Benchmarks ended slightly lower after two back-to-back strong
gains ahead of lawmakers' all important call on budget cuts.
Indices erased modest gains in the final minutes of the trading
session. Federal Reserve chairman Ben Bernanke's encouraging
comments about the bond buying program lifted the Dow close to a
record high on Wednesday. Meanwhile, the U.S economy expanded
slightly in the fourth quarter whereas initial claims declined
during the previous week. The consumer discretionary sector was
the biggest gainer among the S&P 500 industry groups.
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The Dow Jones Industrial Average (DJI) lost 0.2% to close the day
at 14,054.49. The S&P 500 shed 0.1% to finish yesterday's
trading session at 1,514.68. The tech-laden Nasdaq Composite
Index slipped 0.1% to end at 3,160.19. The fear-gauge CBOE
Volatility Index (VIX) jumped 5.3% to settle at 15.51.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.81 billion shares, above
the daily average of 6.46 billion shares. Advancing stocks
outnumbered declining stocks. For the 49% that advanced, 48%
Benchmarks are back in the negative territory following two
consecutive days of healthy gains. Despite yesterday's loss, the
S&P 500 finished February with four successive months of
gains. The blue-chip index gained 1.4%, S&P 500 inched up
1.1% and Nasdaq added 0.6% in the month of February.
Investors will now closely watch the outcome of the all important
debate on budget cuts scheduled for today. If no deal is reached
today then cuts will take effect starting Friday. President
Barack Obama and members of the Congress arranged for a last
round of talks to prevent the budget cuts. President Barack Obama
said: "Middle-class families can't keep paying the price for
dysfunction in Washington."
Meanwhile, the Street had some positive domestic economic data on
Thursday. According to the "second" estimate of GDP for the
fourth-quarter released by the Bureau of Economic Analysis the
U.S. economy expanded at a slightly better rate than earlier
estimated. The report showed that real gross domestic product
increased 0.1% annually in the fourth quarter. But this was below
the consensus estimate of an increase of 0.5%. In the third
quarter real GDP grew at 3.1%. The increase in real GDP in the
fourth-quarter was boosted by positive contributions from
personal consumption expenditures (PCE), nonresidential fixed
investment and residential fixed investment.
The U.S. Department of Labor revealed that the number of
Americans filing for unemployment benefits declined during the
previous week. According to the report, the advance figure
for seasonally adjusted initial claims dropped 22,000 to 344,000
from prior week's revised figure of 366,000. This was below the
consensus estimate of 367,000. Initial claims have declined for
the third time now in four weeks.
Shares of Mylan Inc. (NASDAQ:
) gained 3.6% after the company reported its fourth-quarter
results. The company earnings came in above the Street's
estimates but revenue fell short of projections. The company's
profits increased 25% in the fourth-quarter. Mylan said it will
purchase a unit of India's Strides Arcolab Ltd for $1.6 billion
to widen its presence in the injectable drugs market.
The consumer discretionary sector was the biggest gainer among
the S&P 500 industry groups. The Consumer Discretionary SPDR
(XLY) gained 0.5%. Stocks such as The Walt Disney Company (NYSE:
), Amazon.com, Inc. (NASDAQ:
), The Home Depot, Inc. (NYSE:
), McDonald's Corporation (NYSE:
) and Viacom, Inc. (NASDAQ:
) added 0.2%, 0.4%, 0.7%, 0.2% and 1.1%, respectively.
Housing stocks declined after two back-to-back days of strong
gains. The SPDR S&P Homebuilders (XHB) lost 0.3%. Stocks such
as Lumber Liquidators Holdings Inc (NYSE:
), M.D.C. Holdings, Inc. (NYSE:
), KB Home (NYSE:
), D.R. Horton, Inc. (NYSE:
) and PulteGroup, Inc. (NYSE:
) lost 0.1%, 0.3%, 1.6%, 1.6% and 0.6%, respectively.