Benchmarks started the second half of 2014 on a positive note
after economic data showed manufacturing activity picked up in U.S
and Asia. Gains in health-care, technology and consumer
discretionary sectors also propelled the S&P 500 and the Dow to
close at record highs. Bio-tech stocks primarily boosted the
Nasdaq. Upbeat U.S. auto sales in June also boosted investor
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) jumped more than 129 points
or about 0.8% to close Tuesday's trading session at 16,956.07. The
Standard & Poor 500 (S&P 500) advanced almost 0.7% to
finish at 1,973.32. The tech-laden Nasdaq Composite Index closed at
4,458.65; gaining 1.1%. The fear-gauge CBOE Volatility Index (VIX)
dropped 3.6% to settle at 11.15. Total volume for the day was
roughly 5.84 billion shares, almost in line with last month's
average of 5.80 billion. Advancers outpaced declining stocks on the
NYSE. For 65% stocks that advanced, 32% declined.
The blue-chip index was within two points of 17,000 during the
intra-day session. It closed at a record level for the twelfth time
this year. The S&P 500 ended at another high; the twenty-third
one this year.
The Institute for Supply management reported June PMI of 55.3%.
Manufacturing activity in June was a tad lower than May's reading
of 55.4%. However, it indicated expansion in factory output for the
13th successive month. Any reading above 50 suggests expansion.
New orders climbed 2 percentage points to 58.9% in June from May's
reading of 56.9%. New orders for cars, computers, chemicals and
various other products hit the highest level since the end of last
year. Separately, Markit's final U.S. Manufacturing Purchasing
Managers Index was at 57.3 in June, the highest reading since May
Manufacturing activity also picked up in Asia. Investors were
encouraged by a survey showing China's manufacturing activity
improved in June for the first time in six months. China's final
reading of the HSBC/Markit purchasing managers' index (PMI) rose to
50.7 in June from May's reading of 49.4.
Moreover, Japan's manufacturing activities also expanded in June.
The final Markit/JMMA Japan Manufacturing Purchasing Managers Index
(PMI) rose to a seasonally adjusted 51.5 in June, more than June's
preliminary reading of 51.1.
Coming back to the domestic front, better-than-expected U.S. car
sales indicated a rise in consumer spending. Domestic-made vehicle
sales climbed to an annualized rate of 13.5 million in June, more
than the consensus estimate of an increase to 12.9 million. Total
vehicle sales also increased to an annualized rate of 17.0 million
in June, more than the consensus estimate of a rise to 16.4
million. U.S. car and light truck sales reached the highest level
in more than eight years.
Shares of major auto manufacturer, General Motors Company (NYSE:
) surged almost 3.6% after the company reported its sales of U.S.
car and light trucks rose 1% in June to 267,461 vehicles. Sales of
other auto majors such as Chrysler Group, Toyota Motor Corporation
), Nissan Motor Co Ltd and Hyundai Motor Co increased by 9.0%,
3.0%, 5.0% and 2.0%, respectively on a year-on-year basis.
Separately, sales of Ford Motor Co. (NYSE:
) dropped by 5.0% to 222,064 vehicles. However sales exceeded the
forecast of 217,007 vehicles.
In another report, the US Census Bureau of the Department of
Commerce reported a 0.1% rise in construction spending from revised
April estimate of $955.1 billion to $956.1 billion in May. However,
this increase in the payout by builders on residential and
nonresidential structures was less than the consensus estimate of
an increase of 0.5%.
Gains in bio-tech stocks ensured a positive finish for the Nasdaq.
Gilead Sciences Inc. (NASDAQ:
), Vertex Pharmaceuticals Incorporated (NASDAQ:
) Amgen Inc. (NASDAQ:
), Biogen Idec Inc. (NASDAQ:
), Celgene Corporation (NASDAQ:
) and Regeneron Pharmaceuticals, Inc. (NASDAQ:
) increased 2.9%, 1.2%, 1.6%, 2.9%, 3.1% and 7.4%, respectively.
The Health Care Select Sector SPDR (XLV) gained 1.3%, the highest
among the S&P 500 sectors.
The blue-chip index came close to the 17,000 milestone in early
afternoon trading led a by a surge in shares of International
Business Machines Corporation (NYSE:
) and Visa Inc. (NYSE:
). Shares of IBM and Visa went up 2.8% and 1.7%, respectively.
Other key technology stocks such as Apple Inc. (NASDAQ:
), Microsoft Corporation (NASDAQ:
), Verizon Communications Inc. (NYSE:
), AT&T, Inc. (NYSE:
) and Google Inc. (NASDAQ:
) gained 0.6%, 0.4%, 0.9%, 0.3% and 1.2%, respectively. Overall,
the Technology Select Sector SPDR (XLK) advanced 1.0%.
Elsewhere, the consumer discretionary sector also showed signs of
strength. Shares of Netflix, Inc. (NASDAQ:
) soared 7.4% after The Goldman Sachs Group, Inc. (NYSE:
) upgraded its rating. Key stocks from the sector such as The Walt
Disney Company (NYSE:
), Comcast Corporation (NASDAQ:
) and Amazon.com Inc. (NASDAQ:
) increased 0.9%, 0.8% and 2.3%, respectively. The Consumer
Discretionary Select Sector SPDR (XLY) gained 1.1%, the second
highest among the S&P 500 sectors. Overall, 9 out of 10 sectors
of the S&P 500 ended in the green.
Small-cap stocks also extended their gains on Tuesday. The Russell
2000 Index of small-cap stocks gained 1.1% to end at 1205.82,
slightly less than the previous record close of 1208.65, acheived
on March 4.
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