The Dow finally recorded its first close above the 16,000 mark
yesterday driven by encouraging jobs data. The Nasdaq too
finished in the green while the S&P 500 snapped its three-day
losing streak. Meanwhile, annual inflation rate came in lower
than the Federal Reserve's target. President of the Federal
Reserve Bank of St. Louis and a voting member of the FOMC, James
Bullard, said inflation data gives the central bank some scope to
continue with its accommodative policy. All the sectors in
S&P 500 industry groups ended in the green, with financials
leading the gains.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) climbed 0.7% to close the
day at 16,009.99. The S&P 500 increased 0.8% to finish
yesterday's trading session at 1,795.85. The tech-laden Nasdaq
Composite Index gained 1.2% to end at 3,969.15. The fear-gauge
CBOE Volatility Index (VIX) dropped 5.52% to settle at 12.66.
Consolidated volumes on the New York Stock Exchange were roughly
3.3 billion shares. Advancing stocks outnumbered the decliners.
For 72% shares that advanced, 25% declined.
Stocks moved higher on Thursday after initial claims numbers
dropped to a near two- month low. Meanwhile, a drop in the
producer price index for the second straight month in October
indicated a lower rate of inflation. Expectations that the
Federal Reserve could start reducing stimulus with minimal
changes in interest rates have helped increase the margin between
long run and short-run debt. This in turn will benefit banking
institutions, who benefit from borrowing at short rates and
lending at longer rates
James Bullard said inflation and jobs data is providing the
central bank with reasons to continue the stimulus program.
Bullard said: "What we need to do is continue with the program
for now as we have, but if an inflation problem starts to
develop, we have to be willing to move to arrest that problem".
Coming to jobless numbers, the U.S. Department of Labor reported
that initial claims decreased 21,000 to 323,000 in the week
ending on November 16, from previous week's figure of 344,000.
This was considerably below the consensus estimate of 335,000.
Separately, the U.S. Bureau of Labor Statistics reported that the
U.S. Producer Price Index (PPI) for finished goods decreased 0.2%
in October, in line with the consensus estimate. In the month of
October, prices for finished energy goods dropped by 1.5%. The
PPI for intermediate materials, supplies and components declined
0.4%, with the crude materials for further processing dropping
0.9% in October.
Shares of Target Corporation (NYSE:
) declined nearly 3.5% after the company's earnings dropped year
on year. Quarterly earnings including U.S. and Canadian
operations came in at 54 cents a share, sharply lower than the 96
cents reported in the prior-year quarter. Consequently, the
company trimmed its earnings forecast. Revenues also fell short
of the Street's estimates.
Shares of Dollar Tree, Inc. (NASDAQ:
) declined nearly 6.4%. The company reported an increase of
nearly 3.1% in same-store sales in the third quarter. Major
support came from sale of consumables products like frozen foods,
beverages, and seasonal items. The company's net income dropped
to $125.4 million, in comparison with $155.4 million, a year
earlier. Dollar Tree also said fourth-quarter expected earnings
would range from $1.0 to $1.07 per share based upon expected
sales of $2.25 billion to $2.31 billion.
The financial sector was the biggest gainer among the S&P 500
industry groups and the Financials SPDR (XLF) gained 1.4%. Stocks
such as JPMorgan Chase & Co. (NYSE:
), Wells Fargo & Co (NYSE:
), Berkshire Hathaway Inc. (NYSE:BRK.B), Bank of America Corp
) and Citigroup Inc. (NYSE:
) added 2.0%, 1.1%, 1.3%, 3.0% and 1.9% respectively.