Investor sentiment received a boost after the Federal Reserve
reiterated it would continue with its economic stimulus package.
Meanwhile, Cypriot lawmakers discussed measures to bail out the
country from its financial crisis. All top ten S&P 500
industry groups finished in the green with Consumer Discretionary
stocks leading the pack.
The Dow Jones Industrial Average (DJI) gained 0.4% to close
the day at 14,511.73. The S&P 500 increased 0.7% to finish
yesterday's trading session at 1,558.71. The tech-laden Nasdaq
Composite Index climbed 0.8% to end at 3,254.19. The fear-gauge
CBOE Volatility Index (VIX) dropped 12% to settle at 12.67.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.9 billion shares, below
2012's average of 6.48 billion shares. Advancing stocks
outnumbered the decliners. For the 71% that advanced, 26%
Benchmarks finished in the green after the Federal Reserve
confirmed that it would continue buying $85 billion worth of
bonds. The Federal Reserve Open Market Committee said it will
continue with its bond buying program to keep interest rates
near-zero. The Fed is also targeting an unemployment rate of 6.5%
and an inflation rate of 2.5%. Last month, the unemployment rate
was at 7.7%. Chairman of the Federal Reserve, Ben Bernanke said:
"In light of this outlook and following a review of the efficacy
and cost of additional asset purchases, the committee today
reaffirmed its asset purchase program and its federal funds
The central bank revised growth rates of the U.S. economy in
the range of 2.3% and 2.8% this year, 2.9% and 3.4% for 2014 and
2.9% and 3.7% for 2015. After Democrats and Republicans failed to
meet on common ground, budgetary cuts were implemented from March
1. The "sequestration cuts" will negatively affect the budget in
future with expected layoffs on the cards.
On the international front, Cyprus held talks with Russia on
Wednesday in an attempt to bailout the country from financial
distress. Cyprus has asked Russia to extend the payment period of
2.5 billion Euro loans, which expires in 2016. It is also asking
for a discount on the prevailing interest rate of 4.5%. If Cyprus
does not reach an agreement on the bailout, not only will the
country exit the euro but it will also send shock waves through
financial markets worldwide. Earlier, the Cyprus parliament voted
against imposing tax on savings deposited in the banks.
On the earnings front, shares of food processing company,
General Mills, Inc. (NYSE:
) gained 2.6% after reporting profits for fiscal third-quarter.
The company has gained from recent acquisitions. Brands of the
company include Cheerios and Bretty Crocker. Meanwhile,
shares of Lennar Corporation (NYSE:
) surged 4.8% after posting first-quarter profits above the
Street's expectations. The company has benefitted from rising
rents and low interest rates.
Consumer Discretionary stocks gained the most among the
S&P 500 industry groups. The Consumer Discretionary SPDR
(XLY) increased 1.2%. Stocks such as Comcast Corporation (NASDAQ:
), CBS Corporation (NYSE:
), the Walt Disney Company (NYSE:
), Time Warner Inc. (NYSE:
) and Netflix, Inc. (NASDAQ:
) gained 2.1%, 1.2%, 1.1%, 1.6% and 1.0%, respectively.
The housing sector also had a good run. SPDR S&P
Homebuilders (XHB) gained 2.5%. Stocks such as the Ryland Group,
), KB Home (NYSE:
), M.D.C. Holdings, Inc. (NYSE:
), Hovnanian Enterprises, Inc. (NYSE:
) and PulteGroup, Inc. (NYSE:
) gained 4.0%, 2.6%, 3.3%, 2.1% and 2.7%, respectively.
CBS CORP (CBS): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis
DISNEY WALT (DIS): Free Stock Analysis Report
GENL MILLS (GIS): Free Stock Analysis Report
HOVNANIAN ENTRP (HOV): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
MDC HLDGS (MDC): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
RYLAND GRP INC (RYL): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
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