Positive investor sentiment towards encouraging economic data
released throughout last week ensured that major indices posted
record gains on Friday. The day was also marked by major
corporate developments and profits booked by energy and
industrial stocks. Meanwhile, the Euro Zone had a sliver of
positive news after car registrations for April increased
marginally. All the top ten S&P 500 industry groups finished
in the green, among which energy stocks outperformed others.
The Dow Jones Industrial Average (DJI) gained 0.8% to close
the day at 15,354.40. The S&P 500 increased 1.0% to finish
Friday's trading session at 1,666.12. The tech-laden Nasdaq
Composite Index rose 1.0% to end at 3,498.97. The fear-gauge CBOE
Volatility Index (VIX) dropped 4.8% to settle at 12.45.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.33 billion shares,
marginally below 2013's average of 6.36 billion shares. Advancing
stocks outnumbered the decliners. For the 68% that advanced, 28%
Benchmarks posted gained for the fourth week in a row. The
Federal Reserve's monetary stimulus coupled with strong corporate
earnings and encouraging domestic data fuelled the rally. The Dow
Jones, the S&P 500 and the Nasdaq have advanced 17.2%, 16.8%
and 15.9%, respectively since the start of 2013. This week, the
Dow, S&P 500 and the Nasdaq gained 2.0%, 1.5% and 1.7%,
respectively. In comparison with level which was prevailing
during March 2009, the S&P 500 has gained nearly 1000 points.
A removal of monetary stimulus might curb U.S. economic growth in
the second quarter. However, markets seem to be buoyant thanks to
encouraging retail sales and job market numbers.
On the domestic front, according to a report, released by
Thomson Reuters and University of Michigan, the consumer
confidence index in May improved to 83.7, above the consensus
estimate of 77.6 and previous month's reading of 76.4. Meanwhile,
another report released by the Conference Board, indicated an
improvement in the Conference Board Leading Economic Index (LEI)
for April. The index increased 0.6% compared to a marginal
decline during the previous month.
Major components of this index are building permits, initial
claims, average work week in manufacturing and ISM new orders.
For the six months ending April 2013, the index has improved 1.7%
compared to 0.5% during previous six months. The Conference Board
Coincident Economic Index (CEI) improved marginally 0.1%.
However, for the six months ending April 2013, the index advanced
at much faster pace of 1.3% compared to 0.4% in the previous six
On the international front, according to figures released by
the European Automobile Manufacturers' Association, new car
registrations for the month of April increased marginally for the
first time in 19 months, by 1.7%. The increase is attributable to
growth in Spain and Germany. This report comes after the Euro
Zone slipped into recession for the first quarter. Germany's
Volkswagen gained 2% and now has a 27% market share in Europe,
compared to April 2012. Car sales have slumped in the recession
hit Euro Zone mainly because of low income and high
Energy stocks were the biggest gainers. The Energy Select
Sector SPDR (XLE) gained 1.7%. Stocks such as Exxon Mobil
), Chevron Corporation (NYSE:
), Hess Corp. (NYSE:
), Occidental Petroleum Corporation (NYSE:
) and Marathon Petroleum Corp (NYSE:
) increased 1.2%, 0.5%, 0.8%, 2.0% and 5.3%, respectively.
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