Hopes that central banks on both sides of the Atlantic would
introduce fresh economic measures and strong corporate results
helped benchmarks post their third-straight day of gains. While the
Dow had been trading over its psychological level for the last few
days, the S&P 500 and Nasdaq also crossed their individual key
levels. The energy sector showed particular strength yesterday.
The Dow Jones Industrial Average (DJI) jumped 0.4% and ended the
day at 13,168.60. The Standard & Poor 500 (S&P 500) gained
0.5% and finished yesterday's trading session at 1,401.35. The
tech-laden Nasdaq Composite Index jumped 0.9% and closed at
3,015.86. The fear-gauge CBOE Volatility Index (VIX) added a mere
0.3% to settle at 15.99. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.39
billion shares; lower than the last year's daily average of 7.84
billion. Advancing stocks outpaced the decliners on the NYSE; as
for 63% stocks that gained, 34% stocks closed lower.
Benchmarks have been rallying for the past three days and the
statistical landmarks that they achieved have provided much cheer
to investors. This includes the Dow's first rise on a Monday after
a gloomy run of losing out on a finish in the green for nine
consecutive Mondays. Mondays' gains had also lifted benchmarks to
three-month highs. However, the real credit for the benchmarks'
uptrend goes to Friday's robust gains, which came on the heels of
better-than-expected nonfarm payroll data. Also, Friday's gains had
taken the Dow back over its key psychological level.
Getting into the numbers for yesterday, there were many
positives for investors. The S&P 500 ended the flirtation with
its key level to finally cross and settle above the 1, 400 mark.
The Nasdaq too shared the laurels, closing over 15 points higher
than its psychological level of 3, 000. Both of these benchmarks
crossed their individual highs for the first time since early May.
Meanwhile, with yesterday's gains, the Dow is just about 100 points
short of chalking up a four-and-half year high.
Investors have received a much needed boost from strong nonfarm
payroll data released by the government last Friday. Market
watchers believe that the strong numbers do not in any way deter
the chances of the central bank considering a third round of
quantitative easing (QE3). The unemployment rate rose to 8.3% from
8.2% and market sentiment believed this development has kept the
door open for QE3.
Incidentally, one of the major the reasons for the markets'
uptrend yesterday - comments by the President of Federal Reserve
Bank of Boston, Eric S. Rosengren, about the need for the central
bank to pursue new round of bond purchases reflected the effect of
employment data. In an interview with the Wall Street Journal, Eric
Rosengren's comments mirrored market sentiments about the jobs
report. He commented: "You continue to do it until you have
documented evidence that you're getting growth in income and the
unemployment rate consistent with your economic goals".
While investors garnered fresh hopes from the statement of the
Boston Fed chief, hopes for action by the central bank lingered on
at the other side of the Atlantic as well. European Central Bank
head Mario Draghi might had not lived up to his vow of doing
"whatever it takes" to preserve the Euro-zone, at least for the
moment, but sentiment is generally positive in Europe. Spanish and
Italian bond yields have eased significantly and equity markets
have also shown strength. Thus, hopes of ECB springing into action
might be alive and that is helping the markets.
Corporate results also joined the party yesterday to aid the
markets' uptrend. Fossil, Inc. (NASDAQ:
) was a major name in helping to improve the mood as its earnings
numbers and encouraging guidance boosted the company's shares by
31.5%. Also, Chinese medical devices bellwether Mindray Medical
) second-quarter 2012 earnings outpaced the estimates and revenues
were over 23% higher than the year-ago quarter. Mindray's shares
soared 11.5%. Separately, Sirius XM Radio Inc's (NASDAQ:
) shares added 4.6% following a record-setting second quarter. The
company's revenue, free cash flow, and net subscriber additions
were at record highs.
Separately, shares of Chesapeake Energy Corporation (NYSE:
) jumped 9.4%, thanks to the company's earnings results and its
plan to sell assets. The gains aided the energy sector as well and
the Energy Select Sector SPDR (ETF) (XLE) gained 1.5%. Among other
energy shares, ConocoPhillips (NYSE:
), BP plc (ADR) (NYSE:
), Marathon Oil Corporation (NYSE:
), Hess Corp. (NYSE:
) and Western Refining, Inc. (NYSE:
) surged 1.0%, 2.5%, 2.6%, 2.4% and 2.2%, respectively.
BP PLC (BP): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis
CONOCOPHILLIPS (COP): Free Stock Analysis
FOSSIL INC (FOSL): Free Stock Analysis Report
HESS CORP (HES): Free Stock Analysis Report
MINDRAY MEDICAL (MR): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
SIRIUS XM RADIO (SIRI): Free Stock Analysis
WESTERN REFING (WNR): Free Stock Analysis
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