Stock Market News for June 09, 2014 - Market News

Benchmarks scored record highs yet again on Friday banking on encouraging May's nonfarm payroll report. The S&P 500 ended at another high; the eighteenth one this year. The blue-chip index also closed at a record level for the eighth time this year. The Nasdaq too closed at a level last seen in late March. Separately, Friday's gains helped the Russell 2000 index of small-caps stocks turn positive for the year. Benchmarks ended the week with best gains since mid-April.

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The Dow Jones Industrial Average (DJI) gained 0.5% to close Friday's trading session at 16,924.28. The Standard & Poor 500 (S&P 500) went up almost 0.5% to finish at 1,949.44. The tech-laden Nasdaq Composite Index advanced 0.6% to 4,321.40. The fear-gauge CBOE Volatility Index (VIX) plunged 8.1% to settle at 10.73. Total volume for the day was roughly 5.27 billion shares, lower than last month's average of 5.75 billion. Advancers outpaced declining stocks on the NYSE. For 72% stocks that advanced, 25% declined.

Investor sentiment turned bullish after the U.S. Bureau of Labor Statistics said total nonfarm payroll employment jumped 217,000 in May, more than the consensus estimate of a rise by 213,000. Nonfarm payroll jobs increased by over 200,000 level for the fourth straight month in May, a stretch last seen in January 2000.

Unemployment rate stayed at 6.3% in May. In April, the unemployment rate had dropped to 6.3%, touching the lowest level since September 2008. It was also the biggest one-month decline in 31 years. Overall, U.S. employment returned to its pre-recession peak for the first time in May. The nation recovered 8.7 million jobs lost during the recession. Employment increased in professional and business services, health care and social assistance, food services and drinking places, transportation and warehousing.

Separately, the Board of Governors of the Federal Reserve System reported that consumer credit increased by $26.9 billion in April to $3.18 trillion. This increase in the indicator of potential future spending levels was more than the consensus estimate of an increase by $15 billion. Non-revolving credit increased at an annual rate of 9.50% and the revolving credit increased at an annual rate of 12.25%. In April, consumer credit increased at a seasonally adjusted annual rate of 10.25%.

Friday's gains helped benchmarks record their best weekly gains since mid-April. The S&P 500 and the Dow advanced 1.3% and 1.2%, respectively. Both the S&P 500 and the blue-chip index recorded their strongest weekly percentage gains since April 17. The Nasdaq advanced 1.8%. The tech-heavy index gained for the fourth-straight week. The small-cap stocks nonetheless finished ahead of their blue-chip counterparts. The Russell 2000 gained 2.7% in the week.

Benchmarks ended in positive territory for the week following the announcement of several stimulus measures by the European Central Bank (ECB) intended to boost Eurozone's recovery. The central bank had reduced the refinancing rate to 0.15% from 0.25% and the marginal lending facility rate was reduced to 0.40% from 0.75%. ECB had also cut the deposit rates to minus 0.10%. Additionally, ECB had deployed a series of targeted long term refinancing operations and announced that it will halt sterilizing purchases under its Securities Market Program. Separately, ECB President Mario Draghi had said preparations for outright purchases of asset-backed securities have started.

Encouraging services sector report and upbeat ISM manufacturing data also helped the benchmarks finish in the green for the week. The ISM Services Index in May touched the highest level since August 2013. According to data from the Institute for Supply Management, the Non-Manufacturing Index for May increased 1.1 percentage points to 56.3% from April's reading of 55.2%. The May 2014 Manufacturing PMI increased 0.5 percentage points from April's reading of 54.9% to 55.4%.

Coming back to Friday, 8 out of 10 sectors of the S&P 500 ended in the green. The SPDR S&P Homebuilders ETF (XHB) led the advance among the S&P 500 sectors. The sector gained 1.6%. Key housing stocks from the sector such as DR Horton Inc. (NYSE: DHI ), Lennar Corp. (NYSE: LEN ), Toll Brothers Inc. (NYSE: TOL ), KB Home (NYSE: KBH ), Beazer Homes USA Inc. (NYSE: BZH ) and PulteGroup, Inc. (NYSE: PHM ) increased 1.8%, 1.7%, 1.4%, 2.0%, 1.8% and 1.3%, respectively.

The Industrial Select Sector SPDR (XLI) gained 1.0%, the second highest among the S&P 500 sectors. Key stocks from the sector such as General Electric Company (NYSE: GE ), United Technologies Corp. (NYSE: UTX ), Union Pacific Corporation (NYSE: UNP ), The Boeing Company (NYSE: BA ) and 3M Company (NYSE: MMM ) increased 1.5%, 0.6%, 0.8%, 1.1% and 0.7%, respectively.

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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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