Benchmarks ended Friday's session on a mixed note after renewed
tension between Ukraine and Russia unnerved investors. Ukraine
forces destroyed part of a Russian armored column after it entered
Ukrainian soil. However, benchmarks recorded their second-straight
week of gains.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) declined 0.3% to close at
16,662.91. The Standard & Poor 500 (S&P 500) decreased a
meager 0.01% to settle at 1,955.06. The tech-laden Nasdaq Composite
Index closed at 4,464.93; gaining 0.3%. The fear-gauge CBOE
Volatility Index (VIX) went up 5.9% to settle at 13.15. Total
volume on the New York Stock Exchange was 3 billion. Decliners
outpaced advancing stocks on the NYSE. For 49% stocks that
declined, 47% advanced.
Benchmarks reversed initial gains after Ukrainian President Petro
Poroshenko informed British Prime Minister David Cameron that
Ukrainian artillery demolished a "significant" part of the Russian
armored column that crossed into Ukrainian soil. A Ukrainian
military spokesman said that they had tracked the column soon after
it entered Ukraine.
However, Russia denied that no armored vehicles had entered into
Ukrainian territory. Instead, they accused Ukraine of trying to
halt Russia's humanitarian aid mission in eastern parts of Ukraine.
Russian foreign minister said: "We draw attention to the sharp
intensification of military action by Ukrainian forces with the
apparent aim to stop the path, agreed on with Kiev, of a
humanitarian convoy across the Russia-Ukraine border". Ukraine
retaliated by saying Russia is trying to ferry military personal
through humanitarian convoys.
The incident unnerved investors as they took money out of equities
and parked them into safe-haven assets.
This news on Russian incursion into Ukrainian soil comes a day
after Russian president Vladimir Putin said that Russia will try
its level best to curb the conflict in Ukraine. He also added there
is a need for 'consolidation and mobilization', but not at the
expense of confrontation with other countries.
On the domestic front, Monster Beverage Corporation's (
) shares climbed 30.5% after beverage giant The Coca-Cola Company (
) agreed to buy a 16.7% stake in the company. The deal is valued at
$2.15 billion. Monster Beverage gained the most among the S&P
500 components. Applied Materials, Inc. (
) closely followed Monster Beverage. Its shares surged 6.3% a day
after the company declared upbeat third-quarter earnings results.
However, shares of Nordstrom Inc. (
) declined 5.2% after the largest U.S. luxury department-store
chain fell short of same-store sales estimates for the recent
Economic data came in mixed on Friday. The Board of Governors of
the Federal Reserve System reported industrial production rose 0.4%
in July. This rise in industrial production in July was more than
the consensus expectation of a rise by 0.3%. Separately, capacity
utilization edged up to 79.2%, less than consensus expectations of
a rise to 79.3%.
The monthly survey of manufacturers in New York State by the
Federal Reserve Bank of New York showed modest improvement in
business conditions. However, the improvement was less than that in
the previous month. General business conditions index retreated to
14.7 in August. Consensus estimates had pegged it to be at 20.67.
New orders slipped to 14.1 and unfilled orders index remained in
the negative territory in August.
The University of Michigan and Thomson Reuters' preliminary reading
of consumer sentiment declined in August. The gauge was at 79.2 in
August, which was in contrast to the consensus forecast of an
increase to 82.6.
Separately, the U.S. Bureau of Labor Statistics reported that the
U.S. Producer Price Index (PPI) for finished goods increased 0.1%
in July, in-line with the consensus estimate.
Six out of 10 sectors of the S&P 500 ended in the green. The
Energy Select Sector SPDR ETF (XLE) led the advance. The sector
gained 0.7%. Key stocks from the sector such as Chevron Corporation
), Schlumberger Limited (
) and EOG Resources, Inc. (
) increased 0.2%, 0.6% and 2.1%, respectively.
Despite Friday's losses, benchmarks ended with weekly gains. The
S&P 500, the Dow and the Nasdaq gained 1.2%, 0.7% and 2.2%,
Benchmarks had gained on Monday following hopes that tensions
between Russia and Ukraine would recede. On Thursday, Russian
President Vladimir Putin's comments eased concerns related to
Positive earnings results, gains in biotech stocks, ceasefire
agreement in Gaza and subdued Chinese inflation data also boosted
Downbeat European growth numbers, discouraging retail sales numbers
and disappointing Germany's investor confidence data were some of
the negatives for the week.
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