Benchmarks ended their losing streak on Thursday following
stronger-than-expected reports on the home front. The Dow Jones
and the S&P 500 finished in the green for the first time this
week. In recent days, the market has been affected over concerns
on about the Federal Reserve's bond buying program. But
encouraging economic reports released yesterday boosted investor
sentiment. The number of Americans filing for unemployment
benefits declined in the previous week. All ten sectors of the
S&P 500 industry groups finished higher with the financial
sector and the consumer discretionary sector gaining the
The Dow Jones Industrial Average (DJI) gained 1.2% to close
the day at 15,176.08. The S&P 500 climbed 1.5% to finish
yesterday's trading session at 1,636.36. The tech-laden Nasdaq
Composite Index inched up 1.3% to end at 3,445.36. The fear-gauge
CBOE Volatility Index (VIX) tumbled 11.7% to settle at 16.41.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.3 billion shares,
slightly lower than the 2013's average of 6.38 billion shares.
Advancing stocks outnumbered the decliners. For the 81% that
advanced, only 18% declined.
On Thursday, stocks rallied after back-to-back losses.
Benchmarks had slumped sharply on Wednesday but moved up on
Thursday. Though they have enjoyed a decent rally this year,
markets have lost their way following Bernanke's testimony on May
22 over the Fed's bond buying program. Investor concerns about
the Fed's bond buying program increased after the Bank of Japan
refrained from taking any additional measures in its latest
policy meeting. This prompted a selloff in the Japanese market. A
clear picture about the future of the Federal Reserve's bond
buying program may emerge only next week, when the central bank
issues its latest policy statement.
Meanwhile, initial claims for the week ending June 8, declined
12,000 to 334,000 from the prior week's unrevised figure of
346,000. The decline in initial claims was above the consensus
estimate. The four week moving average dropped 7,250 to 345,250
from the previous week unrevised figure of 352,500. In the
previous week the U.S Department of Labor said that the U.S
economy added 175,000 jobs in May.
Apart from encouraging initial claims numbers, the Street also
received good news from the retail sector. According to the U.S.
Department of Commerce retail sales increased 0.6% in May from
the previous month. The figure was above the consensus estimate
of an increase of 0.4%. Retail trades increased 0.7%.
Better-than-expected retail sales number was boosted by increase
in sales of automobiles.
Promising initial claims numbers and a gain in retail sales
indicated the improving health of the U.S economy. Market experts
expected the growth of the U.S. economy to slow down following
implementation of federal spending cuts and social security
taxes, which began from January 1. However, a decrease in initial
claims and an improvement in retail sales indicate that the
economy may be in a better position than previously
The consumer discretionary stocks rallied after the encouraging
retail sales report. The Consumer Discretionary SPDR (XLY) gained
1.9%. Stocks such as The Walt Disney Company (NYSE:
), Amazon.com, Inc. (NASDAQ:
), McDonald's Corporation (NYSE:
), Starbucks Corporation (NASDAQ:
) and Time Warner Inc (NYSE:
) added 2.1%, 1.5%, 0.7%, 2.4% and 3.1%, respectively.
The financial sector also had a good run and the Financial Select
Sector SPDR (XLF) increased 1.9%. Stocks such as JPMorgan Chase
& Co. (NYSE:
), Goldman Sachs Group Inc (NYSE:
), Bank of America Corp (NYSE:
), Citigroup Inc (NYSE:
) and Wells Fargo & Co (NYSE:
) gained 1.9%, 2.5%, 1.2%, 1.7% and 1.7%, respectively.
AMAZON.COM INC (AMZN): Free Stock Analysis
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