Encouraging economic reports through last week helped indices post a number of records on Friday. The S&P 500 closed above 1,800 for the first time and the blue-chip index recorded its longest stretch of weekly gains in three years. The tech-laden Nasdaq also joined the party, hitting a new 13-year high. The health care sector was the biggest gainer among the S&P 500 industry groups while technology stocks lost the most.
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The Dow Jones Industrial Average (DJI) climbed 0.3% to close the day at 16,064.77. The S&P 500 increased 0.5% to finish Friday’s trading session at 1,804.76. The tech-laden Nasdaq Composite Index gained 0.6% to end at 3,991.65. The fear-gauge CBOE Volatility Index (VIX) dropped 3.2% to settle at 12.26. Consolidated volumes on the New York Stock Exchange were roughly 3.1 billion shares. Advancing stocks outnumbered the decliners. For 59% shares that advanced, 37% declined.
After taking a while to break the 16K mark, the Dow had finally crossed that level last Thursday, largely buoyed by encouraging jobs data. The markets continued its bull run on Friday as well, helping all three indices notch up new records. The rally also helped the Dow and S&P 500 register their seventh straight week of gains.
Despite indices hitting new highs and the subsequent rally, the day was largely bereft of economic events except for comments from Dennis Lockhart, President of the Federal Reserve Bank of Atlanta. Lockhart believes that the debate over the central bank’s tapering of the $85 billion bond repurchase plan will be “on the table” during the Federal Open Market Committee’s (FOMC) December meeting.
Speaking to CNBC, Lockhart said monetary stimulus has had a favorable impact, and “quite a bit of progress” had been achieved on the jobs front with unemployment on the decline. Lockhart admitted that a considerable amount of doubt exists about the long-term consequences of quantitative easing, but he claimed “we’re not in danger zone now.” Lockhart said the Fed continued to enlarge its balance sheet by continuing with these measures. However, the benefits of the stimulus program outweighed its costs, he added.
Separately, Kansas City Fed President Esther George said discussions on tapering are a regular feature of FOMC meetings. She said: “These are discussions we have at each meeting. So I would expect we will continue to discuss that as we go forward”. These comments follow statements from Fed chairman Ben Bernanke and chair nominee Janet Yellen in which they have promised continued support to the economy until conditions improve to the desired level.
Shares of Intel Corporation (NASDAQ:INTC) declined nearly 5.4%, the biggest decline since January 18. The slide came after the company released its sales forecast for 2014 that came in below analysts’ expectations. Intel forecasts sales to be about $52.6 billion in fiscal 2014, almost the same as 2013. However, this was lower than estimates of $53.7 billion.
The healthcare sector has climbed nearly 37.5% in 2013 so far, becoming the year’s best-performing sector among the S&P 500 industry groups. The health care sector was the biggest gainer among the S&P 500 industry groups and the Health Care SPDR (XLV) gained 1.3%. Stocks such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Merck & Co., Inc. (NYSE:MRK), Gilead Sciences, Inc. (NASDAQ:GILD), and Bristol-Myers Squibb Co (NYSE:BMY) added 0.8%, 0.5%, 0.7%, 3.7%, and 2.0%, respectively.
The technology sector dropped the most among the S&P 500 industry groups and the Technology SPDR (XLK) lost 0.2%. Stocks such as Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), Verizon Communications Inc. (NYSE:VZ), and Oracle Corporation (NYSE:ORCL) lost 0.3%, 0.2%, 1.5%, 0.3%, and 0.3%, respectively.
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