Benchmarks gained during Tuesday's trading session on the back
of expectations that the Federal Reserve will make "moderate"
changes to the $85 billion bond purchase program. Meanwhile, the
Consumer Price Index (CPI) for the month of August grew
marginally, by 0.1%. On the international front, business
sentiment for Asia declined in the third quarter. Of the top ten
S&P 500 industry groups utilities gained the most. Materials
stocks were the only losers.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.2% to close the
day at 15,529.73. The S&P 500 increased 0.4% to finish
yesterday's trading session at 1,704.76. The tech-laden Nasdaq
Composite Index rose 0.8% to end at 3,745.7. The fear-gauge CBOE
Volatility Index (VIX) increased 1.0% to settle at 14.53.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.06 billion shares, below
2013's average of 6.24 billion shares. Advancing stocks
outnumbered the decliners. For 33% shares that declined, 65%
Benchmarks eked out gains during yesterday's trading session as
investors expect the changes in the bond purchase program to be
"moderate". The meeting of the Federal Open Market Committee that
began on Tuesday is expected to decide the fate of the bond
purchase program. Apart from continuing to keeping interest rates
near-zero, investors expect bond purchases to be reduced by $10
billion to $75 billion per month.
According to the US Department of Labor, the CPI grew marginally
by 0.1%. This is below the consensus estimate as well as July's
reading of 0.2%. Although consumer prices hardly changed during
August, an increase was witnessed in rents and medical care
costs. This increase might support the fact that the bond
purchase program should be trimmed. The core CPI also increased
0.1%. On a year over year basis, CPI has increased 1.6% while the
core-CPI has increased 1.8%. Rent and medical care costs, which
are solely responsible for the increase in CPI and core-CPI,
increased 0.3% and 0.6%, respectively.
On the international front, the Thomson Reuters/INSEAD Asia
Business Sentiment Index declined to 66 in the third quarter from
previous quarter's reading of 71. The weakest business sentiment
was witnessed in the Chinese, South Korean and Taiwanese
economies. The shipping and financial sectors were the worst hit.
The gauge measuring the financial and shipping sectors both
declined to 50, compared to second quarter's reading of 78 and
80, respectively. Within the Asian region, Japan and the
Philippines recorded the strongest reading of 63 and 100,
respectively. The weakest sentiment reading came from the
On the earnings front, FactSet Research Systems Inc. (NYSE:
) declined 1.7% after it posted earnings below the Street's
expectations. FactSet reported profits of $51 million or $1.16 a
share, compared to $48.5 million or $1.08 a share. Revenues of
the company increased 5.6% to $219.3 million. The company has
guided profits for the next quarter in the range of $1.21 and
$1.24 a share based on revenues coming in within the range of
$222 million and $225 million.
Utilities stocks gained the most during yesterday's trading
session. The Utilities SPDR (XLU) gained 0.6%. Stocks such as
Duke Energy Corp (NYSE:
), The Southern Company (NYSE:
), NRG Energy Inc (NYSE:
), Sempra Energy (NYSE:
) and PG&E Corporation (NYSE:
) gained 0.2%, 0.5%, 1.3%, 1.0% and 0.2%, respectively.
Materials stocks were the only losers among the top ten S&P
500 industry groups. The Materials Select Sector (XLB) declined
0.3%. Stocks such as Monsanto Company (NYSE:
), Air Products & Chemicals, Inc. (NYSE:
), Ecolab Inc. (NYSE:
), Sherwin-Williams Company (NYSE:
) and Mosaic Co (NYSE:
) declined 1.2%, 1.3%, 0.6%, 1.0% and 1.2%, respectively.