Benchmarks ended flat on Monday despite Standard & Poor
revising United States' outlook to stable from negative. Stocks
were oscillating between small gains and losses throughout the
trading session yesterday. Trading volumes were low and no major
economic reports were released yesterday. Investors not only
ignored positive news about the U.S economy but also chose to
overlook encouraging news about Japan's economy. Materials sector
was the biggest gainer among the S&P 500 industry groups. But
home building stocks had a bad day.
The Dow Jones Industrial Average (DJI) lost 0.1% to close the
day at 15,238.59. The S&P 500 fell 0.57 point to finish
yesterday's trading session at 1,642.81. The tech-laden Nasdaq
Composite Index inched up 0.1% to end at 3,473.77. The fear-gauge
CBOE Volatility Index (VIX) increased 2.0% to settle at 15.44.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.5 billion shares,
considerably lower than 2013's average of 6.4 billion shares.
Declining stocks outnumbered the advancers. For the 42% that
advanced, 55% declined.
Markets opened higher on Monday after Standard & Poor's
revised U.S' outlook to stable from negative. But lost its
way as the day progressed and kept fluctuating between small
gains and losses for the rest of the session. In the previous
week, the official jobs numbers report that met expectations
reassured investors that the Federal Reserve will not curb its
bond buying program acted as a catalyst and the Dow Jones
rocketed more than 200 points on Friday.
On Monday, Standard & Poor's raised the U.S sovereign
credit rating to stable from negative. According to the rating
agency, Federal Reserve's bond buying program and their
continuous effort to keep the interest rates low helped to
improve the health of the U.S economy. Standard & Poor's
believe Federal Reserve's efforts to keep the interest rate low
via its bond buying program boosted investor sentiment.
Additionally, the ratings firm believes Congress' efforts to
reduce the budget deficit by increasing some taxes in the
beginning of 2013, has also helped. Incidentally, in the
year 2011, when Standard & Poor's cut the government debt
rating, markets plunged more than 5% on the first trading day
following the downgrade.
DU PONT (EI) DE (DD): Free Stock Analysis
EASTMAN CHEM CO (EMN): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
MONSANTO CO-NEW (MON): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
PRAXAIR INC (PX): Free Stock Analysis Report
TOLL BROTHERS (TOL): Free Stock Analysis
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In its report Standard & Poor's said: "We believe that the US
monetary authorities have both the strong ability and willingness
to support sustainable economic growth and to attenuate major
economic or financial shocks." The agency also applauded the
Federal Reserve's "timely and effective actions to lessen the
impact of major shocks since the Great Recession."
On the international front, the Street received some encouraging
news about Japan's economy. But investors chose to ignore these
developments. Japan grew at an annual rate of 4.1% in January-
March beating the initial estimate of 3.5%. The country's current
account surplus also doubled in April from the year ago period.
Investors will closely watch the outcome of The Bank of Japan's
two-day policy meeting which will end on
The materials sector was the biggest gainer among the S&P 500
industry groups and the Materials Select Sector SPDR (XLB) gained
0.5%. Stocks such as Monsanto Company (NYSE:
), E I Du Pont De Nemours And Co. (NYSE:
), Praxair, Inc. (NYSE:
), Praxair, Inc. (NYSE:
) and Eastman Chemical Company (NYSE:
) added 4.5%, 0.1%, 0.5%, 0.3% and 0.2%, respectively.
Homebuilding stocks had a bad day yesterday and the SPDR S&P
Homebuilders (XHB) lost 0.8%. Stocks such as The Home Depot, Inc.
), Toll Brothers Inc (NYSE:
), Meritage Homes Corporation (NYSE:
) and PulteGroup, Inc. (NYSE:
) declined 1.3%, 3.0%, 1.7% and 2.0%, respectively.