Markets closed flat on Monday as investors remained cautious ahead of the Federal Reserve’s monetary statement. On a day of listless trading, benchmarks remained unaffected by news that Greece had concluded its debt deal with private creditors. Nonetheless, the Dow registered its fourth-straight day of gains and was up all through the trading session unlike its fellow benchmarks.
The Dow Jones Industrial Average (DJI) rose 0.3% and closed the day at 12,959.71. The Standard & Poor 500 (S&P 500) edged up 0.02% to finish yesterday’s trading session largely unchanged at 1,371.09. The Nasdaq Composite Index dropped a mere 0.2% and settled at 2,983.66. The fear-gauge CBOE Volatility Index (VIX) slumped 8.6% to settle at 15.64, the lowest level since May 2011. Consolidated volumes on the New York Stock Exchange, the American Stock Exchange and Nasdaq were 5.15 billion shares, significantly lower than last year's daily average of 7.84 billion. Decliners beat advancing stocks on the NYSE, as for 44% of stocks that gained, 52% of the stocks traded lower. The remaining stocks were left unchanged.
Both the S&P 500 and Nasdaq struggled to find their way into the green zone. While both hovered in the red for most of the morning session, the S&P 500 managed to crawl up during the afternoon and ended negligibly higher. The Nasdaq vacillated between negligible gains and losses, finally closing in the red zone. However, it was the blue-chip index that remained in the green seat through the trading session and subsequently recorded its fourth consecutive finish in the positive zone. This is only for the second time this year that the Dow has achieved this feat. Among the 30 Dow components, 21 finished in the green while The Travelers Companies, Inc. (NYSE:TRV) closed unchanged and the remaining 8 stocks closed in the red. Among the gainers, Alcoa Inc. (NYSE:AA), The Boeing Company (NYSE:BA), General Electric Company (NYSE:GE), The Home Depot, Inc. (NYSE:HD), The Coca-Cola Company (NYSE:KO), Merck & Company, Inc. (NYSE:MRK), The Procter & Gamble Company (NYSE:PG) and Exxon Mobil Corporation (NYSE:XOM) jumped 0.6%, 0.4%, 0.5%, 1.0%, 0.9%, 1.3%, 1.2% and 1.5%, respectively.
Apprehensions surrounding the Federal Reserve’s monetary statement, which is due on Tuesday, kept the investors on their toes. Investors will be keen to find out the central bank’s stance on monetary easing policy. Investors have been looking forward to a third round of quantitative easing, but they have been disappointed every time. Even during his last congressional testimony, Fed chairman Ben Bernanke provided little hope of a third round of bond buying. The central bank will also expectedly leave the interest rate unaltered at historically low levels.
Additionally, the Fed will be disclosing the results of the bank stress test. This is a crucial indicator of the stability of large banks during economic turmoil. The latest round of stress tests covered 19 US large banks. The stress result will also decide if the banks can opt for dividend payouts and buyback of shares. These concerns kept the financial sector hovering in the negative zone with the Financial SPDR Select Sector Fund (XLF) losing 0.3% and the KBW Bank Index (BKX) settling 0.7% lower. Bellwethers like Bank of America Corporation (NYSE:BAC), The Goldman Sachs Group, Inc. (NYSE:GS), JP Morgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS) and Wells Fargo & Company (NYSE:WFC), which are a part of this test, lost 0.8%, 0.3%, 1.2%, 0.9% and 0.5%, respectively.
Markets largely focused on domestic news yesterday and overlooked foreign developments. Greece has reportedly secured its debt deal with private creditors. Private investors have agreed to shoulder a substantial amount of the country’s debt load, easing the way for Greece to receive the next tranche of its bailout package.
ALCOA INC (AA): Free Stock Analysis Report
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HOME DEPOT (HD): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
MERCK & CO INC (MRK): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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