The Dow and S&P 500 finished at record highs on Wednesday
boosted by strong earnings result from Macy's that sparked
optimism about a strong holiday season. Also helping the mood
were comments from Janet Yellen, ahead of her confirmation as the
next Fed chairman. Yellen said there is "more work to do" to
boost the economy and labor market. All the sectors in the
S&P 500 industry groups ended in the green, with consumer
discretionary stocks ending at the top.
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The Dow Jones Industrial Average (DJI) gained 0.5% to close the
day at 15,821.63. The S&P 500 increased 0.8% to finish
yesterday's trading session at 1,782.00. The tech-laden Nasdaq
Composite Index rose 1.2% to end at 3,965.58. The fear-gauge CBOE
Volatility Index (VIX) declined 2.34% to settle at 12.52.
Consolidated volumes on the New York Stock Exchange were 3.37
billion shares. Advancing stocks outnumbered the decliners. For
66% shares that advanced, only 31% declined.
Much of the day's gains were aided by Macy's, Inc. (NYSE:
) which reported better-than-expected quarterly earnings.
The company reported net income of $177 million or 47 cents per
share in the third quarter, up from $145 million or 36 cents per
share earned in the previous year. Comparable store sales
increased 3.5% in the third quarter. Shares of the company rose
9.4% to $50.68.
The company gave a positive forecast for its sales in the holiday
season. Comparable sales are expected to increase in the range of
2.5% to 4% in the second half of this year, and between 2.5% to
2.9% for the whole year. The company's expects fiscal earnings
for 2013 to be in the range of $3.80 to $3.90 per share. These
developments lifted consumer discretionary shares, subsequently
driving the broader markets upwards.
Federal Reserve Vice Chairman, Janet Yellen made introductory
remarks, before her confirmation hearing as the next Chairman of
the Federal Reserve on Thursday. In her prepared speech, Janet
Yellen said there is "more work to do" with respect to the
economy and the labor market which are still performing below
expectations. Market watchers are of the view that these
remarks indicate that the Fed may not taper its bond purchases in
the near future. Speaking to the Senate Banking Committee on
Thursday, Yelllen said: "I believe that supporting the recovery
today is the surest path to returning to a more normal approach
to monetary policy."
In corporate developments, an arbitrator said on Tuesday that
Starbucks Corporation (NASDAQ:
) would have to pay Kraft Foods Group (NASDAQ:
) a sum of $ 2.23 billion for damages coupled with $527 million
as interest and legal fees. This in lieu of ending its agreement
with Kraft relating to retail packaged coffee vending, marketing
Following this development, Starbucks will restate its results
for the fourth quarter which will reflect a net loss of $1.64 per
share. On Wednesday, Starbucks Chief Executive Howard Schultz
commented: "It's difficult when a decision like this goes against
you. But it is a one-time charge in a single moment in time, and
now it's behind us."
The consumer discretionary sector was the biggest gainer among
the S&P 500 industry groups and the consumer discretionary
SPDR (XLY) gained 1.6%. Stocks such as Amazon.com, Inc. (NASDAQ:
), Comcast Corporation (NASDAQ:
), the Walt Disney Company (NYSE:
), the Home Depot, Inc. (NYSE:
), and McDonald's Corporation (NYSE:
) added 1.9%, 0.9%, 1.8%, 1.9%, and 0.5%, respectively.
AMAZON.COM INC (AMZN): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
DISNEY WALT (DIS): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
KRAFT FOODS GRP (KRFT): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
STARBUCKS CORP (SBUX): Free Stock Analysis
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