Benchmarks had a quiet session on Monday in the absence of major
domestic headlines and ended with meager gains. Positive sentiment
created by nonfarm payroll data released on Friday overflowed into
Monday as well. Meanwhile, Spanish Economy Minister Luis de Guindos
said that there is no need for any further austerity measures.
Also, representatives from the troika of IMF, ECB and European
Commission concluded its visit to Greece last Sunday. Hopes of help
from the ECB also lingered to add to the gains.
The Dow Jones Industrial Average (DJI) gained 0.2% and ended at
13,117.51. The Standard & Poor 500 (S&P 500) also added
0.2% to finish yesterday's trading session at 1,394.23. The
tech-laden Nasdaq Composite Index increased 0.7% and closed at
2,989.91. The fear-gauge CBOE Volatility Index (VIX) edged up
almost 2.0% and settled at 15.95. Consolidated volumes on the New
York Stock Exchange, Nasdaq and the American Stock Exchange were
roughly 5.33 billion shares, sharply lower than last year's daily
average of 7.84 billion. Advancers outran the decliners on the
NYSE; as for 61% stocks that gained, 35% stocks ended lower.
Interestingly enough, the Dow rose on Monday for the first time
since May 21. For nine consecutive Mondays, the Dow had settled in
negative territory, its longest losing streak since 1973. 19 of the
30 Dow components ended in the green. Prominent gainers included
Alcoa Inc. (NYSE:
), Bank of America Corp (NYSE:
), Cisco Systems, Inc. (NASDAQ:
), Hewlett-Packard Company (NYSE:
), E I Du Pont De Nemours And Co (NYSE:
) and Caterpillar Inc. (NYSE:
) and they jumped 1.6%, 2.8%, 2.1%, 2.4%, 1.4% and 1.6%,
Gains were meager yesterday; but were sufficient to ensure that
benchmarks closed the trading session on a three-month high. This
was primarily due to the strong gains made on Friday. While Usain
Bolt treated us to yet another lightning fast run, benchmarks also
had a robust upward rally on Friday. The Dow gained the lowest, by
1.7%. Better-than-expected nonfarm payroll data boosted sentiment
and also reversed the markets' four-day losing streak on the
closing day of last week.
On Monday, the positive sentiment from jobs data continued to
boost indices. The day lacked any major domestic headlines,
Friday's addition of 163,000 nonfarm payroll employment in July was
a significant jump from the addition of 64, 000 jobs in June
(revised downwards from the original level of 80, 000). The figure
was also clearly ahead of consensus estimates that projected the
addition of 99, 000 jobs.
The Fed had suggested that jobs data was an important criterion
for it to decide whether fresh economic measures were needed. But
robust jobs numbers have not shut the doors on a possible third
round of quantitative easing (QE3). The general sentiment is that
the rise in the unemployment rate to 8.3% from 8.2% has kept the
door open for that possibility.
Thus, while those hopes spilled over to Friday, investors were
also hoping that the European Central Bank (ECB) would make a move
to buyback Spanish and Italian bonds. Reportedly, German Chancellor
Angela Merkel is also in favor of the plan and has said that the
German government is "not worried" about the move.
Separately, representatives of ECB, European Commission and
International Monetary Fund, collectively called the troika,
concluded their Greece visit and have met Greece's Finance Minister
Yannis Stournaras. Reports suggested that the troika and Greece
agreed that they need to strengthen 'policy efforts'. However, the
troika noted that the nation has been able to progress a great deal
following budgetary cuts.
Meanwhile, the Spanish economy minister ruled out the need of
any more austerity measures. However, he said the nation would now
seek aid from the European rescue fund. The minister also urged
European members to place their trust in Spain and said the nation
has provided "more than enough signs that it deserves that
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