Gains in media stocks helped benchmarks shrug off weak economic
data and settle in the green. Investors ignored the biggest
contraction of the U.S. economy in the first quarter since early
2009 and also overlooked an unexpected fall in durable goods order.
Broadcaster stocks rose on Wednesday after Supreme Court ruled in
their favor over start-up online-video service provider, Aereo Inc.
However, oil refinery stocks declined after The Wall Street Journal
reported that the U.S. is about to ease the ban on crude oil
exports for the first time in nearly 40 years.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.3% to close
Wednesday's trading session at 16,867.51. The Standard & Poor
500 (S&P 500) advanced 0.5% to finish at 1,959.53. The
tech-laden Nasdaq Composite Index closed at 4,379.76; gaining 0.7%.
The fear-gauge CBOE Volatility Index (VIX) dropped almost 4.5% to
settle at 11.59. Total volume on the New York Stock Exchange (NYSE)
was 3.1 billion. Advancers outpaced declining stocks on the NYSE.
For 67% stocks that advanced, 30% declined.
Media companies gained after the Supreme Court ruled in their
favor. The Supreme Court stated that Aereo Inc., an Internet video
startup had violated copyright law. The Supreme Court voted 6-3
against Aereo and ruled that the company needs to pay broadcast
companies if it takes television programs from airwaves.
Aereo uses tiny antennas for broadcasting content to subscribers
via the Internet. The online-video service provider operates in
major U.S. cities, including New York, Boston and Chicago.
The ruling was a major win for the broadcast industry as the
industry had argued that Aereo should pay for broadcast rights the
same way cable and satellite providers do. Broadcast company, CBS
) was yesterday's second-best gainer among the S&P 500
components. The stock surged 6.2% following the ruling.
Other media stocks such as Comcast Corporation (NASDAQ:
) owner of NBC, The Walt Disney Company (NYSE:
) owner of ABC and other networks and Twenty-First Century Fox,
) increased 1.1%, 1.5% and 2.2%, respectively. The Consumer
Discretionary Select Sector SPDR (XLY) gained almost 0.9%, the
second highest among the S&P 500 sectors.
However, oil refiners declined after the Commerce Department
loosened the nearly 40 year ban on crude oil exports. The Wall
Street Journal reported that the Commerce Department defied the
current U.S. law and granted permission to two energy companies
Enterprise Products Partners L.P. (NYSE:
) and Pioneer Natural Resources Co. (NYSE:
) to ship a type of unrefined ultralight oil known as condensate to
foreign buyers. The buyers can then turn the oil into gasoline, jet
fuel and diesel fuel. The current U.S. law states that companies
can only export refined fuels such as gasoline and diesel.
Following the news, oil refiners, Valero Energy Corporation (NYSE:
) and Marathon Petroleum Corporation (NYSE:
) declined the most among the S&P 500 components. Shares of
Valero Energy and Marathon Petroleum plunged 8.3% and 6.3%,
respectively. Similarly, shares of Tesoro Corporation (NYSE:
) and Phillips 66 (NYSE:
) dropped 4.2% each.
Economic data was largely discouraging. First quarter GDP growth
contracted more than expected. According to the "third estimate" by
the Bureau of Economic Analysis, the first quarter output of goods
and services produced by labor and property located in the United
States decreased at an annual rate of 2.9%, more than the consensus
estimate of 1.8%.
First quarter GDP growth dropped the most since early 2009 when the
recession was coming to an end. The previous estimate expected the
U.S. economy to contract by 1.0% in the first quarter. In the
fourth quarter 2013, the US economy had expanded 2.6%.
In addition to this, the US Census Bureau reported new orders for
manufactured durable goods in May decreased 1.0%, more than the
consensus estimate of a 0.2% decline. The drop in May came after a
revised 0.8% gain in April. Excluding transportation, new orders
for manufactured durable goods decreased 0.1% in May. However,
unfilled orders for manufactured durable goods in May were up 0.6%.
Nine out of 10 sectors of the S&P 500 ended in the green. The
Health Care Select Sector SPDR (XLV) gained 1.1%, the highest among
the S&P 500 sectors. Key stocks from the sector such as Johnson
& Johnson (NYSE:
), Pfizer Inc. (NYSE:
), Merck & Co. Inc. (NYSE:
), Gilead Sciences Inc. (NASDAQ:
) and Amgen Inc. (NASDAQ:
) advanced 1.1%, 1.7%, 1.6%, 1.2% and 0.5%, respectively.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CBS CORP (CBS): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis
DISNEY WALT (DIS): Free Stock Analysis Report
TWENTY-FIRST CF (FOX): Free Stock Analysis
ENTERPRISE PROD (EPD): Free Stock Analysis
PIONEER NAT RES (PXD): Free Stock Analysis
VALERO ENERGY (VLO): Free Stock Analysis Report
MARATHON PETROL (MPC): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
PHILLIPS 66 (PSX): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
MERCK & CO INC (MRK): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
AMGEN INC (AMGN): Free Stock Analysis Report
To read this article on Zacks.com click here.