New deals, upbeat homebuilder confidence data and easing
tensions between Russia and Ukraine handed markets strong gains on
Monday. Meanwhile, investors waited for what Janet Yellen and Mario
Draghi have to say at Jackson Hole, Wyo on Friday. The S&P 500
is now 1% away from its record high and Nasdaq closed above 4,500
points for the first time in 14 years. The blue-chip index
registered its biggest one-day percentage gain since Aug 8.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained about 1.1%, or over
175 points, to close at 16,838.74. The Standard & Poor 500
(S&P 500) advanced 0.9% to settle at 1,971.74. The tech-laden
Nasdaq Composite Index closed at 4,508.31; gaining almost 1%. The
fear-gauge CBOE Volatility Index (VIX) dropped 6.3% to settle at
12.32. A total of 4.5 billion shares were traded on Monday, less
than last five day's average of 5.2 billion. Advancers outpaced
declining stocks on the NYSE. For 76% stocks that advanced, 21%
Deal news between Dollar General Corporation (
) and Family Dollar Stores Inc. (
) was welcomed by investors. Dollar General offered to acquire the
company in an all-cash deal valued at $78.50 per share or $8.95
billion. Shares of Family Dollar Stores and Dollar General jumped
4.9% and 11.6%, respectively. Both Dollar General and Family Dollar
Stores turned out to be among the biggest percentage gainers among
the S&P 500 components.
The NAHB/Wells Fargo Housing Market index rose 2 points to 55 in
August, hitting its highest level in seven months. Homebuilder
sentiment also rose for the third straight month in August.
Upbeat housing data boosted housing stocks and eventually the
broader markets. The SPDR S&P Homebuilders (XHB) was the
biggest gainer among the S&P 500 sectors. The sector gained
1.8%. Key stocks from the sector such as PulteGroup, Inc. (
), Toll Brothers Inc. (
), DR Horton Inc. (
) and Lennar Corp. (
) increased 2.8%, 1.7%, 1.4% and 1.7%, respectively. Overall, 9 out
of 10 sectors of the S&P 500 ended in the green.
Airline stocks also gained on Monday due to a drop in
. Brent crude oil prices plunged to a 14-month low of 101.11,
before closing at 101.60. Oil prices took a hit on easing
Shares of U.S. airline companies such as Delta Air Lines Inc. (
), United Continental Holdings, Inc. (
), The Boeing Company (
) and Southwest Airlines Co. (
) gained 2.5%, 3.9%, 1.5%, and 3.6%, respectively.
Reportedly, an agreement was reached between Ukraine and Russian
foreign ministers regarding humanitarian aid from Russia. Russia's
Foreign Minister Sergei Lavrov held talks with Germany, France and
Ukraine over the weekend. He said: "Finally, all questions have
been resolved ... related to the Russian initiative to send 300
trucks with humanitarian aid."
Last Friday, Russia had accused Ukraine of trying to halt Russia's
humanitarian aid mission in eastern parts of Ukraine. Ukraine
retaliated by saying Russia is trying to ferry military personal
through humanitarian convoys.
Meanwhile, investors remained focused on the annual symposium of
central bankers scheduled to be held in Jackson Hole, Wyo on
Friday. U.S. Federal Reserve Chairwoman Janet Yellen's speech will
possibly indicate whether the quantitative easing program will
continue. European Central Bank President Mario Draghi's speech
will provide clues as to whether ECB will push for easy monetary
policies in order to combat the perils of deflation.
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