ANF Abercrombie and Fitch Co

Weak economic data failed to drag markets lower as investor sentiment was lifted by the technology and retail sectors.  With initial claims surged and the economy expanding at just 1.8%, the employment situation remains a major area of concern amidst a sluggish economy. These concerns had dented the markets in the opening session, but strong performance from the consumer discretionary index and technology sector and modest support from the energy sector helped the indices rebound.

The Dow Jones Industrial Average (DJIA) shed 76 points in the opening session but recouped its losses in the later trading session to close at 12,402.76, up 0.1%. The Standard & Poor 500 (S&P 500) climbed up 0.4% to finish at 1,325.69. The Nasdaq Composite Index closed at 2,782.92, after gaining 0.8%. Volumes continued to be tight as on the New York Stock Exchange, AMEX and Nasdaq. Consolidated volumes were at 6.4 billion shares, significantly below the daily average recorded so far this year of 7.64 billion. On the NYSE, composite volumes were at 3.39 billion shares. Advancers outnumbered decliners by a ratio of 2:1 on the NYSE.

The technology sector gained significantly on the wave of the bullish comments from hedge-fund manager David Einhorn on Microsoft Corporation (NASDAQ:MSFT), which jumped 2.0%. Also helping the technology sector was a report from research firm Gartner Inc. Gartner reported a surge in server shipments in the first quarter across the world except Japan. This consequently led to a double-digit-percentage growth in revenues. Hewlett-Packard Company (NYSE:HPQ), benefitted from this news, jumping 1.5%, as did other companies. Among the gainers were, Dell Inc. (NASDAQ:DELL), Juniper Networks, Inc. (NYSE:JNPR), NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NYSE:AMD), Micron Technology Inc. (NASDAQ:MU) and NetApp, Inc. (NASDAQ:NTAP) and they jumped 1.9%, 0.8%, 2.5%, 0.6%, 1.9% and 6.9%, respectively.

The retail sector also aided the broader markets as the consumer discretionary index led the gains in the S&P 500. The sector drew strength from upbeat earnings results of Tiffany & Co. (NYSE:TIF). Shares of the company soared 8.6% to settle at $76.04. Among other retailers, Nike Inc. (NYSE:NKE), Gap Inc. (NYSE:GPS) and Abercrombie & Fitch Co. (NYSE:ANF) gained 1.1%, 1.4% and 1.6%, respectively.

Despite a fall in US light sweet crude oil prices, the energy sector climbed higher and the Energy Select Sector SPDR gained 0.5%. Crude prices for June delivery dropped $1.09 to settle at $100.82 per barrel, but remained above the $100 per barrel mark. Energy stocks like Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP) and Transocean LTD (NYSE:RIG) jumped 0.1%, 0.5%, 0.5% and 0.4%, respectively.

A couple of weak economy reports dampened the mood in the morning session but did not last through the day. Initial claims climbed up, while economic growth did not make any progress. These reports showed no signs of an economic recovery and instead exposed weaknesses. Hiring trends remained modest to below average as unemployment benefits claims rose higher. The Department of Labor said in its report: “In the week ending May 21, the advance figure for seasonally adjusted initial claims was 424,000, an increase of 10,000 from the previous week's revised figure of 414,000. The 4-week moving average was 438,500, a decrease of 1,750 from the previous week's revised average of 440,250. The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending May 14, a decrease of 0.1 percentage point from the prior week's unrevised rate of 3.0 percent”.

Separately the Commerce Department said GDP growth had expanded at the same pace as was previously expected, at 1.8% in the first quarter of 2011. According to the Bureau of Economic Analysis GDP, “in the fourth quarter, real GDP increased 3.1 percent,” and also said: “The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending.  Imports, which are a subtraction in the calculation of GDP, increased”.

 

 
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