Encouraging factory orders data and strong domestic auto sales
boosted investor confidence on Tuesday. Improving payment rates in
the healthcare sector added to the bullish mood. Investors also
derived optimism from a conclusion to the Cyprus deal. Among the
top ten S&P 500 industry groups, healthcare stocks gained the
most while materials stocks were the biggest losers.
The Dow Jones Industrial Average (DJI) gained 0.6% to close the
day at 14,662.01. The S&P 500 increased 0.5% to finish
yesterday's trading session at 1,570.25. The tech-laden Nasdaq
Composite Index gained 0.5% to end at 3,254.86. The fear-gauge CBOE
Volatility Index (VIX) dropped almost 5.9% to settle at 12.78.
Consolidated volumes on the New York Stock Exchange, American Stock
Exchange and Nasdaq were roughly 5.9 billion shares, below 2012's
average of 6.48 billion shares. Declining stocks outnumbered the
advancers. For the 47% that advanced, 49% declined.
Since the beginning of this year, economic data has been mostly
positive indicating an improving economy. Riding on positive
domestic data, the Dow Jones and the S&P 500 neared all-time
highs. The Dow Jones increased as much as 111 points in intra-day
trade while the S&P 500 was just 2.4 points shy of its all-time
high. The S&P 500 has gained 10.3% this year.
Strong factory orders data boosted investor confidence
yesterday. According to the U.S. Department of Commerce, in
February, new orders for manufactured goods increased 3% above the
consensus estimate of 2.2%. This data follows a decrease of 1% in
January. This is the highest level attained on NAICS (North
American Industry Classification System) basis since 1992. Factory
orders have gone up for two out of the previous three months.
Shipments increased 0.9% while inventories data was up marginally,
Meanwhile, sales of domestic vehicles remained flat. In March,
sales of domestic vehicles were reported at 12.1 million,
marginally higher than consensus estimate of 12 million. Although
vehicle sales are not a major factor when it comes to changes in
retail sales, it constitutes about 20% of the retail sales
The U.S. government said that it would increase payment rates by
3.3% in 2014 for health insurers that provide coverage through the
Medicare Advantage program. This decision follows an announcement
in February that a payment cut of 2.3% would be made. Currently,
almost 14 million Americans are a part of this program. Following
these developments, investors turned bullish towards the healthcare
sector. The sector has gained almost 16% this year.
On the international front, investors received a boost after the
conclusion of the Cyprus bailout deal. According to the deal,
Cyprus will receive a 10 billion Euro loan along with a time period
of 5 years to improve its financial situation. According to data
released by the European Union, the unemployment rate in the Euro
Zone has increased to 12.0% from 11.9% in January. In terms of
numbers, about 19 million people are jobless in the Euro Zone.
Month over month, the number of unemployed people has increased by
Among the top ten S&P 500 industry groups, healthcare stocks
performed the best. The Health Care SPDR (XLV) gained 1.5%. Stocks
such as Johnson & Johnson (NYSE: JNJ ), Pfizer Inc.
(NYSE: PFE ), Abbott
Laboratories (NYSE: ABT ), Amgen, Inc.
(NASDAQ: AMGN ) and
Gilead Sciences, Inc. (NASDAQ: GILD ) gained 0.9,
1.4%, 2.3%, 4.0% and 0.5%, respectively.
Materials stocks suffered the most. The Materials Select Sector
SPDR (XLB) lost 1.0%. Stocks such as Monsanto Company (NYSE: MON ), the Dow Chemical
Company (NYSE: DOW
), Praxair, Inc. (NYSE: PX ), Freeport-McMoRan
Copper & Gold Inc. (NYSE: FCX ) and PPG
Industries, Inc. (NYSE: PPG ) declined 1.7%,
1.3%, 0.1%, 1.4% and 0.4%, respectively.ABBOTT LABS (ABT): Free Stock Analysis ReportAMGEN INC (AMGN): Free Stock Analysis ReportDOW CHEMICAL (DOW): Free Stock Analysis ReportFREEPT MC COP-B (FCX): Free Stock Analysis
ReportGILEAD SCIENCES (GILD): Free Stock Analysis
ReportJOHNSON & JOHNS (JNJ): Free Stock Analysis
ReportMONSANTO CO-NEW (MON): Free Stock Analysis
ReportPFIZER INC (PFE): Free Stock Analysis ReportPPG INDS INC (PPG): Free Stock Analysis ReportPRAXAIR INC (PX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment