Weaker-than-expected GDP numbers eased investor concerns that
the Federal Reserve would decrease monetary stimulus in the near
future. Benchmarks rallied for the second consecutive day. Last
week, Federal Reserve Chairman Ben Bernanke hinted that monetary
stimulus would be decreased by the end of the year if economic
data continued to be encouraging. Investors were disappointed by
his comments and markets fell sharply. All ten sectors of the
S&P 500 industry groups finished in the green with health
care leading the pack.
For a look at the issues facing today's markets, read our
Ahead of Wall Street for June 27
The Dow Jones Industrial Average (DJI) gained 1.0% to close
the day at 14,910.14. The S&P 500 added 1.0% to finish
yesterday's trading session at 1,603.26. The tech-laden Nasdaq
Composite Index rose 0.9% to end at 3,376.22. The fear-gauge CBOE
Volatility Index (VIX) declined 6.8% to settle at 17.21.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.48 billion shares,
marginally higher than 2013's average of 6.36 billion shares.
Advancing stocks outnumbered the decliners. For the 73% that
advanced, only 25% declined.
Benchmarks registered first two consecutive days of gains
after losses last week following Ben Bernanke's discouraging
comments about the bond buying program. The S&P logged its
best two day gain in three weeks. On Tuesday, encouraging
domestic reports drove the major indices into positive territory.
But yesterday tepid gross domestic product numbers reduced
investor concerns about the future of the bond buying program.
The easy monetary policy of the central bank is the primary
reason for lifting the benchmarks higher this year. Analysts now
think that discouraging GDP numbers may change the Federal
Reserve's decisions about the future of such stimulus.
The U.S. Department of Commerce released the final numbers for
first quarter GDP. According to the report, the U.S economy
expanded at annual rate of 1.8% in the first quarter of 2013.
This came in well below the consensus estimate of 2.3%. In the
fourth quarter, real GDP increased 0.4%. The increase in real GDP
in the first quarter was primarily boosted by positive
contributions from personal consumption expenditures (PCE),
private inventory investment, and residential fixed investment.
These positive contributions were somewhat offset by negative
contributions federal government spending, state and local
government spending, and exports.
The GDP report revealed that real personal consumption
expenditures gained 2.6% in the first quarter. Whereas real
nonresidential fixed investment and real residential fixed
investment increased 0.4% and 14.0% respectively. On the other
hand, real federal government consumption expenditures and gross
investment plunged 8.7% in the first quarter in comparison with a
decline of 14.8% in the fourth quarter.
On the earnings front, Monsanto Company (NYSE:
), a major seed company posted third quarter results. The
company's profit came in above the Street's estimates. But
revenues came in below expectations. The company's shares
declined 0.6% after the announcement of quarterly results.
Monsanto Chairman and CEO Hugh Grant said: "This is a year where
the strength of our global portfolio has really been highlighted,
and with the continued strength of our larger, more global
business, we're on track to deliver more than 20 percent ongoing
earnings growth in fiscal year 2013 and in a very strong position
to build on that success with continued growth next year."
The health care sector was the biggest gainer among the
S&P 500 industry groups. The Health Care SPDR (XLV) gained
1.4%. Stocks such as Johnson & Johnson (NYSE:
), Merck & Co., Inc. (NYSE:
), Eli Lilly & Co. (NYSE:
), Bristol Myers Squibb Co. (NYSE:
) and GlaxoSmithKline plc (NYSE:
) added 1.9%, 1.0%, 1.2%, 2.9% and 1.3%, respectively.
BRISTOL-MYERS (BMY): Free Stock Analysis
GLAXOSMITHKLINE (GSK): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
LILLY ELI & CO (LLY): Free Stock Analysis
MONSANTO CO-NEW (MON): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
To read this article on Zacks.com click here.