Benchmarks ended Thursday's choppy session mostly lower, dragged
down by late selloffs in the utilities and energy sectors. The
S&P 500 and the Nasdaq closed in the red, while Dow managed to
finish in the green. The late selloff eroded the day's earlier
gains that came on the back of encouraging initial claims data and
dovish comments from ECB President Mario Draghi.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained just 0.2% to close
Thursday's trading session at 16,550.97. The Standard & Poor
500 (S&P 500) dropped 0.1% to finish at 1,875.63. The
tech-laden Nasdaq Composite Index declined 0.4% to 4,051.50. The
fear-gauge CBOE Volatility Index (VIX) went up 0.2% to settle at
13.43. Total volume for the day was roughly 6.7 billion shares,
higher than this month's average of 6.1 billion. Decliners outpaced
advancing stocks on the NYSE. For 56% stocks that declined, 41%
Utilities and energy sectors weighed on the broader markets
yesterday. The Utilities Select Sector SPDR (XLU) declined 1.1%.
Key stocks from the sector such as Duke Energy Corporation (NYSE:
), NextEra Energy, Inc. (NYSE:
), Dominion Resources, Inc. (NYSE:
), Southern Company (NYSE:
) and Exelon Corporation (NYSE:
) decreased 1.3%, 0.8%, 1.6%, 1.5% and 0.8%, respectively.
The Energy Select Sector SPDR (XLE) led the decline among the
S&P 500 sectors. The sector dropped 1.4%. Top holdings from the
sector such as Exxon Mobil Corporation (NYSE:
), Chevron Corporation (NYSE:
), Schlumberger Limited (NYSE:
), ConocoPhillips (NYSE:
) and Occidental Petroleum Corporation (NYSE:
) decreased 0.8%, 0.9%, 1.6%, 1.4% and 1.1%, respectively.
Selling pressure also intensified in high-growth stocks in the
later part of the day. Momentum stocks from the technology sector
such as Facebook, Inc. (NASDAQ:
), FireEye, Inc. (NASDAQ:
) and Google Inc. (NASDAQ:
) decreased 1.1%, 4.2% and 0.4%, respectively. Shares of online
retailer Amazon.com Inc. (NASDAQ:
) and online travel company TripAdvisor Inc. (NASDAQ:
) declined 1.5% and 0.9%, respectively.
Shares of The Priceline Group Inc. (NASDAQ:
) dropped 2.1% after the company's current-quarter earnings per
share forecast fell short of analysts' expectations. The
travel-services company expects its earnings per share, excluding
special items, for the quarter ending June to be between $11.22 and
$12.02. Analysts expect earnings per share to be at $12.27.
Also, shares of Tesla Motors, Inc. (NASDAQ:
) plunged 11.3%, a day after the electric car maker reported
adjusted loss (including stock-based compensation expenses) of 14
cents per share in the first quarter of 2014.This was wider than
the Zacks Consensus Estimate of a loss of 10 cents. The loss was
also in contrast to the break-even results reported in the year-ago
Bio-tech stocks too suffered losses yesterday. Gilead Sciences Inc.
), Vertex Pharmaceuticals Incorporated (NASDAQ:
) Amgen Inc. (NASDAQ:
) and Biogen Idec Inc. (NASDAQ:
) decreased 0.1%, 2.1%, 1.8% and 0.4%, respectively. Overall, the
Health Care Select Sector SPDR (XLV) decreased 0.5%.
These losses eroded the day's initial gains that were sparked by
encouraging economic data and ECB president's dovish comments. On
the economic front, the U.S Department of Labor reported that
seasonally adjusted initial claims decreased 26,000 to 319,000 in
the week ending May 3. This decrease in applications for
unemployment benefits reached the lowest level in a month. The fall
was more than the consensus estimate of initial claims decreasing
Separately, the European Central Bank kept monetary policy
unchanged. ECB President Mario Draghi said at a press conference
that for the purpose of promoting economic growth and stability,
the central bank might lower lending rates or provide more economic
stimulus during their June policy meeting.
Meanwhile, in a testimony before the Senate Budget Committee,
Federal Reserve Chairwoman Janet Yellen reiterated the central
bank's intentions to keep interest rates low. Yellen commented:
"Interest rates are unlikely to begin rising until we are in a
strong economic recovery".
On Tuesday, Yellen had said that the economy was still in need of
support from the central bank given the "considerable slack" in the
labor market. She stated that the central bank intends to keep the
federal funds rate low for some time, even after employment and
inflation rates return to the desired level. Yellen also
acknowledged the fact that "there is no mechanical formula or time
table" to raise interest rates.
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