Benchmarks finished little changed on Thursday with small-cap stocks rebounding after entering the correction level a day earlier. However, benchmarks had been trading significantly lower during the day, but rebounded in the closing hours. The Dow had lost as much as about 130 points at one point. Investors were disappointed with ECB's stimulus measures. Encouraging report on initial claims also failed to boost investor sentiment as they remained focused on Friday's nonfarm payroll report.
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The Dow Jones Industrial Average (DJI) declined a meager 0.02%, to close at 16,801.05. The Standard & Poor 500 (S&P 500) closed unchanged at 1,946.17. The tech-laden Nasdaq Composite Index closed at 4,430.19; gaining 0.2%. The fear-gauge CBOE Volatility Index (VIX) went down 3.3% to settle at 16.16. A total of 4 billion shares were traded in NYSE on Thursday. Advancers outpaced declining stocks on the NYSE. For 52% stocks that advanced, 46% declined.
Smaller companies staged a comeback yesterday after it had entered the correction level on Wednesday. The Russell 2000 Index of small-cap stocks gained 1% to 1096 at 4 p.m. This was the highest gain the index registered since Aug 18. On Wednesday, the index had lost significantly and was over 10% lower than its record high reached on Mar 4.
The SPDR S&P Homebuilders ETF (XHB) gained almost 1%, the highest among the S&P 500 sectors. Housing stocks such as Lennar Corp. (LEN), DR Horton Inc. (DHI), Toll Brothers Inc. (TOL), Beazer Homes USA Inc. (BZH) and PulteGroup, Inc. (PHM) increased 1.2%, 0.9%, 0.3%, 3.9% and 1.1%, respectively.
Consumer discretionary sector was the second biggest gainer for the day among the S&P industry groups. The Consumer Discretionary Select Sector SPDR (XLY) jumped 2.1%. Key stocks such as Nike, Inc. (NKE), Amazon.com Inc. (AMZN) andpriceline.com Incorporated (PCLN) and gained 1.8%, 0.3% and 0.2%, respectively.
Meanwhile, European Central Bank (ECB) kept key interest rates unchanged and provided few details about asset-backed security purchase program. ECB President Mario Draghi said that in order to boost inflation and economic growth in the Eurozone, ECB will buy assets for a minimum of two years. He said the central bank will commence purchasing covered bonds this October and plans to purchase asset-backed securities this quarter.
Among previous stimulus measures, interest rate on bank deposits in the central bank was lowered to negative territory by ECB. New lending and private asset purchasing programs was also introduced by ECB.
ECB's decision negatively impacted benchmarks. However, benchmarks finished nearly flat as investors showed renewed interest on beaten down stocks.
The day's strong labor market data failed to entice investors. The U.S Department of Labor reported that seasonally adjusted initial claims decreased 8,000 to 287,000 in the last week of September. Applications for unemployment benefits remained below the key level of 300,000 for the third straight week. Consensus estimates pegged initial claims to come in at 297,000.
Investors remained focused on September's nonfarm payrolls report; scheduled for release on Friday. Analysts forecast 215,000 jobs to be created in September, more than August's figure of 142,000. They project the unemployment rate to remain unchanged at 6.1%.
Coming back to the day's other economic reports; the U.S. Department of Commerce stated new orders for manufactured goods decreased 10.1% in August. This was more than the consensus estimate of a decline by 9.3%. This reading follows an increase of 10.5% in July. Excluding transportation, new orders decreased 0.1% in August. Separately, unfilled orders and shipments were down 0.6% and 0.1%, respectively. However, shipments were up 0.1%.
Separately, U.S. car sales increased at a slower pace. Total vehicle sales increased to an annualized rate of 16.3 million in September, less than the consensus expectation of a rise to 16.8 million.
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