Benchmarks ended in the green on Monday, as investors
attempted to predict the Federal Reserve's next move ahead of its
two day policy meeting. Investor sentiment also got a boost from
indications of a strong recovery in the economy led by
encouraging U.S. manufacturing data and upbeat data from Europe.
Two major corporate deals also captured investors' attention for
the day. The technology sector was the highest gainer among the
S&P 500 industry groups while consumer staples were the only
sector which sustained losses.
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) gained 0.8% to close the
day at 15884.57. The S&P 500 rose 0.6% to finish yesterday's
trading session at 1786.54. The tech-laden Nasdaq Composite Index
climbed 0.7% to end at 4029.52. The fear-gauge CBOE Volatility
Index (VIX) increased 1.7% to settle at 16.03. Consolidated
volumes on the New York Stock Exchange, American Stock Exchange
and Nasdaq were roughly 5.8 billion shares. Advancing stocks
outnumbered the decliners. For the 64% that advanced, only 33%
Several positive economic reports released recently had led
investors to believe that the Federal Reserve would soon reduce
its bond purchases. Encouraging industrial production numbers
added to such expectations. The report showed an increase in U.S.
manufacturing output for the fourth month in a row, including
According to the Board of Governors of the Federal Reserve
System, industrial production increased by 1.1% in November. This
was higher than the consensus estimate of 0.6% increase and
higher than the 0.1% increase registered in October.
Manufacturing production increased 0.6% in November, marking its
fourth consecutive month of gains. Production at mines increased
1.7%, negating the drop of 1.5% recorded in October. The
utilities index increased 3.9% in November, due to a boost in
demand for heating as a result of colder temperatures. Capacity
utilization for the industrial sector increased 0.8% to 79.0% in
November. This is 1.2% below its long-run average, from
On the international front, Eurozone's economy received a boost
from a rise in new orders. A survey by economists of London-based
company Markit showed that business sentiment across the region
improved for the first time after three months, despite ongoing
weakness in the French economy. The purchasing managers' index
increased to 52.7 in December, compared to 51.6 in November. This
was the index's highest level in three months. Any figure higher
than 50 indicates an expansion in the economy. Markit's chief
economist, Chris Williamson said on Monday the rise is a "big
relief and puts the recovery back on track".
Two major deals impacted investor sentiments on Monday. In what
is being viewed as a major development, chipmaker Avago
Technologies Ltd (NASDAQ:
) announced that it will buy LSI Corp (NASDAQ:
) for $6.6 billion. The move will allow Avago to enter the
fast-growing storage chip market. As per the offer, $11.15 per
share will be paid in cash. The offer is a 41% higher than LSI's
Friday closing price of $10.98. The deal will be funded using $1
billion provided by private equity group, Silver Lake Partners.
Further, a $4.6 billion term loan will be taken from a small
group of banks, while $1.0 billion will be provided from cash in
In another major development, American International Group Inc.
) said the company is willing to sell its aircraft-leasing
business to AerCap Holdings N.V. (NYSE:
) for nearly $5.4 billion. The company has been attempting to
sell International Lease Finance Corp (ILFC) for four years to
help return a $182 billion bailout package received from the
government in 2008.
In other economic reports, the New York Empire state index came
in at 0.98 in December, below the consensus estimate of 4.75. The
general business conditions index increased three points to
touch1.0. New orders increased, but remained in the negative
territory at -3.5, while the shipments index increased to 7.7.
The unfilled orders index dropped to -24.1, and the inventories
index declined to -21.7. Both indexes recorded their lowest
levels since 2009.
The technology sector was the biggest gainer among the S&P
500 industry groups on Monday. The Technology SPDR (XLK) gained
1.0%. Stocks such as Apple Inc. (NASDAQ:
), Google Inc. (NASDAQ:
), Microsoft Corporation (NASDAQ:
), International Business Machines Corp. (NYSE:
), and AT&T Inc. (NYSE:
) increased 0.6% 1.2%, 0.5%, 2.9%, and 0.9%, respectively.
The consumer staples sector was the only loser among the S&P
500 industry groups on Monday. The Consumer Staples SPDR (XLP)
lost 0.02%. Stocks such as The Procter & Gamble Company
), Philip Morris International Inc. (NYSE:
), Wal-Mart Stores, Inc. (NYSE:
), Walgreen Company (NYSE:
), and SYSCO Corporation (NYSE:
) decreased 0.8%, 0.6%, 0.4%, 0.2%, and 0.23, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
AERCAP HLDGS NV (AER): Free Stock Analysis
AMER INTL GRP (AIG): Free Stock Analysis
AVAGO TECHNOLOG (AVGO): Free Stock Analysis
GOOGLE INC-CL A (GOOG): Free Stock Analysis
LSI CORP (LSI): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
PHILIP MORRIS (PM): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
WALGREEN CO (WAG): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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