Investors anticipated a positive outcome to the Federal
Reserve's two-day policy meeting, lifting the major indices
higher on Tuesday. Benchmarks finished in the green for the
second consecutive day. A couple of domestic reports were
also released yesterday. Housing starts increased in May but
missed the Street's expectations. Additionally, the Consumer
Price Index increased in May. All ten sectors of the S&P 500
industry chalked up gains with industrials leading the pack.
The Dow Jones Industrial Average (DJI) gained 0.9% to close
the day at 15,318.23. The S&P 500 added 0.8% to finish
yesterday's trading session at 1,651.81. The tech-laden Nasdaq
Composite Index rose 0.9% to end at 3,482.18. The fear-gauge CBOE
Volatility Index (VIX) declined 1.1% to settle at 16.61.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.43 billion shares,
considerably lower than 2013's average of 6.36 billion shares.
Advancing stocks outnumbered the decliners. For the 66% that
advanced, only 32% declined.
The Federal Reserve's two-day policy meeting, kicked off on
Tuesday. The future of the bond buying program will be the focal
point of discussions. The $85 billion bond buying program was
implemented to boost borrowing, spending and investing to bring
the country back on the road to recovery. Quantitative easing has
acted as the primal catalyst for the economy, lifting benchmarks
higher this year. The S&P 500 is nearly 1% below its highest
The Fed is expected to release its latest policy statement on
Wednesday. Despite robust economic reports on the home front
indicating improvements in the health of the economy investors
are expecting that the Fed will not change its program. The
Central Bank is also likely to give an update on economic
projections for the 2013-2015 period. The outcome of the two-day
policy meeting will probably decide the trajectory of major
indices going forward.
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On the domestic front, the U.S. Census Bureau and the Department
of Housing and Urban Development jointly announced building
permits and housing starts numbers. According to the report,
privately owned housing starts came in at 914,000, higher than
the previous month's revised figure of 856,000. This was below
the consensus estimate of 950,000. Building permits declined to
974,000 in the month of May from April's revised figure of
1,005,000. This is marginally above the consensus estimate of
Housing stocks gained after housing starts numbers. The SPDR
S&P Homebuilders (XHB) gained 0.9%. Stocks such as Meritage
Homes Corp (NYSE:
), PulteGroup, Inc. (NYSE:
), The Ryland Group, Inc. (NYSE:
), D.R. Horton, Inc. (NYSE:
) and Toll Brothers Inc (NYSE:
) gained 1.1%, 0.3%, 0.9%, 0.5% and 1.1%, respectively.
Meanwhile, the Consumer Price Index for All Urban Consumers
(CPI-U) added 0.1% in May, missing the consensus estimate of an
increase of 0.2%. CPI entered positive territory after
languishing in the negative zone for the two consecutive months.
Increase in CPI was boosted by shelter components. The shelter
index gained 0.3% in May.
The industrial sector was the biggest gainer among the S&P
500 industry groups and the Industrial Select Sector SPDR (XLI)
gained 1.2%. Stocks such as United Parcel Service, Inc. (NYSE:
), 3M Co (NYSE:
), Deere & Company (NYSE:
) United Technologies Corporation (NYSE:
) and General Electric Company (NYSE:
) increased 1.0%, 1.0%, 0.2%, 1.3% and 2.4%, respectively.