Major indices declined sharply on Wednesday after minutes from
the Federal Reserve's July meeting gave no clear indications on
when its stimulus program would come to a close. Investor
apprehensions about the future of the bond buying program have
pushed the markets lower recently. The Dow Jones ended in
negative territory for the sixth consecutive day, its longest
fall in more than a year. Meanwhile, existing home sales
increased for the month of July. All the top ten S&P 500
industry groups finished in the red, among which the utilities
sector was the worst performer.
For a look at the issues currently facing the markets, make
sure to read today's
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) lost 0.7% to close the
day at 14,897.47. The S&P 500 declined 0.6% to finish
yesterday's trading session at 1,642.82. The tech-laden Nasdaq
Composite Index fell 0.4% to end at 3,599.79. The fear-gauge CBOE
Volatility Index (VIX) jumped 6.9% to settle at 15.94.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.58 billion shares, well
below 2013's average of 6.31 billion shares. Declining stocks
outnumbered the advancers. For 72% shares that declined, only 26%
Benchmarks traded lower for most of the trading session
yesterday. Following the release of the Federal Reserve's
minutes, benchmarks declined sharply. Within half an hour stocks,
bounced back and erased all the day's losses. But selling
pressure returned in the later part of the trading. The Dow has
slipped nearly 4.5% after hitting its highest level on August
Investors were waiting for clues about the timing of the
tapering of the bond purchase program. But the Fed minutes
provided investors with no indications about when this would
occur. Some policymakers of the Federal Reserve agreed that it is
not appropriate to taper the bond purchase program as of now.
However, few policymakers thought that the pace of the program
should slow down. According to the FOMC minutes: "A few members
emphasized the importance of being patient and evaluating
additional information on the economy before deciding on any
changes to the pace of asset purchases."
On the earnings front, Target Corporation (NYSE:
) reported fiscal second quarter results. The retailer's earnings
came in above the Street's estimates but revenue fell short of
expectations. The company's fiscal second quarter profits
declined 13% from a year ago period due to higher costs from its
Canadian business. The company said that its annual profit may
come in near the lower end of its estimate. Shares declined 3.6%
after the announcement of its quarter results.
Shares of Staples, Inc. (NASDAQ:
) tumbled more than 15% following its quarterly results. The
largest office supply retailer in the U.S. reported fiscal second
quarter earnings and revenues below the Street's estimates. The
company's profits declined 15% due to weakness in its
international sales. The company has also reduced its
annual profit estimate. On the positive side, Lowe's Companies,
), reported fiscal second quarter earnings that topped estimates.
The company's profits jumped 26%. Lowe's also increased its
full-year outlook. Shares jumped 3.9% yesterday.
On the economic front, the National Association of Realtors
reported existing home sales numbers. According to the report,
existing home sales increased strongly in July, by 6.5%, to 5.39
million from the downwardly revised June figure of 5.06 million.
This was considerably above the consensus estimate of 5.14
million, its highest level in more than three years. In the last
twelve months existing home sales have increased 17.2%. According
to NAR chief economist Lawrence Yun: "Mortgage interest rates are
at the highest level in two years, pushing some buyers off the
The utilities sector was the worst performer among the S&P
500 industry groups and the Utilities SPDR (XLU) lost 1.1%.
Stocks such as Duke Energy Corp (NYSE:
), the Southern Company (NYSE:
), Dominion Resources, Inc. (NYSE:
), NextEra Energy, Inc. (NYSE:
) and NRG Energy Inc. (NYSE:
) slipped 1.5%, 1.4%, 1.0%, 1.7% and 0.2%, respectively.
DOMINION RES VA (D): Free Stock Analysis
DUKE ENERGY CP (DUK): Free Stock Analysis
NEXTERA ENERGY (NEE): Free Stock Analysis
NRG ENERGY INC (NRG): Free Stock Analysis
SOUTHERN CO (SO): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis
TARGET CORP (TGT): Free Stock Analysis Report
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