Stock Market News for April 09, 2015 - Market News

Benchmarks ended Wednesday's volatile trading session with modest gains after Fed minutes hinted at a possible rate hike this year. While "several" officials favored a rate hike in June, others opined a rate hike isn't necessary until later this year as strong dollar and drop in oil prices will keep inflation rate lower. Meanwhile, new deal between Mylan and Perrigo boosted bio-tech stocks, which eventually had a positive impact on the Nasdaq.

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The Dow Jones Industrial Average (DJI) gained almost 0.2%, to close at 17,902.51. The Standard & Poor's 500 (S&P 500) increased 0.3% to 2,081.90. The tech-laden Nasdaq Composite Index closed at 4,950.82; gaining 0.8%. The fear-gauge CBOE Volatility Index (VIX) dropped 5.4% to settle at 13.98. A total of about 5.68 billion shares were traded on Wednesday, less than the month to date average of 6.25 billion. Advancers outpaced declining stocks on the NYSE. For 59% stocks that advanced, 38% declined.

Minutes from the Federal Open Market Committee's (FOMC) meeting on Mar 17-18 stated officials were divided on the timing of raising interest rates. According to the minutes: "Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting". The minutes added that others opined "energy price declines and the dollar's appreciation would continue to weigh on inflation in the near term, suggesting that conditions likely would not be appropriate to begin raising rates until later in the year".

The minutes also showed Fed officials believed an increase in core price inflation or wage inflation isn't required for hiking federal funds rate. Improvement in labor markets, stabilization of energy prices and leveling out of the value of the dollar will be more than enough for them to consider raising interest rates.

Meanwhile, bio-tech stocks displayed strength throughout the day, boosted by a new deal between Mylan N.V. ( MYL ) and Perrigo Company Plc ( PRGO ). Mylan had proposed to acquire Dublin-based drug maker Perrigo in a cash-and-stock deal valued at $205 per share. Mylan said the deal will create a diversified global pharma company with "unmatched commercial and operating platform and a unique, one-of-a-kind profile." Shares of Mylan and Perrigo soared 14.8% and 18.4%, respectively.

Bio-tech stocks including Amgen Inc. ( AMGN ), Biogen Idec Inc. ( BIIB ), Celgene Corporation ( CELG ), Vertex Pharmaceuticals Incorporated ( VRTX ) and Regeneron Pharmaceuticals, Inc. ( REGN ) increased 1.9%, 1.7%, 2.2%, 2.8% and 2.6%, respectively. Overall, iShares Nasdaq Biotechnology (IBB) gained almost 3%. Gains among bio-tech stocks had a positive impact on the Nasdaq. Like bio-tech firms, gains among chipmakers also boosted the Nasdaq. The PHLX Semiconductor Index advanced 0.7% on Wednesday.

Eight out of 10 sectors of the S&P 500 ended in the green. The SPDR S&P Homebuilders ETF (XHB) gained 1.2%, the highest among the S&P 500 sectors. Key holdings including KB Home ( KBH ), Beazer Homes USA Inc. ( BZH ), Ryland Group Inc. ( RYL ), Toll Brothers Inc. ( TOL ) and The Home Depot, Inc. ( HD ) increased 1.3%, 1.2%, 2.2%, 2.6% and 1.1%, respectively.

On the other hand, energy shares took a beating due to slump in oil prices. Crude oil prices tanked after the U.S. Energy Information Administration said weekly crude inventories increased by 10.9 million barrels to 482.4 million barrels for the week ending Apr 3, 2015. This turned out be the largest weekly build in U.S. crude oil inventory level since Mar 2001. The prices of WTI crude oil and Brent crude oil declined 7.1% and 6.4% to $50.42 per barrel and $55.55 a barrel, respectively.

The Energy Select Sector SPDR (XLE) dropped 0.8% and was the biggest loser among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) declined 1.9% and 1.7%, respectively. Other key energy stocks such as EOG Resources, Inc. ( EOG ) and Transocean Ltd. ( RIG ) decreased 0.2% and 1.8%, respectively.

Separately, Royal Dutch Shell plc ( RDS.A ) announced it has entered into a deal with BG Group plc. Shell is expected to acquire the leading upstream energy player in UK for a total consideration of $70 billion. However, shares of Royal Dutch Shell dropped 3.4%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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