Benchmarks ended Friday's trading session little changed
following mixed economic reports. While reports on personal income
and Chicago PMI numbers were positive, personal consumption
expenditure dropped in April for the first time this year. The
Nasdaq ended in the red due to declines in tech-bellwethers and
bio-tech stocks. However, benchmarks ended in the green for the
week and posted their biggest monthly gains since February.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.1% to close
Friday's trading session at 16,717.17. The Standard & Poor 500
(S&P 500) went up 0.2% to finish at 1,923.57. The tech-laden
Nasdaq Composite Index dropped 0.1% to 4,242.62. The fear-gauge
CBOE Volatility Index (VIX) dropped 1.5% to settle at 11.40. Total
volume on the New York Stock Exchange was 3.2 billion shares.
Advancers outpaced declining stocks on the NYSE. For 49%
stocks that advanced, 47% declined.
Markets received mixed economic data on Friday. According to the
Bureau of Economic Analysis, personal income increased 0.3% in
April, in line with the consensus estimate. This rise in personal
income came after it had increased 0.5% in March. However, personal
consumption expenditure decreased 0.1% in April, in contrast to the
consensus estimate of an increase by 0.2%. Personal consumption
expenditure rose 1.0% in March.
Separately, Chicago PMI numbers were encouraging. The Institute for
Supply Management-Chicago noted that Chicago Business Barometer
increased to 65.5 in May from April's reading of 63.0. This rise in
the Chicago Purchasing Managers Index in May was in contrast to the
consensus estimate of a decrease to 60.5. This increase in the
Chicago PMI numbers was the highest since October 2013.
The University of Michigan and Thomson Reuters' reading of consumer
sentiment was at 81.9 in May. This was less than the consensus
forecast of an increase to 82.5. Earlier, the preliminary reading
of consumer sentiment was at 81.8 in May.
Mixed economic data kept the gains in check while the Nasdaq ended
in negative territory following a decline in technology
bellwethers. Stocks such as Apple Inc. (NASDAQ:
), Cisco Systems, Inc. (NASDAQ:
) and Oracle Corporation (NYSE:
) decreased 0.4%, 0.2% and 0.4%, respectively.
Bio-tech stocks also had a negative impact on the Nasdaq. Stocks
such as Gilead Sciences Inc. (NASDAQ:
), Vertex Pharmaceuticals Incorporated (NASDAQ:
), Biogen Idec Inc. (NASDAQ:
) and Celgene Corporation (NASDAQ:
) decreased 1.1%, 0.8%, 0.2% and 0.2%, respectively.
Benchmarks closed in the green during the holiday-shortened week.
The S&P 500, the Dow and the Nasdaq gained 1.2%, 0.7% and 1.4%,
Merger and acquisition activity in the food industry,
better-than-expected initial claims and expectations that ECB will
reduce key lending rates drove benchmarks higher for the week. A
new deal between The Hillshire Brands Company (NYSE:
) and Pilgrim's Pride Corporation (NASDAQ:
) also added to the bullish sentiment. Encouraging economic numbers
on manufactured durable goods, improved consumer confidence and an
increase in the leading measure of U.S. home prices also lifted
On Tuesday, the Nasdaq reached its highest level in almost eight
weeks boosted primarily by gains in the technology sector. Friday's
gains helped the S&P 500 close at a record high for the 14th
time this year.
Overall, investors chose to focus on the positives rather than on
GDP data that showed the economy contracted in the first quarter.
Benchmarks also recorded their best monthly gains since February.
The S&P 500, the Dow and the Nasdaq gained 2.1%, 0.8% and 3.1%,
respectively. May's gains helped the Nasdaq and the blue-chip index
turn positive for the year.
Gains in small-cap and high-growth stocks drove benchmarks higher
for the month. Additionally, gains in consumer discretionary and
energy stocks helped benchmarks finish in the green. The Nasdaq was
boosted primarily by gains in bio-tech stocks. A new deal between
Keurig Green Mountain and Coca-Cola also provided optimism.
Federal Open Market Committee's (FOMC) indication that central bank
will remain flexible when it comes to raising short term interest
rates also boosted investor sentiment. Additionally, Federal
Reserve Chairwoman Janet Yellen's indicated key lending rates would
remain low. Russian President Vladimir Putin's willingness to
discuss measures to ease the Ukrainian crisis and dovish comments
from ECB President Mario Draghi were some of the other positives
for the month.
Most economic indicators were on the positive side during May. This
includes small-business sentiment, ISM Services Index and initial
claims numbers. March's retail sales data was revised upwards,
adding to the optimism.
Coming back to Friday, 6 out of 10 sectors of the S&P 500 ended
in the green. The Consumer Staples Select Sector SPDR (NYSE:
) led the advance as the sector gained 0.8%. Top holdings from the
sector such as The Procter & Gamble Company (NYSE:
), The Coca-Cola Company (NYSE:
), Philip Morris International, Inc. (NYSE:
), Wal-Mart Stores Inc. (NYSE:
) and CVS Caremark Corporation (NYSE:
) increased 0.5%, 0.6%, 0.2%, 1.0% and 0.9%, respectively.
The Utilities sector followed the Consumer Staples sector. The
Utilities Select Sector SPDR (NYSE:
) advanced 0.7%. Key stocks from the sector such as Duke Energy
), NextEra Energy, Inc. (NYSE:
), Dominion Resources, Inc. (NYSE:
), Southern Company (NYSE:
) and Exelon Corporation (NYSE:
) increased 0.2%, 0.8%, 0.6%, 0.6% and 2.1%, respectively.
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