Benchmarks finished in the green following encouraging
domestic data and positive comments from China on its growth
rate. The Dow Jones breached previous records, while the S&P
is very close to its highest level. Support from the Federal
Reserve for continued bond buying was largely responsible for
boosting market sentiment. All ten S&P 500 industry groups
finished in the green, among which industrials were the biggest
The Dow Jones Industrial Average (DJI) gained 0.9% to close
the day at 14,253.77. The S&P 500 increased 1.0% to finish
yesterday's trading session at 1,539.79. The tech-laden Nasdaq
Composite Index rose 1.3% to end at 3,224.13. The fear-gauge CBOE
Volatility Index (VIX) dropped almost 3.8% to settle at 13.48.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.5 billion shares,
marginally above the daily average of 6.48 billion shares.
Advancing stocks outnumbered the declining stocks. For the 72%
that advanced, 25% declined.
Yesterday, the Dow finished at 14,253.77, marching past the
previous record achieved on October 9, 2007, at 14,164.53. The
S&P 500 is just 2% away from its highest level. After the Dow
touched its lowest point on March 9, 2009, at 6,547 there have
been major economic reforms and stimulus packages which have
helped the distressed economy recover from the financial crisis.
Recent domestic economic data including improving housing prices,
increased spending and auto sales have boosted the economy.
Improved corporate earnings in the previous quarter also indicate
an improving economy. Even though the Dow has touched its highest
level since 2007, the unemployment rate prevailing is 7.9%,
compared with 4.7% in 2007.
Encouraging data on the domestic front was largely responsible
for improved investor sentiment. According to the Institute for
Supply Management, the non-manufacturing sector grew in February
for the 38
month in a row. The non-manufacturing index grew 0.8% at 56% in
February compared with 55.2% in January. This is higher than the
consensus estimate of 55.3%. The non-manufacturing business index
increased 0.5% to 56.9 from previous month's reading of 56.4. The
new orders index increased 3.8% to 58.2% and the employment index
decreased 0.3% to 57.2 indicating growth in employment for the
seventh month in a row.
On the international front, China said that they will focus on
maintaining the GDP growth rate at 7.5% and will increase fiscal
spending by 10%. 24 of the 31 provinces in the country said that
they are aiming for a minimum GDP growth of 10%. These positive
developments came after the China State Council decided to
introduce new rules to have greater control over the housing
Meanwhile, retail sales data of the 17 European countries
(EA17) also reported encouraging figures According to Eurostat,
the European Union's statistics agency, retail sales for the
month of January increased 1.2%. In December, retail sales
declined by 0.8%. Retail sales in 27 European countries (EU27)
increased 0.9% compared with a decline of 0.7% in December. On a
year over year basis, the retail sales index dropped 1.3% for 17
European countries and 0.9% in the 27 European countries.
Industrial stocks were the biggest gainers among the top ten
S&P 500 groups. The Industrials SPDR (XLI) rose 1.4%. Stocks
such as General Electric Company (NYSE:
), 3M Co (NYSE:
), Caterpillar Inc. (NYSE:
), Honeywell International Inc. (NYSE:
) and United Technologies Corporation (NYSE:
) increased 1.4%, 1.1%, 0.5%, 1.4%, and 2.1%, respectively.
CATERPILLAR INC (CAT): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis
HONEYWELL INTL (HON): Free Stock Analysis
3M CO (MMM): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
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