Benchmarks halted their streak of record highs on Friday as
investors finally took a breather. The Dow's six-day record run
ended on a listless and uneventful day. The economy did not have
much to offer on data or news front, while investors chose to
book profits on Friday. However, the record run had ensured the
benchmarks a green seat for the week.
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Ahead of Wall Street
The Dow Jones Industrial Average dropped 0.01% to close Friday's
session at 16,478.41. The S&P 500 ended with a meager loss of
0.03% at 1,841.40. The tech-laden Nasdaq Composite Index was down
0.3% to 4,156.59. The fear-gauge CBOE Volatility Index (CBOE)
rose 1.1% to 12.46. Volumes, as expected, were low, at 4 billion.
This was significantly lower than the monthly average of 6.1
billion shares. Decliners edged past the advancers as 50% stocks
dropped on the New York Stock Exchange while 47% stocks gained.
The meager losses and near flat finishes had little effect on the
benchmarks' positive run for the week. The six-day record run for
the Dow, three days of which occurred this very week, helped the
Dow finish with solid weekly gains. The Dow gained 257 points or
1.6% over the week, recording its best two week performance since
June 2012. The S&P 500 too had its best two-week run since
July and signed off the week with gains of 1.3%. The Nasdaq
jumped 1.3% for the week.
The gains have now put the Dow and S&P 500 on course for
their best multi-year performances. The Dow is up 25.8% for the
year, en route to its best annual performance since 1996. The
S&P 500 has jumped 29.1% year to date and looks set to notch
up its best year since 1997.
The latest boost for the benchmarks was the central bank's
decision to taper its $85 billion bond buying program. The
central bank announced its decision following the conclusion of
the Federal Open Market Committee meeting on Dec 18. The move
will reduce bond repurchases by $10 billion, bringing monetary
stimulus to $75 billion a month from Jan 2014. At the same time,
the Fed also indicated that the key interest rate would continue
to remain at a record low for a longer period than what was
Last week, the positive momentum was further aided by positive
economic numbers. These included improved holiday sales during
Nov 1 to Dec 24, a drop in seasonally adjusted initial claims,
improvement in new orders for manufactured durable goods as well
as increased core capital goods orders. Separately, the
government revised last three months' new home sales figure
In fact, the volatility index has slumped 11.9% over the past
five trading sessions, reflecting improving investor confidence.
The index has also shed a significant 30.6% year to date.
Coming back to Friday's events, Facebook, Inc. (NASDAQ:
) was among the most actively traded shares, which however lost
about 4%. Among other tech stocks, Apple Inc. (NASDAQ:
), Amazon.com Inc. (NASDAQ:
), Microsoft Corporation (NASDAQ:
), Intel Corporation (NASDAQ:
), SanDisk Corp. (NASDAQ:
) and Netflix, Inc. (NASDAQ:
) dropped 0.7%, 1.6%, 0.4%, 0.4%, 0.4% and 2.5%, respectively.
Also, Twitter, Inc. (NYSE:
) was largely affected after investors chose to book profits.
Twitter's shares dropped 13.0% on Friday to $63.75. The shares
have jumped almost three times since it debuted on the Street
last year in November.