Stock Market News for September 25, 2015

Benchmarks closed lower on Thursday amid Caterpillar's decision to trim jobs, decline in the healthcare sector and uncertainty about U.S. monetary policy. While Caterpillar's decision to cut jobs weighed on the broader markets, decline in biotech stocks had a negative impact on the healthcare sector. Meanwhile, investors kept an eye on Janet Yellen's speech, which could provide clarity on the timing of a rate hike.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) declined 0.5% to close at 16,201.32. The Standard & Poor's 500 (S&P 500) dropped 0.3% to 1,932.24. The tech-laden Nasdaq Composite Index closed at 4,734.48, decreasing 0.4%. The fear-gauge CBOE Volatility Index (VIX) gained 6.1% to settle at 23.47. A total of around 7.7 billion shares were traded on Thursday, slightly higher than the last 20-sessions' average of 7.5 billion. Decliners outpaced advancing stocks on the NYSE. For 58% stocks that declined, 39% advanced.

Caterpillar Inc ( CAT ) announced a restructuring program on Thursday, which includes trimming 10,000 jobs by the end of 2018. The company aims to shed 5,000 salaried and management jobs between now and the end of 2016. This will lower the company's operating costs by $1.5 billion on a yearly basis. Additionally, the company lowered its revenue guidance for this year by $1 billion to $48 billion. Moreover, it expects next year's revenues to be 5% lower than that of 2015.

Caterpillar Chairman and CEO Doug Oberhelman said: "We are facing a convergence of challenging marketplace conditions in key regions and industry sectors - namely in mining and energy." He added: "While we've already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now." However, shares of the world's largest mining and construction equipment maker tanked 6.3% on Thursday, the most among the Dow components.

Yesterday's losses were broad based, with 7 out of 10 sectors of the S&P 500 ending in the red. The Health Care Select Sector SPDR ETF (XLV) declined 1% and was the biggest loser among the S&P 500 sectors. Biotech stocks led the losses in the healthcare sector. Stocks such as Regeneron Pharmaceuticals, Inc. ( REGN ), Gilead Sciences Inc. ( GILD ), Biogen Inc. ( BIIB ), Amgen Inc. ( AMGN ) and Celgene Corporation ( CELG ) decreased 2.7%, 2.8%, 1.8%, 1.5% and 2.7%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) declined almost 2%.

Separately, the Financial Select Sector SPDR (XLF) decreased 0.7%, the second highest among the S&P 500 sectors. Key financial stocks including Wells Fargo & Company ( WFC ), Morgan Stanley ( MS ), Bank of America Corporation ( BAC ), Citigroup Inc. ( C ) and JPMorgan Chase & Co. ( JPM ) dropped 0.5%, 1.1%, 1.1%, 1.9% and 0.7% respectively.

Meanwhile, investors' sentiment dwindled ahead of the Federal Reserve Chairwoman Janet Yellen's speech on inflation and monetary policy to be held after the market closes on Thursday. Investors are looking for clues on the timing of a rate hike.

In economic news, the U.S. Department of Labor reported that initial claims increased 3,000 for the week ending Sep 19 to 267,000, less than the consensus estimate of unemployment benefits increasing to 275,500. However, the 4-week moving average decreased 750 from previous week's level to 271,750.

Meanwhile, the U.S. Census Bureau and the Department of Housing and Urban Development jointly reported a 5.7% increase in sales of new single-family houses in August to 552,000. This was in contrast to the consensus estimate of sales decreasing to 514,000. Separately, the Commerce Department reported that durable orders declined 2% in August, less than the consensus estimate of a 2.2% decline.

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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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