Benchmarks eked out gains on the back of better than expected
economic reports. However, investors remained cautious over a
possible military strike on Syria and the possibility of the Fed
tapering the bond purchase program. Investor confidence was
boosted by better than expected initial claims data and robust
service sector data. Of the top ten S&P 500 industry groups,
energy stocks gained the most while utilities suffered maximum
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 0.04%
to close the day at 14937.48. The S&P 500 added 0.1% to
finish yesterday's trading session at 1655.08. The tech-laden
Nasdaq Composite Index increased 0.3% to end at 3658.785. The
fear-gauge CBOE Volatility Index (VIX) declined 0.7% to settle at
15.77. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 5.3 billion
shares, below 2013's average of 6.3 billion shares. Declining
stocks outnumbered the advancers. For 50% shares that declined,
A series of positive economic reports were released yesterday
which boosted investor sentiment. However, on the back of these
encouraging reports, the probability that the $85 billion bond
purchase program would soon be tapered also increased. As a
result, gains were trimmed during the later part of the day.
While the ISM services index for August rose at the fastest rate
in more than eight years, initial claims data decreased to its
lowest point in five years. Speculation over tapering of the bond
purchase program also pushed the 10-year Treasury rate to nearly
According to the U.S. Department of Labor, number of Americans
filing for unemployment claims reduced to 323,000. This below
last week's figure of 332,000 and the consensus estimates of
330,000.On a 4-week moving average basis the figure declined
3,000 to 328,500 compared to previous week's figure of 331,500.
This figure is also the lowest level attained in the past 5
According to the ADP National Employment Report, 176,000 U.S.
nonfarm private sector jobs were added for the month of August.
Small, medium business and large business added 71,000, 74,000
and 32,000, respectively. The addition in employment was almost
in line with the consensus estimate. However, it is lower than
previous month's figure of 200,000.
The ISM non-manufacturing index came in at 58.6% for August. This
is 2.8% points above previous month's index of 56% and consensus
estimates of 55.3%. The non-manufacturing business activity
increased 1.8% points to 62.2% while New Orders index and
Employment index increased 2.8% percentage points and 3.8% points
to 60.5% and 57%, respectively. Of the 11 constituents which make
up for the services sector, only the Prices and Inventory
sentiment indices witnessed a fall.
Meanwhile, according to the U.S. Department of Commerce, new
orders in July for manufactured goods decreased 2.4% to $485.0
billion. Shipments increased 1.1% or $5.3 billion while unfilled
orders and inventories edged up 0.4% and 0.2%. New orders for
manufactured durable goods declined 7.4% to $226.3 billion. This
is in sharp contrast to previous month's decline of 3.9%.
However, new orders of nondurable goods increased 2.4%.
The Bloomberg consumer confidence index dropped for the fourth
straight week to -32.3. A decline in opinion of Americans on the
state of the economy and a weak buying climate is responsible for
the drop in consumer confidence index. Americans' view on the
state of economy dropped to -55.3 from previous week's reading of
-55.1. The barometer measuring the buying climate dropped to
-40.6. This figure is weaker than June's reading of -38.7. An
imminent attack on Syria by the U.S. and rising mortgage rates
has dampened investor sentiment, as a result of which the
consumer confidence has dropped.
The energy sector gained the most during yesterday's trading
session. The Energy Select Sector SPDR (XLE) gained 0.3%. Stocks
such as Schlumberger Limited (NYSE:
), National-Oilwell Varco, Inc. (NYSE:
), Anadarko Petroleum Corporation (NYSE:
), Chevron Corporation (NYSE:
) and EOG Resources Inc (NYSE:
) gained 1.6%, 1.9%, 0.6%, 0.4% and 0.6%, respectively.
Utilities stocks suffered maximum losses. The Utilities SPDR
(XLU) lost 0.4%. Stocks such as Dominion Resources, Inc. (NYSE:
), NextEra Energy, Inc. (NYSE:
), American Electric Power Company Inc (NYSE:
), Public Service Enterprise Group Inc. (NYSE:
) and The Southern Company (NYSE:
) lost 0.2%, 0.2%, 0.2%, 0.3% and 0.3%, respectively.