Positive economic reports propelled benchmarks to record highs
on Thursday. Economic data on manufacturing, existing home sales,
initial claims and leading economic indicators all came in
positive. The four-day rally in S&P 500 boosted it to a record
close. While Nasdaq closed at its highest level since Mar 31, 2000,
Dow closed at the best level since Jul 24. Investors also waited
for what Janet Yellen and Mario Draghi have to say at Jackson Hole,
Wyo on Friday.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained almost 0.4% to close
at 17,039.49. The Standard & Poor 500 (S&P 500) advanced
0.3% to settle at 1,992.37. The tech-laden Nasdaq Composite Index
closed at 4,532.10; gaining 0.1%. The fear-gauge CBOE Volatility
Index (VIX) dropped 0.2% to settle at 11.76. A total of 4.5 billion
shares were traded on Thursday, less than last five day's average
of 5.1 billion. Advancers outpaced declining stocks on the NYSE.
For 49% stocks that advanced, 47% declined.
The Philadelphia Federal Reserve's manufacturing index surged to 28
in August from 23.9 in July. It touched the highest level in August
since Mar 2011. However, demand for manufactured goods as measured
by current new orders index slowed down in August. Current
shipments also decreased. Separately, the Conference Board's
leading economic index increased 0.9% in July after it rose 0.6% in
June. This was also more than the consensus estimate of a rise by
The National Association of Realtors reported existing home sales
rose 2.4% to a seasonally adjusted annual rate of 5.15 million in
July from June's revised figure of 5.03 million. This was also more
than the consensus estimate of 5.02 million. Existing home sales
rose for the fourth consecutive month in July, touching the highest
level since Sep 2013.
Separately, the U.S. Department of Labor reported that claims for
unemployment benefits declined in the week ending Aug 16 to 298,000
from the previous week's revised level of 312,000. This was lower
than consensus estimate of 304,000.
Separately, shares of Bank of America Corporation (
) increased 4.1% after the company agreed to pay $16.65 billion in
cash to the U.S. government. This is the largest settlement between
the government and a single company. Bank of America had to pay
this sum after the government alleged that BofA sold flawed
mortgage-backed securities in the build up to the financial crisis.
The Financial Select Sector SPDR ETF (XLF) gained 1.2%, the highest
among the S&P 500 sectors. Key stocks from the sector such as
Wells Fargo & Company (
), JPMorgan Chase & Co. (
), Citigroup Inc. (
), American Express Company (
) and U.S. Bancorp (
) increased 0.9%, 1.5%, 2.6%, 0.7% and 1.2%, respectively.
Hewlett-Packard Company (
) and Hormel Foods Corporation (
) were among the biggest gainers in the S&P 500 after both the
companies reported strong quarterly results. Shares of
Hewlett-Packard and Hormel Foods soared 5.4% and 4.3%,
respectively. Sharers of eBay Inc. (
) rallied 4.7% on reports that the company was contemplating
spining off PayPal as early as next year.
Meanwhile, investors remained focused on the annual symposium of
central bankers scheduled to be held in Jackson Hole, Wyo on
Friday. The 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
policy in order to combat the perils of deflation.
Six out of 10 sectors of the S&P 500 ended in the green. The
Technology Select Sector SPDR (XLK) advanced 0.5%, the second
highest among the S&P 500 sectors. Key stocks from the sector
such as Microsoft Corporation (
), Oracle Corporation (
), AT&T, Inc. (
) and International Business Machines Corporation (
) gained 0.6%, 0.8%, 0.3% and 0.6%, respectively.
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