Benchmarks bolstered gains during yesterday's trading session
as the Federal Reserve decided to continue with the massive $85
billion bond purchase program. Better than expected earnings from
Fedex also added a boost to investor sentiment. Meanwhile,
housing start and building permits data came in below
expectations. All the top ten S&P 500 industry groups
finished in the green during yesterday's trading session.
Utilities stocks were the biggest gainers.
CONOCOPHILLIPS (COP): Free Stock Analysis
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FEDEX CORP (FDX): Free Stock Analysis Report
HESS CORP (HES): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis
PG&E CORP (PCG): Free Stock Analysis
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SEMPRA ENERGY (SRE): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 1.0% to close the
day at 15,676.94. The S&P 500 increased 1.2% to finish
yesterday's trading session at 1,725.52. The tech-laden Nasdaq
Composite Index rose 1.0% to end at 3,745.7. The fear-gauge CBOE
Volatility Index (VIX) decreased 6.5% to settle at 13.59.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 7.39 billion shares, well
above 2013's average of 6.24 billion shares. Advancing stocks
outnumbered the decliners. For 15% shares that declined, 84%
Benchmarks rallied nearly 1% yesterday after the Federal Reserve
decided to continue with the monthly bond purchase program. The
Fed chairman, Ben Bernanke said the Central bank is looking for
underlying signs of improvement in the economy. Once the
confirmation is received, then only will the tapering of the bond
purchase program be implemented. While benchmarks moved upwards
following the decision to continue the bond purchase program,
central banks remain cautious over the recent rally. Central bank
has conveyed concerns in light of upcoming "budget and debt
Meanwhile, the Fed lowered growth expectations for the economy.
Economic growth is expected within the range of 2% and 2.3% from
June's expectations of 2.3% and 2.6%. Growth expectations have
declined more steeply to a range of 2.9% and 3.1% from the
previously expected range of 3.0% and 3.5%.
According to the US Department of Commerce, housing starts for
the month of August came in at 891,000, well below the consensus
estimate of 919,000. However, on a month over month, this was
above June's figure of 883,000. On a year over year basis, the
figure grew 19%. On a single family basis, housing starts came in
at 628,000, up 7% compared to July's figure of 587,000. Building
permits for the month of August came in at 918,000 compared to
previous month's figure of 954,000. High mortgage rates have
lowered t home sales and permissions. However, the housing sector
is expected to remain strong.
On the earnings front, shares of FedEx Corporation (NYSE:
) gained nearly 5.0% on the back of better than expected profits.
Earnings of the company came in at $1.53 a share compared to the
Street's expectation of $1.50 a share and $1.45 a share in the
previous quarter. Revenues of the company increased 11% to $11
billion. This was marginally above the Street's estimates. On a
yearly basis, Fedex expects earnings growth between the range of
7% and 13%.
Utilities stocks gained for the second consecutive day during
yesterday's trading session. The Utilities SPDR (XLU) gained
3.0%. Stocks such as Duke Energy Corp (NYSE:
), The Southern Company (NYSE:
), Dominion Resources, Inc. (NYSE:
), Sempra Energy (NYSE:
) and PG&E Corporation (NYSE:
) gained 3.0%, 3.6%, 3.1%, 2.6% and 2.7% respectively.
Energy stocks also had a very good run yesterday. The Energy
Select Sector (XLE) gained 1.2%. Stocks such as Exxon Mobil
), Chevron Corporation (NYSE:
), Hess Corp. (NYSE:
), ConocoPhillips (NYSE:
) and Honeywell International Inc. (NYSE:
) gained 0.7%, 1.2%, 1.8%, 1.2% and 0.4%, respectively.