Broadgate: Market News 1/8
1 August 2013
The S&P 500 finished a volatile session nearly flat on Wednesday as the Federal Reserve gave no hint that a reduction in the pace of its bond-buying program is imminent.
The benchmark index pulled back just before the close after rising within 2 points of 1,700, a key resistance level that the S&P 500 has struggled to break.
All three major stock indexes posted sharp gains for July, however, with the S&P 500’s 5 percent increase its best monthly percentage gain since January.
In a statement following its two-day policy meeting, the Fed said the economy continues to recover but still needs support. The central bank said it would keep buying $85 billion per month in Treasury and mortgage securities in an effort to strengthen the economy.
Most growth-oriented sector indexes finished the session higher, with the S&P consumer discretionary index up 0.5 percent.
At the same time, dividend-paying stocks such as utilities slipped. The S&P utility index slid 0.7 percent.
“The statement was clearly more well received than the last. The Fed continues to try to talk down the concerns of kind of a premature taper,” said Burt White, chief investment officer of LPL Financial in Boston.
The Fed’s stimulus has been credited by many as central to the S&P 500’s gain of 18.2 percent so far this year.
Fed Chairman Ben Bernanke jolted markets in late May by saying the central bank planned to ease back on its stimulus efforts once the economy improves. Many economists expect the Fed to reduce its bond-buying pace in September.
Late in the session, shares of J.C. Penney sank 10.2 percent to $14.60 after commercial lender CIT Group stopped supporting deliveries from smaller manufacturers to the department store chain, according to a New York Post report. The stock was the S&P 500’s biggest percentage loser.
The Dow Jones industrial average slipped 21.05 points, or 0.14 percent, to end at 15,499.54. The Standard & Poor’s 500 Index dipped 0.23 of a point, or 0.01 percent, to finish at 1,685.73.
In contrast, the Nasdaq Composite Index rose 9.90 points, or 0.27 percent, to close at 3,626.37.
For the month of July, the Dow rose 4 percent, the S&P 500 climbed 5 percent and the Nasdaq gained 6.6 percent.
Stocks opened modestly higher on Wednesday after data showed the U.S. economy gained momentum in the second quarter and private-sector employers added more jobs than expected. Gross domestic product grew at an annualized rate of 1.7 percent in the second quarter, exceeding the forecast for growth at a 1 percent pace. Payrolls processor ADP reported that private-sector employers added 200,000 jobs in July – an encouraging sign ahead of the U.S. Labor Department’s release on Friday of the nonfarm payrolls data for July.
The Dow set an all-time intraday high of 15,634.32 at about 10:38 a.m., a Thomson Reuters chart showed.
Both the S&P 500 and the Nasdaq reached their session highs shortly before 3 p.m. The S&P 500 climbed as high as 1,698.43 in the wake of the Fed’s statement, while the Nasdaq reached a session high of 3,649.35, its highest since late 2000.
It was the 10th straight session where the S&P 500 traded within 10 points of the 1,700 level. A rise above that level could signal that stocks have more room to rise.
The late-day pullback was “technicals more than anything else,” said Uri Landesman, president of Platinum Partners in New York.
After the bell, shares of Whole Foods declined 1.6 percent to $54.68 following the release of its quarterly results.
In Wednesday’s session, the shares of credit card companies ranked among the biggest losers. Shares of Visa dropped 7.5 percent to $177.01 and had the biggest negative impact on the S&P 500. Shares of American Express, a Dow component, slid 1.9 percent to $73.77.
In another milestone set earlier in the session, Facebook Inc’s stock traded above its initial public offering price of $38 for the first time since its market debut in May 2012. The stock rose as high as $38.31. Facebook closed at $36.80, down 2.2 percent.
Comcast Corp gave the S&P 500 its biggest boost after the U.S. cable provider posted a higher quarterly profit on Wednesday, as it added more Internet customers than expected on the cable side and booked an increase of more than 20 percent in operating cash flow at its NBC Universal unit. Comcast’s Class A stock rose 5.6 percent to close at $45.08.
Shares of Herbalife shot up 9.1 percent to $65.50 after a source said billionaire George Soros has taken a large long position in the nutritional supplement company. Herbalife’s stock jumped as high as $66.25 on the report, its highest price since May 2012.
Volume was roughly 7 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, above the average daily closing volume of about 6.4 billion this year.
Advancers beat decliners on the NYSE by a ratio of about 15 to 14. On the Nasdaq, about 13 stocks rose for every 11 that fell.
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