Signs that inflation was under control and manufacturing was
picking up pace was of little help to the markets as they closed
nearly flat on Wednesday. While the Street awaits the return of
investors from their summer holidays, the trend of low volumes
continued even yesterday. Among the individual sectors, the housing
stocks showed an upward rally boosted by encouraging data.
The Dow Jones Industrial Average (DJI) slipped a mere 0.06% to
close at 13,164.78. The Standard & Poor 500 (S&P 500)
inched up 1.60 points or 0.1% to finish yesterday's trading session
at 1,405.53. The tech-laden Nasdaq Composite Index gained 0.5% and
ended at 3,030.93. The fear-gauge CBOE Volatility Index (VIX)
dropped 1.5% to settle at 14.63. Consolidated volumes on the New
York Stock Exchange, Nasdaq and American Stock Exchange were
roughly 4.79 billion shares, sharply lower than last year's daily
average of 7.84 billion. Advancers outnumbered the declining stocks
on the NYSE; as for 61% stocks that gained, 36% stocks closed
A slew of economic readings came out yesterday and the majority
of them signaled an economic recovery. To begin with, the Board of
Governors of the Federal Reserve reported that industrial
production increased 0.6% in July, better than consensus estimates
of a rise of 0.5%. The growth in industrial production was also far
ahead of the 0.1% increase both in May and June. A growth in
industrial production is a very positive sign. Being a measure of
actual volume of output in a goods-producing industry uninfluenced
by prices, industrial production is one of the more important
Separately, a report by the U.S. Bureau of Labor Statistics
reported Consumer Price Index for All Urban Consumers (CPI-U) was
unchanged in July. Higher food prices were offset by a 0.3% fall in
the energy index. Excluding food and energy, the index edged up
0.1% in July, lower than consensus estimates of 0.2%. This also
marked a change from the 0.2% rise that the index has experienced
the last four times. Thus, the report suggested that inflation was
However, the Empire State Manufacturing Survey by the Federal
Reserve Bank of New York was not as encouraging. According to the
report: "The general business conditions index slipped below zero
for the first time since October 2011, falling thirteen points to
-5.9. At -5.5, the new orders index was below zero for a second
consecutive month, and the shipments index fell six points to 4.1".
The reading of a negative 5.9% was in sharp contrast to consensus
estimates of a reading of 7.2%.
While the day was largely dominated by economic data, another
economic report from the National Association of Home Builders
(NAHB) helped lift housing stocks. The NAHB/Wells Fargo Housing
Market index jumped to 37 in August, up from 35 in last month, the
highest level since February 2007. Following the report, the SPDR
S&P Homebuilders (XHB) gained 0.3% and stocks including M.D.C.
Holdings, Inc. (NYSE:
), Lennar Corporation (NYSE:
), M/I Homes Inc (NYSE:
) and PulteGroup, Inc. (NYSE:
) gained 0.1%, 0.2%, 2.2% and 0.6%, respectively.
The day also witnessed earnings releases by certain key
companies. Deere & Company's (NYSE:
) quarterly earnings missed estimates owing to the global economic
slowdown. The company also lowered its sales forecast for the year.
Eventually, its shares slumped 6.3%. Separately, Staples, Inc.
) slumped 14.6%, missing the Street's estimates while earnings also
declined from year-ago levels. However, another retailer,
Abercrombie & Fitch Co. (NYSE:
) jumped almost 9% with its quarterly results easily outpacing
estimates. Target Corporation's (NYSE:
) results also exceeded estimates and the retailer upped its yearly
outlook. Shares were up 1.8%.
ABERCROMBIE (ANF): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
MDC HLDGS (MDC): Free Stock Analysis Report
M/I HOMES INC (MHO): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
STAPLES INC (SPLS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
To read this article on Zacks.com click here.