Positive domestic economic reports along with encouraging
results from a leading housing company drove major benchmarks
into positive territory. On the international front, in an
attempt to pacify investor concerns over China's credit crunch,
People's Bank of China said it would inject cash into financial
institutions. All the top ten S&P 500 industry groups posted
gains among which financial stocks gained the most.
For a look at the issues facing today's markets, read our
Ahead of Wall Street for June 26
The Dow Jones Industrial Average (DJI) gained 0.7% to close
the day at 14,760.31. The S&P 500 increased 1.0% to finish
yesterday's trading session at 1,588.03. The tech-laden Nasdaq
Composite Index rose 0.8% to end at 3,347.89. The fear-gauge CBOE
Volatility Index (VIX) lost 2.3% to settle at 18.47. Consolidated
volumes on the New York Stock Exchange, American Stock Exchange
and Nasdaq were roughly 6.73 billion shares, above 2013's average
of 6.36 billion shares. Advancing stocks outnumbered the
decliners for 75% that advanced, 20% declined.
Major indices accrued gains of around 1% during yesterday's
trading session. These increases are primarily attributable to
domestic economic reports. The S&P 500 gained nearly 1%,
though it is still 4.9% shy of its all-time high. New home sales
data boosted investor confidence the most. According to the U.S.
Department of Commerce, sales of new single-family houses for May
came in at 476,000. The figure is well above the consensus
estimates of 461,000 and April's figure of 466,000. On a year
over year basis, housing starts improved 29%.
In addition to positive new home sales data, the
S&P/Case-Shiller home price index provided investors with
further encouragment. The S&P/Case-Shiller 10-City home price
index and The S&P/Case-Shiller 20-City home price index came
in at 165.63 and 152.37, respectively for April. On an annual
basis, this indicates a rise of 11.58% and 12.05%, respectively.
These figures are at their highest levels in seven years and have
also recorded their biggest gain in one month since the
introduction of this index.
Meanwhile, the U.S. Department of Commerce said durable orders
increased 3.6% compared to the consensus estimate of 3.3%.
However, on a month over month basis, the figure remained
unchanged. Shipments of manufactured durable goods increased 1.2%
while growth in transportation equipment was recorded at 3.6%.
Among capital goods, nondefense new orders increased 9.3% while
defense new orders increased 12%.
Another factor which improved investor sentiment was the
Conference Board Consumer Confidence Index. The index came in at
81.4 compared to 74.3 in May. The Present Situation Index and
Expectations Index improved to 69.2 and 89.5 compared to 64.8 and
80.6, respectively. Consumer's assessment of current conditions
improved in June. Opinions about good business conditions
improved to 19.1% and opinions on bad business conditions
declined to 24.9% from 26%. Consumer's opinion on labor market
On the international front, in an attempt to calm investors
People's bank of China (PBOC), said they would inject cash to
support the economy if the situation arises. Yesterday, Asian
markets had suffered losses after benchmarks went into a free
fall. Major indices plunged to a four and a half year low.
Yesterday the PBOC said: "The central bank will also take
necessary measures to help those institutions who have problems
in managing liquidity to maintain overall stability in the money
market." The interest rates on an overnight and 7-day basis came
down to 5.8% and 7.4%, respectively but still remained above
On the earnings front, Lennar Corporation (NYSE:
) gained 0.7% after it posted better-than-expected results
yesterday, indicating an improvement in the housing sector.
Orders of the company increased 27% while the backlog increased
55%. CEO of the company, Stuart Miller, said: "The housing
recovery is still very much intact and the fundamentals of that
recovery remain solid."
All the top ten S&P 500 industry groups posted gains among
which financial stocks emerged as the biggest gainer. Stocks such
as Bank of America Corp (NYSE:
), Wells Fargo & Co (NYSE:
), JPMorgan Chase & Co. (NYSE:
), PNC Financial Services (NYSE:
) and U.S. Bancorp (NYSE:
) gained 3.0%, 1.3%, 2.3%, 3.1% and 1.6%, respectively.
BANK OF AMER CP (BAC): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
LENNAR CORP -A (LEN): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
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