The Dow and S&P 500 finally snapped their six-day losing
streak and the Nasdaq also chalked up gains as investors chose to
focus on positive signs from China rather than being bogged down
yet again by European concerns. China's Premier Wen Jiabao has
prioritized spurring economic growth over curbing inflation.
Elsewhere the G8 meeting ended with no clear decisions regarding
the prevailing economic situation. Luckily this failed to dent
investors' mood. On the other hand, Facebook continued to lose its
sheen for the second consecutive day as it closed in the red zone
yesterday.
The Dow Jones Industrial Average (DJI) inched down 1.1% to end
at 12,504.48. The Standard & poor 500 (S&P 500) jumped 1.6%
and signed off yesterday's trading session at 1,315.99. The
tech-laden Nasdaq Composite Index soared 2.5% and closed at
2,847.21. After rallying higher all through last week, the
fear-gauge CBOE Volatility Index (VIX) slumped 12.3% yesterday to
settle at 22.01. Consolidated volumes on the New York Stock
Exchange, Nasdaq and the American Stock Exchange were roughly 6.77
billion shares, lower than last year's daily average of 7.84
billion.
Yesterday's gains came after a series of losses for the
benchmarks. Investors finally witnessed a positive rally, where
each benchmark jumped by over a percent, after the markets ended in
the red on every single day last week. Consequently, it was the
markets' worst weekly drop since last November. The Dow registered
its first-triple digit gains since April 26th and reversed its
six-consecutive days of losses. Only seven of the 30 Dow components
ended in the red yesterday and stocks like Alcoa, Inc. (NYSE:
AA
), The Boeing Company (NYSE:
BA
), Caterpillar Inc. (NYSE:
CAT
), E. I. du Pont de Nemours and Company (NYSE:
DD
), Hewlett-Packard Company (NYSE:
HPQ
) and United Technologies Corp. (NYSE:
UTX
) jumped 2.0%, 3.8%, 3.7%, 1.9%, 2.0% and 1.8%, respectively, to
let the Dow notch up its third finish in the green this month.
The S&P 500 and Nasdaq also shared the laurels, as the
former snapped its six-day losing streak while the Nasdaq rebounded
after suffering losses for five-straight days. The S&P 500 has
suffered a heavy battering at the hands of European financial woes
amidst a mixed bag of economic readings. Since the end of April,
the S&P 500 has lost 7.8%. However, things were better
yesterday and the S&P 500 had its best day in almost two
months. As for Nasdaq, the tech-laden index enjoyed its best
one-day percentage gain since December last year.
Movement in the Nasdaq is often guided by its biggest component
- Apple Inc. (NASDAQ:
AAPL
). The iPhone and iPad maker, which is also the largest company in
terms of market value, jumped 5.8% yesterday and made a significant
contribution in enabling the Nasdaq to outperform the fellow
benchmarks. A similar trend was also noticed in the benchmarks'
last quarterly performance, where a significant surge in Apple's
shares boosted Nasdaq that emerged as the biggest winner.
Yesterday's gains in Apple were the largest since April 25, a day
after Apple reported its quarterly results.
However, the new Nasdaq component Facebook, Inc.'s (NASDAQ:
FB
) fortunes on the Street seems to be gloomy for the moment. Last
Friday, all the hoopla about its debut on the Street quickly faded,
and the company's shares which gained 10% in the morning, ended
with a mere 0.6% gain on its first-day of trading. Its second day
of trading was even more disappointing as it crashed by 11% to
close at $34.03 a share.
Nonetheless, this hardly affected the broader markets, as
investors were buoyed by Chinese Premier Wen Jiabao's stance on
economic growth being more important than curbing inflation. Jiabao
said: "We should continue to implement a proactive fiscal policy
and a prudent monetary policy while giving more priority to
maintaining growth". He could well sense the urgency the economy
needs amidst the growing global financial woes and said: "To
prevent the economy from slowing down too rapidly is of great
urgency". He further added: "No matter the fiscal policy or the
monetary policy, we cannot afford to wait and see and miss the
right timing… We must implement the policies in a timely manner if
we believe they're right". These comments were sufficient
encouragement for investors and were clearly reflected in the
markets' uptrend.
However, while the leader of the second-largest economy sparked
off hopes, the G-8 meeting failed to create optimism as it provided
no clear indication on financial issues. The weekend summit held in
Washington and consisting of leaders from U.S., German and Britain,
did suggest that leaders would want Greece to stay in the euro, but
no concrete plan was announced regarding the same. Therefore, with
enough ambiguity among investors, news from the G-8 summit could
hardly boost the markets.
ALCOA INC (AA): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
BOEING CO (BA): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
Report
DU PONT (EI) DE (DD): Free Stock Analysis
Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
UTD TECHS CORP (UTX): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research