Benchmarks scored record highs yet again on Friday banking on
encouraging May's nonfarm payroll report. The S&P 500 ended at
another high; the eighteenth one this year. The blue-chip index
also closed at a record level for the eighth time this year. The
Nasdaq too closed at a level last seen in late March. Separately,
Friday's gains helped the Russell 2000 index of small-caps stocks
turn positive for the year. Benchmarks ended the week with best
gains since mid-April.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.5% to close
Friday's trading session at 16,924.28. The Standard & Poor 500
(S&P 500) went up almost 0.5% to finish at 1,949.44. The
tech-laden Nasdaq Composite Index advanced 0.6% to 4,321.40. The
fear-gauge CBOE Volatility Index (VIX) plunged 8.1% to settle at
10.73. Total volume for the day was roughly 5.27 billion shares,
lower than last month's average of 5.75 billion. Advancers outpaced
declining stocks on the NYSE. For 72% stocks that advanced,
Investor sentiment turned bullish after the U.S. Bureau of Labor
Statistics said total nonfarm payroll employment jumped 217,000 in
May, more than the consensus estimate of a rise by 213,000. Nonfarm
payroll jobs increased by over 200,000 level for the fourth
straight month in May, a stretch last seen in January 2000.
Unemployment rate stayed at 6.3% in May. In April, the unemployment
rate had dropped to 6.3%, touching the lowest level since September
2008. It was also the biggest one-month decline in 31 years.
Overall, U.S. employment returned to its pre-recession peak for the
first time in May. The nation recovered 8.7 million jobs lost
during the recession. Employment increased in professional and
business services, health care and social assistance, food services
and drinking places, transportation and warehousing.
Separately, the Board of Governors of the Federal Reserve System
reported that consumer credit increased by $26.9 billion in April
to $3.18 trillion. This increase in the indicator of potential
future spending levels was more than the consensus estimate of an
increase by $15 billion. Non-revolving credit increased at an
annual rate of 9.50% and the revolving credit increased at an
annual rate of 12.25%. In April, consumer credit increased at a
seasonally adjusted annual rate of 10.25%.
Friday's gains helped benchmarks record their best weekly gains
since mid-April. The S&P 500 and the Dow advanced 1.3% and
1.2%, respectively. Both the S&P 500 and the blue-chip index
recorded their strongest weekly percentage gains since April 17.
The Nasdaq advanced 1.8%. The tech-heavy index gained for the
fourth-straight week. The small-cap stocks nonetheless finished
ahead of their blue-chip counterparts. The Russell 2000 gained 2.7%
in the week.
Benchmarks ended in positive territory for the week following the
announcement of several stimulus measures by the European Central
Bank (ECB) intended to boost Eurozone's recovery. The central bank
had reduced the refinancing rate to 0.15% from 0.25% and the
marginal lending facility rate was reduced to 0.40% from 0.75%. ECB
had also cut the deposit rates to minus 0.10%. Additionally, ECB
had deployed a series of targeted long term refinancing operations
and announced that it will halt sterilizing purchases under its
Securities Market Program. Separately, ECB President Mario Draghi
had said preparations for outright purchases of asset-backed
securities have started.
Encouraging services sector report and upbeat ISM manufacturing
data also helped the benchmarks finish in the green for the week.
The ISM Services Index in May touched the highest level since
August 2013. According to data from the Institute for Supply
Management, the Non-Manufacturing Index for May increased 1.1
percentage points to 56.3% from April's reading of 55.2%. The May
2014 Manufacturing PMI increased 0.5 percentage points from April's
reading of 54.9% to 55.4%.
Coming back to Friday, 8 out of 10 sectors of the S&P 500 ended
in the green. The SPDR S&P Homebuilders ETF (XHB) led the
advance among the S&P 500 sectors. The sector gained 1.6%. Key
housing stocks from the sector such as DR Horton Inc. (NYSE:
), Lennar Corp. (NYSE:
), Toll Brothers Inc. (NYSE:
), KB Home (NYSE:
), Beazer Homes USA Inc. (NYSE:
) and PulteGroup, Inc. (NYSE:
) increased 1.8%, 1.7%, 1.4%, 2.0%, 1.8% and 1.3%, respectively.
The Industrial Select Sector SPDR (XLI) gained 1.0%, the second
highest among the S&P 500 sectors. Key stocks from the sector
such as General Electric Company (NYSE:
), United Technologies Corp. (NYSE:
), Union Pacific Corporation (NYSE:
), The Boeing Company (NYSE:
) and 3M Company (NYSE:
) increased 1.5%, 0.6%, 0.8%, 1.1% and 0.7%, respectively.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
D R HORTON INC (DHI): Free Stock Analysis
LENNAR CORP -A (LEN): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
BEAZER HOMES (BZH): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
UNION PAC CORP (UNP): Free Stock Analysis
BOEING CO (BA): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
To read this article on Zacks.com click here.