select Sector SPDR (XLE) increased 1.1%. Top holdings from the sector such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP), Occidental Petroleum Corporation (NYSE:OXY) and EOG Resources, Inc. (NYSE:EOG) increased 1.4%, 1.4%, 0.9%, 2.2% and 2.2%, respectively.

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Stock Market News for May 22, 2014 – Zacks Investment Research

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