Investors grew cautious on Monday owing to fears over a
correction and a Federal Reserve official's comments on monetary
stimulus. Encouraging developments on corporate acquisitions
could not prevent benchmarks from slumping into negative
territory. Among the top ten S&P 500 industry groups, energy
stocks gained the most. Consumer staples stocks emerged as the
The Dow Jones Industrial Average (DJI) lost 0.1% to close the
day at 15,335.28. The S&P 500 slipped 0.1% to finish
yesterday's trading session at 1,666.29. The tech-laden Nasdaq
Composite Index lost 0.1% to end at 3,496.43. The fear-gauge CBOE
Volatility Index (VIX) gained 4.6% to settle at 13.02.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6 billion shares,
marginally below 2013's average of 6.36 billion shares. Advancing
stocks outnumbered the decliners. For the 57% that advanced, 40%
Monday's trading session saw benchmarks garnering small
profits and gains though they ultimately ended marginally in the
red. Markets started on a positive note following news of
corporate acquisitions. Investor sentiment received a boost when
Yahoo! Inc. (NASDAQ:
) decided to purchase blogging company Tumblr for $1.1 billion.
Additionally, Actavis Inc. (NYSE:
) inked a stock-for-transaction $5 billion deal with Warner
Chilcott Plc. (NASDAQ:
). On the back of these developments, the Dow Jones and the
S&P 500 reached all-time intra-day highs. Both indices have
increased 17%, since the start of 2013. Since 1990, this is the
first time that 38% of the S&P 500 stocks have touched a
52-week high in a week.
Investor sentiment received a blow when the president of the
Federal Reserve Bank of Chicago, Charles Evans, hinted that
monetary stimulus would end. Evans said there are chances of
ending monetary stimulus by autumn if the labor market keeps
improving at the prevailing rate. These comments came in a week
after the president of the Federal Reserve of San Francisco, John
Williams made similar comments.
On Wednesday, Ben Bernanke, the chairman of the Federal
Reserve, will give testimony in front of the Congress regarding
the monetary stimulus. Minutes of its most recent meeting will
also be disclosed, providing further clarity on monetary
stimulus. There are chances that the bond-buying program will end
sooner than investors expect.
On the international front, Japan's Ministry of Finance is due
to release its report on exports and imports for April on
Wednesday. The ministry expects exports to rise on the back of
strong demand for electronics and shipments of cars to the U.S.
However, the ministry expects high imports to offset gains from
exports. They also expect the trade deficit for April to be high
for the 10th consecutive month owing to high imports. Recently,
Japan registered a GDP growth of 0.9% following fiscal measures
taken to revive the economy and boost investments.
Energy stocks were the biggest gainers. The Energy Select
Sector SPDR (XLE) gained 1.2%. Stocks such as Exxon Mobil
), Chevron Corporation (NYSE:
), Hess Corp. (NYSE:
), Occidental Petroleum Corporation (NYSE:
) and Marathon Petroleum Corp (NYSE:
) increased 0.8%, 1.1%, 0.1%, 0.9% and 2.3%, respectively.
Consumer Staples stocks were the biggest losers. The Consumer
Staples Select Sect. SPDR (XLP) lost about 1.0%. Stocks such as
the Procter & Gamble Company (NYSE:
), Colgate-Palmolive Company (NYSE:
), the Coca-Cola Company (NYSE:
), Wal-Mart Stores, Inc. (NYSE:
) and CVS Caremark Corporation (NYSE:
) lost 1.2%, 0.8%, 1.4%, 0.6% and 0.8%, respectively.
ACTAVIS INC (ACT): Free Stock Analysis Report
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