Benchmarks eked out gains after a Federal Reserve official
clarified doubt on monetary stimulus on Tuesday. The lack of
catalysts resulted in the absence of any major movement in the
benchmarks. Meanwhile, Japan recorded below-than-expected export
figures for the month of April. Of the top ten S&P 500
industry groups, health care stocks gained the most. Technology
shares suffered maximum losses.
The Dow Jones Industrial Average (DJI) gained 0.3% to close
the day at 15,387.58. The S&P 500 increased 0.2% to finish
yesterday's trading session at 1,669.16. The tech-laden Nasdaq
Composite Index rose 0.2% to end at 3,502.12. The fear-gauge CBOE
Volatility Index (VIX) gained 0.4% to settle at 13.37.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.15 billion shares,
marginally below 2013's average of 6.36 billion shares. Advancing
stocks outnumbered the decliners. For the 53% that advanced, 43%
Major indices have yet again touched all-time highs.
Benchmarks have gained more than 16% from the start of 2013.
Yesterday, the president of New York Federal Reserve, William
Dudley commented on tapering off the monetary stimulus program.
Dudley said he cannot confirm if the Federal Reserve will
continue with or end the monetary stimulus. Whether bond
purchases continue or not depends entirely on the future economic
situation. Apart from a few reports, economic numbers released in
the second quarter have been negative or flat. It is uncertain as
to which route the economy will take in the future. However,
Dudley did say that the pace of the bond-buying program might be
increased or decreased.
These developments came just a day ahead of Ben Bernanke's
testimony due tomorrow at Capitol Hill. Tomorrow's trading
session is expected to be dominated by the Fed Chairman's
testimony. This will probably provide the catalyst which the
markets are looking for.
Meanwhile, the president of Federal Reserve of St. Louis,
James Bullard, suggested the European Central Banks's should
adapt an "aggressive quantitative easing program". He added that
the situation in Europe posed the same risks of deflation and low
growth, which was suffered by Japan at one point of time. The
Euro Zone is in poor financial shape as its Gross Domestic
Product (GDP) declined 0.2% with most Euro Zone members still in
recession. Commenting on the low inflation and growth rate,
Bullard said: "You want to be pretty sure that you don't get
stuck in that situation, and one way to get stuck would be to be
passive in this situation and not take some aggressive action to
try to get inflation back."
On the international front, Japan registered
weaker-than-expected export data in April. Exports grew at 3.8%
compared to the estimates of 5.9%. However, on a month-over-month
basis, exports grew more than 1.1% which was registered in March.
The third largest economy in the world reported a marginal rise
in exports to China at 0.3%. But exports to the U.S. surged 14.8%
year over year.
The growth in the exports was offset by a weaker Yen and
increasing imports. Imports surged 9.4% year over year on the
back of strong imports of liquefied natural gas. The growth in
imports was higher than estimates of 6.7%. The country's trade
balance widened to a deficit of 879.9 billion yen, the biggest
gap observed in April since 1979. This deficit is much wider than
estimates of 621.1 billion yen.
Health care stocks gained the most. The Health Care SPDR (XLV)
gained about 1.1%. Stocks such as Johnson & Johnson (NYSE:
), Pfizer Inc. (NYSE:
), Amgen, Inc. (NASDAQ:
), Zimmer Holdings, Inc. (NYSE:
) and Merck & Co., Inc. (NYSE:
) gained 0.7%, 0.3%, 2.0%, 0.3% and 4.7%, respectively.
Technology shares were the biggest losers. Technology SPDR
(XLK) lost 0.3%. The Stocks such as Apple Inc. (NASDAQ:
), Hewlett-Packard Company (NYSE:
), Microsoft Corporation (NASDAQ:
), Google Inc. (NASDAQ:
) and Red Hat Inc. (NYSE:
) lost 0.7%, 0.3%, 0.7%, 0.2% and 1.5%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
AMGEN INC (AMGN): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
HEWLETT PACKARD (HPQ): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
RED HAT INC (RHT): Free Stock Analysis Report
ZIMMER HOLDINGS (ZMH): Free Stock Analysis
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