A lower-than-expected increase in initial claims coupled with
encouraging same store sale numbers from bellwether retailers
helped markets close in the green. Moreover, ECB President Mario
Draghi said once conditions are met, the European Central Bank
would buy government bonds. Yesterday's gains led the S&P 500
to clinch its fourth win in a row and the upcoming nonfarm payroll
data from the government will be crucial in deciding if the index
can achieve a five-year high.
The Dow Jones Industrial Average (DJI) gained 0.6% and ended at
13,575.36. The Standard & Poor 500 (S&P 500) was up 0.7%
and finished yesterday's trading session at 1,461.40. The
tech-laden Nasdaq Composite Index added 0.5% to climb to 3,149.46.
The fear-gauge CBOE Volatility Index (VIX) slumped 5.7% to settle
at 14.55. Consolidated volumes on the New York Stock Exchange,
Nasdaq and American Stock Exchange were roughly 6.1 billion shares,
just short of the daily average volume of 6.38 billion shares. The
advancers easily outnumbered declining stocks on the NYSE; as for
71% stocks that gained, 26% ended lower.
Markets added gains yesterday largely banking on the
smaller-than-expected jump in initial claims last week. According
to the U.S. Department of Labor, seasonally adjusted initial claims
for the week ending September 29 rose 4,000 from the prior week to
367,000. This was lower than consensus estimates of 368, 000. Apart
from the slight rise in first time unemployment benefit claims, the
4-week moving average remained unchanged from the previous week at
The initial claims report came just a day after Automatic Data
) National Employment Report. ADP data revealed that U.S. companies
added 162,000 jobs in September, higher than the expected 143,000.
While two back-to-back and bullish employment reports brought
relief to investors, they now await the government's nonfarm
payroll data that is scheduled for release on Friday.
Nonfarm payroll numbers will not only reveal current labor
conditions, but a positive report will most likely push S&P 500
to its highest level in five years. So far this week, the S&P
500 has outperformed fellow benchmarks with a 1.4% gain as compared
to Dow's and Nasdaq's gains of 1% and 1.1%, respectively. Moreover,
none of the 10 industry groups of the S&P ended in the red
yesterday and financials were one of the largest gainers.
The Financial Select Sector SPDR (XLF) added 1.5% and stocks
such as American Express Company (NYSE:
), Bank of America Corporation (NYSE:
), Citigroup, Inc. (NYSE:
), JPMorgan Chase & Co. (NYSE:
), The Goldman Sachs Group, Inc. (NYSE:
) and Morgan Stanley (NYSE:
) jumped 1.7%, 3.3%, 2.6%, 2.4%, 1.7% and 2.6%, respectively.
Talking about the sectors and individual stocks, the retail
sector was also a big gainer yesterday. Bellwether retailers such
as Costco Wholesale Corporation (NASDAQ:
), Gap Inc. (NYSE:
) and The TJX Companies, Inc. (NYSE:
) gained 1.9%, 1.0%, and 0.6%, respectively, following encouraging
same store sales numbers. The gains in these retail heavyweights
and the eventual 1.6% jump in SPDR S&P Retail (XRT) were also a
major contributor to the broader markets' gains yesterday.
Positive news was not restricted to the domestic front. European
Central Bank (ECB) President Mario Draghi said yesterday that the
central bank was prepared to buy government bonds once lending
countries meet conditions. It about a month ago that Mario Draghi
had first announced the bond repurchase plan to aid troubled
Euro-zone economies. About the bond plan, termed Outright Monetary
Transactions (OMT), Draghi said: "I could say that today, we are
ready with our OMT…We have a fully effective backstop mechanism in
place once all the prerequisites are in place as well".
AUTOMATIC DATA (ADP): Free Stock Analysis
AMER EXPRESS CO (AXP): Free Stock Analysis
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis
GAP INC (GPS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
MORGAN STANLEY (MS): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis
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