Markets slipped into the red following dismal reports on the
home front coupled with investor concerns about the future of the
Federal Reserve's bond buying program. Investors are hesitant to
take any positions ahead of the all-important Federal Reserve
policy meeting this week. Meanwhile, industrial production for
the month of May came in flat. Financial sector was the biggest
loser among the S&P 500 industry groups. Utilities stocks
were the only gainers.
The Dow Jones Industrial Average (DJI) lost 0.7% to
close the day at 15,070.18. The S&P 500 slipped 0.6% to
finish Friday's trading session at 1,626.73. The tech-laden
Nasdaq Composite Index fell 0.6% to end at 3,423.56. The
fear-gauge CBOE Volatility Index (VIX) jumped 4.5% to settle at
17.15. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 5.5 billion
shares, considerably lower than the 2013's average of 6.38
billion shares. Declining stocks outnumbered the advancers. For
the 45% that advanced, 53% declined.
Markets were volatile last week following concerns over the
Federal Reserve's bond buying program. The Dow lost 1.2%, the
S&P 500 slipped 1% and the Nasdaq declined 1.3%, over the
week. The Federal Reserve is buying bonds worth $85 billion every
month to keep interest rates low. This program was implemented to
boost borrowing, spending and investing to bring the country back
on the road to recovery. The Fed's easy monetary policy has
pushed major indices higher this year. But after Fed
chairman Ben Bernanke's testimony on May 22, markets started
losing their ground. Investors are of the view that if the Fed
tapers the bond buying program, growth of the economy may be
affected. The Federal Reserve's two-day policy meeting will be
held on Tuesday. All eyes are fixed on the outcome of this
Meanwhile, according to Thomson Reuters and the University of
Michigan, the preliminary estimate of consumer sentiment dropped
to 82.7 in June from previous month's figure of 84.5. This was
considerably below the consensus estimate of 84.4. In the
previous month, the index was its highest level since July 2007.
On the other hand the U.S. Bureau of Labor Statistics reported
that Producer Price Index increased 0.5% in May. This was above
the consensus estimate of an increase of 0.1%.
Additionally, industrial production was flat in May after having
declined 0.4% in April. This was contrary to the consensus
estimate of an increase of 0.2%. Manufacturing production
increased 0.1% in May whereas output from mines gained 0.7%.
Increase in manufacturing production and mining was overshadowed
by a fall in the output of utilities.
The financial sector had a bad day and was the biggest loser
among the S&P 500 industry groups. The Financial Select
Sector SPDR (XLF) lost 1.3%. Stocks such as JPMorgan Chase &
), Goldman Sachs Group Inc (NYSE:
), Bank of America Corp (NYSE:
), Citigroup Inc (NYSE:
) and Wells Fargo & Co (NYSE:
) declined 1.9%, 1.8%, 1.1%, 2.1% and 1.9%, respectively.
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
CENTERPOINT EGY (CNP): Free Stock Analysis
DUKE ENERGY CP (DUK): Free Stock Analysis
EDISON INTL (EIX): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
NEXTERA ENERGY (NEE): Free Stock Analysis
PUBLIC SV ENTRP (PEG): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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The utilities sector was the only sector among the S&P 500
industry groups which finished in the green. The Utilities SPDR
(XLU) gained 0.2%. Stocks such as Duke Energy Corp (NYSE:
), NextEra Energy, Inc. (NYSE:
), Public Service Enterprise Group Inc. (NYSE:
), Edison International (NYSE:
) and CenterPoint Energy, Inc. (NYSE:
) added 0.2%, 0.8%, 0.2%, 0.9% and 0.4%, respectively.