(XLF) Stock Market News for March 16, 2012 – Market News

Encouraging economic data not only enabled markets to extend their winning streak, the Standard & Poor 500 closed above 1,4 00 for the first time since  the Great Recession. Unemployment claims dropped to a four-year low and producer prices’ posted their largest gain in five months to bolster the benchmarks, which are now likely to post strong weekly gains.

The Dow Jones Industrial Average (DJI) posted gains for seven consecutive days after it moved up 0.4% to finish at 13,252.76. The Standard & Poor 500 (S&P 500) jumped 0.6% to finish at 1,402.60. The tech-laden Nasdaq Composite Index rose 0.5% to close yesterday’s trading session at 3,056.37. The fear-gauge CBOE Volatility Index (VIX) edged up 0.7% to settle at 15.42. Consolidated volumes on the New York Stock Exchange, the NYSE Amex and the Nasdaq were roughly 7.05 billion shares, lower than last year’s daily average of 7.84 billion. For 59% of stocks that advanced on the NYSE, 39% stocks traded lower. The remaining 2% stocks were left unchanged.

On a day of positive developments, the S&P 500 finished above 1, 400 for the first time since June 2008. Additionally, the Dow settled above 13, 000 and the Nasdaq closed above 3, 000 thus recording the first such instance in the markets’ history. A couple of weeks earlier, the Dow crossed 13, 000 during intra-day trade on certain days but failed to sustain that level every time. However, it was widely believed that the blue-chip index was likely to finish above this key level sooner or later, and that ultimately happened on February 28. Moreover, on March 13 the Dow finished above 13, 000 for the second time this year. While investors were closely watching the Dow’s movement near the 13, 000 mark, the Nasdaq climbed above 3, 000, and was hovering near highs last seen at the fag-end of the Dot Com bubble. Last Tuesday, market experts opined that the S&P 500 was en route to breaking above the 1, 400 level, and yesterday it achieved that feat. Therefore, all the expectations from the three benchmarks have now materialized, hinting at a gradually improving economy.

Labor and housing market, the two key elements that shape an economy, have mostly posted decent data since late December 2011. Yesterday too, the labor market lifted investor sentiment with unemployment claims touching a four-year low. According to the U.S. Department of Labor, the advance figure for seasonally adjusted initial claims declined 14,000 from the previous week’s revised figure to 351,000, for the week ending March 10. The figure thus matched four-year low levels recorded last month. The drop in initial claims was also more than expected, as consensus estimates predicted it would come in at 358, 000. Any figure above 400,000 marks a gloomy state of affairs, while anything below 375, 000 is indicative of strong hiring that can push unemployment levels down. Consistently positive labor market data have boosted investor sentiment, which is automatically reflected in the benchmarks’ uptrend.

Moreover, producer prices’ posted the biggest increase in five months according to the U.S. Bureau of Labor Statistics. The Producer Price Index for finished goods jumped 0.4% in February. This follows a 0.1% rise in January and a 0.1% decline in December 2011. The PPI was boosted by a rise in energy prices. R the Core-PPI or the index for finished goods excluding foods and energy gained 0.2%, in line with expectations.

Separately, the Business Outlook Survey by the Philadelphia Federal Reserve Bank suggested that the business activity index rose from 10.2 to 12.5 in February. This surpasses economists’ expectations of business activity coming at 11.6. Additionally, the report stated: “The survey’s broad indicators for general activity, new orders, and shipments all increased from their readings in January. Firms reported near?steady employment levels but an increase in average work hours. More firms reported higher input prices this month, and a sizable share of firms reported price increases for their own manufactured goods”.

Yesterday, the financial sector was one of the leading gainers with the Financial SPDR Select Sector Fund (XLF) gaining 1.8%. Among financial stocks, American Express Company (NYSE:AXP), Bank of America Corporation (NYSE:BAC), Citigroup, Inc. (NYSE:C), JP Morgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) gained 1.0%, 4.5%, 3.0%, 2.6%, 2.2% and 4.9%, respectively.
AMER EXPRESS CO (AXP): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

View original at: Zacks Investment Research – All Commentary Articles

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