Weekly initial claims increased from 298,000 to 326,000 in last week
US stocks rose on Thursday, 22 May 2014 with high-growth and small-cap companies leading gains. Investors appeared to shrug off softer economic data, including jobless claims and existing-home sales. the Dow Jones Industrial Average underperformed throughout the session as blue chip listings struggled to stay out of negative territory.
The Dow Jones Industrial Average gained 10.02 points, or 0.1%, to 16,543.08. The Nasdaq Composite ended the day up 22.80 points, or 0.6%, at 4,154.34. The S&P 500 closed 4.46 points, or 0.2%, higher at 1,892.49.
Outside of technology, the remaining cyclical groups finished in mixed fashion as consumer discretionary and financials outperformed, while energy, industrials and materials lagged.
The preliminary HSBC China manufacturing purchasing managers index (PMI) for May came in at 49.7 versus 48.1 in April and was the best reading in five months, it was reported on Thursday. This news helped to lift world stock markets and the raw commodity sector, as China is the world's largest consumer of raw commodities and is the world's second-largest economy. Still, a PMI reading below 50.0 suggests contraction. China had recently seen a string of downbeat economic reports.
U.S. economic data released Thursday included the weekly jobless claims report, the Chicago Fed national activity index, the U.S. flash manufacturing PMI, leading economic indicators, the Kanas City Fed manufacturing survey, and existing home sales. All in all there was some good data and some not-so-good data and it was a mixed bag for the market place, which showed a muted reaction to the data.
Weekly initial claims increased from 298,000 to 326,000, while the consensus expected a reading of 305,000. In all likelihood, last week's sharp drop was an aberration rather than a change in labor market conditions, considering levels quickly returned into the 320,000-330,000 range.
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Existing home sales increased a modest 1.3% to 4.65 million SAAR in April from 4.59 million SAAR in March. The gain ended three consecutive months of sales declines. The consensus expected existing home sales to increase to 4.66 million. The increase in sales coincided with improvements in mortgage applications and a gain in the pending home sales index. The Leading Indicators report for April increased 0.4%. That followed a revised 1.0% increase in March, and was below the consensus estimate, which called for an increase of 0.5%.
Meantime, the Markit composite purchasing managers' index for the European Union fell to 53.9 in May from 54.0 in April. This report was in line with market expectations.
The market place quickly digested the minutes from the latest U.S. FOMC meeting, which were released on Wednesday afternoon. Those minutes showed Federal Reserve officials discussing how to go about raising interest rates and that caused a modest reaction by some markets, but it was short-lived. In the end most traders and investors reckoned there was not much new in the FOMC minutes and that U.S. interest rates are likely to remain low for quite some time to come.
In earnings news, Hewlett-Packard reported a fiscal second-quarter profit that was mostly in line with expectations. H-P also announced that it is eliminating an additional 11,000 to 16,000 jobs. Shares were down 4% after hours.
Best Buy shares closed 3.4% higher after the retailer's adjusted first-quarter profit beat expectations. Sears Holdings said it would close 80 stores this year as its fiscal first-quarter loss widened amid falling revenue and weak same-store sales. Shares rebounded after being lower and closed up 4.2%.
Bullion prices ended with moderte gains on Thursday, 22 May 2014. The precious metal was boosted by some positively perceived economic data coming out of China. However, a firmer U.S. dollar index worked to pare the better early gains in gold. Traders also bet that reduced restrictions on gold imports in India will boost demand.
Gold for June delivery climbed $6.90, or 0.5%, to $1,295 an ounce on the Comex division of the New York Mercantile Exchange. July silver also gained 18 cents, or 0.9%, to end at $19.52 an ounce.
Crude Oil prices closed below $104 a barrel on Thursday, 22 May 2014 at Nymex, pulling back from a one-month high as traders assessed the prospects for energy demand.
Crude oil for July delivery fell 33 cents, or 0.3%, to settle at $103.74 a barrel on the New York Mercantile Exchange.
Treasuries settled near their lows after retreating throughout the session. The 10-yr note shed six ticks with its yield climbing two basis points to 2.55%.
Participation has been lacking throughout the week with the Memorial Day weekend on the horizon. 565 million shares changed hands at the NYSE.
Tomorrow, the New Home Sales report for April will be released at 10:00 ET.
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