Stock Market News for April 29, 2011 - Market News
April 29 2011 - 5:05AM
Zacks
The nations’ economic growth rate slowed larger than estimated and
claims for unemployment benefits soared to its highest level since
January. Surprisingly, these disappointing reports failed to sting
the markets which moved to post more multi-year highs. Markets
continued to reap benefits from the positive momentum, gained from
the Federal Reserve’s vow to stimulate the economy. Also, positive
earnings results chipped in to further strengthen the indices and
overshadowed the disappointing data.
The Dow Jones Industrial
Average (DJIA) gained 0.6% to settle at 12763.31 and recorded its
highest close since May 20, 2008. The Standard & Poor 500
(S&P 500) achieved its highest level since June 9, 2008, at
1360.48, gaining 0.4%. The Nasdaq Composite Index was up 0.1% to
finish off at 2872.53, its highest close since Dec. 12, 2000.
Additionally, markets were bolstered as the Dow Jones
Transportation Average climbed 1.2% to 5,510.06 and recorded an
all-time high. The fear-gauge CBOE Volatility Index (VIX) dropped
down below 15. For the month, it has averaged a decent 18.60 versus
22.50 that was recorded in the comparable period of last year. On
the New York Stock Exchange, for every two stocks that gained, one
was on the declining side. Consolidated volumes on the NYSE were
4.2 billion shares.
The Commerce Department, on
Thursday, said that the US gross domestic product (GDP) growth rate
declined to 1.8% in the first quarter. The GDP growth rate came in
lower-than the expected 2.0% after the preceding quarter recorded a
rate of 3.1%. This is also the weakest rate of growth since last
spring. Inflationary worries, which were largely fueled by higher
crude prices, were thought to be the reason behind the declining
rate. Higher commodity prices chopped off consumer spending, which
expanded at just 2.7%, versus the 4% rise in the preceding
quarter.
While inflationary pressures
took a toll on GDP, Ben Bernanke, on Wednesday, cited unemployment
to be a larger concern than surging commodity prices. The
inflationary pressure has taken its cue from soaring crude prices
and is expected to be short-lived. Escalating crude prices was a
result of the violence in the oil-rich Persian Gulf nations. With
the prospect of no such outbreak in near-future, Bernanke sounds
logical to suggest that inflation will cool-down, at least in the
short-term.
Initial claims for
unemployment benefits leaped 25,000 to 429,000 last week and it was
at its highest level since January. On the contrary, economists had
been expecting the jobless claims to fall to 392,000. Thus, the
real worry for the economy is the unemployment rate as the initial
claims figure has remained above the 400,000 mark for three
straight weeks now. Claims below the 400,000 mark generally suggest
steady job growth.
According to the National
Association of Realtors, Pending Home Sales increased 5.1% to 94.1,
against expectations of a 1.7% increase. The Pending Home Sales
Index had increased 2.1% in February to an index value of 89.5.
However, the index was 11.4% lower than March 2010, when it was at
106.2 and sales were inconsistent across the country, failing to
reflect any recovery in the housing sector.
These disappointing reports
could have dented the markets, but luckily for the investors,
markets shrugged off these concerns. Earlier, on Wednesday, the
Federal Reserve’s statement on monetary policy which reiterated its
commitment to keep interest rates low in pursuit of economic growth
had pushed the markets higher. Following the Federal Open Market
Committee’s meeting, at the first of four annual press briefings,
Federal Reserve Chairman Ben Bernanke announced that the FOMC had
decided to close the asset purchase on the scheduled date and
subsequently freeze the size of its balance sheet. Traders cheered
the statements and the strong rally continued yesterday, helping
the markets overlook the disappointing data.
Also helping the bullish
sentiments were strong corporate earnings results. Sprint Nextel
Corp. (NYSE:S), Aetna Inc. (NYSE:AET), The Allstate Corporation
(NYSE:ALL) and Citrix Systems, Inc. (NASDAQ:CTXS) all reported
strong quarter results and their shares jumped 6.7%, 4.1%, 5.7% and
9.7%, respectively.
However, key stocks in the
energy sector were not lucky enough to enjoy the cheer of the
broader markets. Exxon Mobil Corporation (NYSE:XOM) reported higher
profits but shares fell 0.5% as it failed to beat revenue
estimates. Among other decliners in the sector, ConocoPhillips
(NYSE:COP), Chevron Corp. (NYSE:CVX), Sunoco, Inc. (NYSE:SUN) and
Western Refining Inc. (NYSE:WNR) dropped 3.0%, 0.2%, 0.9% and 3.2%,
respectively.
Significant companies
scheduled to report their earnings results today include
Caterpillar Inc., Chevron Corp. and Merck & Co. Inc.
AETNA INC-NEW (AET): Free Stock Analysis Report
ALLSTATE CORP (ALL): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CITRIX SYS INC (CTXS): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
SUNOCO INC (SUN): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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