Market Overview

Stock Market News for May 27, 2014 - Market News

Benchmarks ended in the positive territory on Friday, following reports of a rise in new home sales. Friday's gains led the S&P 500 close at a record high and helped the blue-chip index close in the green for the year. Homebuilder stocks were among the biggest gainers for the day. Hewlett-Packard and GameStop's better-than-expected earnings added to the bullish sentiment. A new deal between TripAdvisor and LaFourchette also enthused investors.

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The Dow Jones Industrial Average (DJI) gained 0.4% to close Friday's trading session at 16,606.27. The Standard & Poor 500 (S&P 500) also gained 0.4% to finish at 1,900.53.  The tech-laden Nasdaq Composite Index rose 0.8% to 4,185.81. The fear-gauge CBOE Volatility Index (VIX) plunged 5.6% to settle at 11.36. Total volume for the day was roughly 4.6 million shares, lower than this month's average of 5.9 million.  Advancers outpaced declining stocks on the NYSE. For 65% stocks that advanced, 31% declined.
Upbeat new single-family home sales report from the U.S. Census Bureau and the Department of Housing and Urban Development lifted investor sentiment. Sales of new single-family houses increased 6.4% from March's revised rate of 407,000 to seasonally adjusted annual rate of 433,000 in April. The rise was larger than expected as the consensus estimate predicted it would improve to 422,000.
On Thursday, existing home sales also rose at the fastest pace since December2013. Existing home sales data released by National Association of Realtors showed that sales increased 1.3% to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March.
Following news on new single-family home sales, SPDR S&P Homebuilders ETF (ETF:XHB) rose 1.6%.  The sector outperformed all the other sectors as key housing stocks such as DR Horton Inc. (NYSE: DHI), Lennar Corp. (NYSE: LEN), Toll Brothers Inc.  (NYSE: TOL), KB Home (NYSE: KBH), Beazer Homes USA Inc. (NYSE: BZH) and PulteGroup, Inc.  (NYSE: PHM) rallied 4.1%, 3.9%, 1.6%, 2.5%, 2.1% and 2.5%, respectively. Overall, 8 out of 10 sectors of the S&P 500 ended in the green.
Hewlett-Packard Company's (NYSE: HPQ) better-than-expected quarterly results and announcement of more job cuts had a positive impact on the benchmarks. Hewlett-Packard's second-quarter non-GAAP earnings of 88 cents came in line with the Zacks Consensus Estimate. Second-quarter earnings were also within management's guidance range of 85 to 89 cents. Cost control measures and a lower share count helped reported earnings increase 1.2% from the year-ago quarter. The personal computer maker also stated that in order to turnaround the company it may reduce another 16,000 jobs. Hewlett-Packard had already announced 34,000 job cuts. Shares of Hewlett-Packard surged 6.1%.
GameStop Corp.'s (NYSE: GME) upbeat quarterly results also lifted the broader markets. The video game and entertainment software retailer posted first-quarter fiscal 2014 earnings per share of 59 cents more than the Zacks Consensus Estimate of 57 cents. The first-quarter fiscal 2014 earnings surged 28.3% from 46 cents delivered in the year-ago quarter. Shares of GameStop increased 4.2%.
TripAdvisor Inc.'s (NASDAQ: TRIP) deal with Paris-based online restaurant booking company LaFourchette was welcomed by investors. Shares of TripAdvisor climbed 3.8% a day after the online travel research company finalized the acquisition of LaFourchette. However, the financial terms of the acquisitions have been kept confidential.
Separately, technology bellwethers such as Apple Inc. (NASDAQ: AAPL) and Inc. (NASDAQ: AMZN) boosted the Nasdaq and helped it outperform the broader markets. Shares of Apple and increased 1.1% and 2.4%, respectively.
Transportation stocks also rallied on Friday. Stocks such as Delta Air Lines Inc. (NYSE: DAL), Southwest Airlines Co. (NYSE: LUV), Alaska Air Group, Inc. (NYSE: ALK), Norfolk Southern Corporation (NYSE: NSC) and Union Pacific Corporation gained 1.4%, 2.1%, 1.2%, 0.2% and 0.5%, respectively.
On the other hand, disappointing earnings results by Staples, TJX, Dick's Sporting Goods and Urban Outfitters coupled with Caterpillar's disappointing sales figures weighed on the benchmarks on Tuesday.
For the week, the benchmarks closed in the green. The S&P 500, the Dow and the Nasdaq gained 1.2%, 0.7% and 2.3%, respectively.
Gains in small-cap and high-growth stocks drove benchmarks higher for the week. Additionally, gains from consumer discretionary and energy stocks helped benchmarks finish in the green. The Nasdaq was boosted primarily by gains in bio-tech stocks.
Separately, benchmarks were positively impacted after minutes from the Federal Open  Market  Committee's  (FOMC)  April  meeting  indicated  that  the  central bank  decided  to  remain  flexible  when  it  comes  to  raising  short  term  interest rates. The Federal Reserve officials in its April 29-30 meeting discussed “several approaches” to tighten monetary policy but made no decisions on which tools to apply.

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