Benchmarks enjoyed a late-day reversal to end in the green on
Friday, boosted by gains in small-cap stocks and advances in the
consumer discretionary sector. Markets also received mixed economic
data on Friday. While a surge in construction of new U.S. homes in
April lifted investor sentiment, an unforeseen fall in consumer
sentiment in May adversely affected the mood. Despite Friday's
gains, the S&P 500 and the Dow finished in the red for the
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) went up 0.3% to close
Friday's trading session at 16,491.31. The Standard & Poor 500
(S&P 500) gained 0.4% to finish at 1,877.86. The
tech-laden Nasdaq Composite Index rose 0.5% to 4,090.59. The
fear-gauge CBOE Volatility Index (VIX) dropped 5.5% to settle at
12.44. Total volume for the day was roughly 5.7 billion shares,
lower than this month's average of 6.1 billion. Advancers outpaced
declining stocks on the NYSE. For 65% stocks that advanced,
Benchmarks closed in positive territory after small-cap stocks
bounced back during the latter part of the trading session. The
Russell 2000 Index of small-caps went up 0.6% on Friday after it
had earlier declined 0.7%. The index was able to come out from its
During the week, the Russell 2000 Index had dropped for three
consecutive days. On Thursday, the index slipped 0.7% and
remained below its 200-day moving average. The index was down 10%
from its record high of 1,208.65 achieved on March 4. On Wednesday
the small-cap index had declined 1.6% followed by a drop of 1.1% on
Additionally, gains in the consumer discretionary sector ensured a
positive finish for the benchmarks. The Consumer Discretionary
Select Sector SPDR (XLY) advanced 0.7%. Internet stocks from the
consumer discretionary sector such as online retailer Amazon.com
), Internet television network provider Netflix, Inc. (NASDAQ:
) and online travel company The Priceline Group Inc. (NASDAQ:
) increased 0.9%, 1.7% and 0.1%, respectively. Other key stocks
from the sector such as The Walt Disney Company (NYSE:
), The Home Depot, Inc. (NYSE:
), McDonald's Corp. (NYSE:
) and Ford Motor Co. (NYSE:
) gained 0.3%, 1.5%, 0.6% and 0.5%, respectively.
Separately, telecom company Verizon Communications Inc. (NYSE:
) also had a positive impact on the benchmarks. Shares of Verizon
Communications increased 2.3% a day, following reports that
investor Warren Buffet's Berkshire Hathaway had bought 11 million
in the first quarter.
Benchmarks traded in the negative territory for most of the trading
session on Friday following mixed economic reports. The U.S. Census
Bureau and the Department of Housing and Urban Development jointly
announced privately owned housing starts in April were at
1,072,000, up from the previous month's revised figure of 947,000.
This was more than the consensus estimate of 981,000. Housing
starts increased at the fastest rate in five months. Rise in
apartment construction was cited to be the reason behind the surge
in home-construction last month.
Also, privately owned housing units authorized by building permits
surged 8.0% to a seasonally adjusted annual rate of 1,080,000 in
April from March's revised figure of 1,000,000. Separately, single
family housing starts in April increased 0.8% above March's revised
figure of 644,000.
However, the University of Michigan and Thomson Reuters'
preliminary reading of consumer sentiment declined in May. The
gauge was at 81.8 in May, which was in contrast to the consensus
forecast of an increase to 84.5. Consumers' anxiety over stagnant
wage growth was cited to be the reason. The Labor Department
reported that average hourly wage rate increased only 1.9% year on
year in April.
For the week, the Dow dropped 0.6% and the S&P 500 slipped a
meager 0.03%. However, the tech-heavy Nasdaq gained 0.5%. On
Tuesday, the Dow and the S&P 500 closed at record highs of
16,715.44 and 1,897.45, respectively.
Benchmarks finished mostly lower for the week, dragged down by
declines in small-cap stocks. Wal-Mart's disappointing
numbers, Cisco's dismal fiscal third quarter results and Euro
zone's less-than-expected first quarter GDP growth weighed on the
benchmarks. Also, selloffs in the consumer discretionary sector had
a negative impact on the benchmarks.
However, gains in Internet and bio-tech stocks, merger and
acquisition activity in the food industry, the new deal between
Keurig Green Mountain and Coca-Cola, an upward revision of March's
retail sales data and encouraging small-business sentiment had
positive impacts on the benchmarks.
Coming back to Friday, nine out of 10 sectors of the S&P 500
ended in the green. The SPDR S&P Homebuilders ETF (XHB) led the
advance among the S&P 500 sectors. The sector gained 1.1%. Key
housing stocks such as PulteGroup, Inc. (NYSE:
) and Lennar Corp. (NYSE:
) increased 0.1% and 0.1%, respectively.
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