Utilities and health-care sector stocks led the gains
U.S. stocks closed higher on Monday, 05 May 2014 as investors shrugged off earlier worries over the slowing economy in China and deteriorating situation in Ukraine. A better-than-expected report on the health of the services sector appeared to have aided markets. Equities had began the session on their lows as renewed global growth concerns, combined with continued worries about Ukraine, conspired to ensure a cautious start.
The Dow Jones Industrial Average turned a more-than 100-point-loss to a gain of 17.66 points, or 0.1%, to 16,530.55. The Nasdaq Composite finished the day 14.16 points, or 0.3%, higher at 4,138.06. The S&P 500 ended the day 3.51 points, or 0.2%, higher at 1,884.65.
Utilities and health-care sector stocks led the gains.
Among major stocks under focus, J.P. Morgan Chase & Co shares dropped 2.5% after the bank said it expected revenue from fixed income and equities trading to fall 20% in the second quarter. The bank also reported it had incurred legal expenses of $347 million in the first quarter. Shares of other investment banks were hit as well. Goldman Sachs Group, fell 1.6%, Morgan Stanley dropped 2%.
Among other stocks, shares of Pfizer fell 2.6% after first-quarter revenue fell short of expectations. Target shares fell 3.5% after announcing chief executive officer Gregg Steinhafel will resign immediately.
Asian stock markets saw some selling pressure on Monday following downbeat manufacturing data coming out of China, which has the world's second-largest economy. The HSBC final purchasing managers' index for China was 48.1 in April versus the preliminary reading of 48.3 and a reading of 48.0 in March. A number below 50.0 suggests contraction in the manufacturing sector.
In other news on Monday, the European Union's producer prices fell for the third month in a row in Marchdown 0.2% from February and down 1.6% from a year ago. The specter of price deflation is gripping the EU at present, which is likely to prompt the European Central Bank to soon announce some type of further monetary policy stimulus measures. The ECB holds its monthly monetary policy meeting on Thursday.
Among economic data expected at Wall Street today, the ISM Non-manufacturing Index increased to 55.2 in April from 53.1 in March. That was the strongest reading since August 2013, while the consensus expected the index to increase to 54.0. Business activities/production levels improved to 60.9 in April from 53.4 in March. The increase in production was predicated on a large increase in new orders (58.2 from 53.4). There is some concern that production may not be sustainable without another influx of new orders growth. Order backlogs slipped into a contraction in April (49.0 from 51.5). The Employment Index fell to 51.3 in April from 53.6 in March, which was unusual considering the April Employment Situation Report showcased a large increase in payrolls that month.
On the fixed income side, Treasuries finished in the red after sliding from their overnight highs. The benchmark 10-yr yield rose two basis points to 2.61%.
Bullion prices ended moderately higher at Comex on Monday, 05 May 2014. Gold futures rode investor fears over increased unrest in Ukraine on Monday and got an additional boost from some weakness in U.S. equities, sending prices for the precious metal to their highest close in three weeks. But better-than-expected data on U.S. service-sector growth helped keep price gains in check.
Gold for June delivery rose $6.40, or 0.5%, to settle at $1,309.30 an ounce on the Comex division of the New York Mercantile Exchange. July silver rose 2.5 cents, or 0.1%, to $19.57 an ounce.
Crude oil futures finished lower on Monday, 05 May 2014 with concerns over a slowdown in China putting pressure on prices after they briefly recaptured the $100 mark amid deadly clashes in Ukraine that threaten the flow of crude supplies from Russia. Tensions between Russia, Ukraine and the West have been in focus for the oil market as Russia is among the largest crude-oil producers in the world.
Crude oil for June delivery declined by 28 cents, or 0.3%, to settle at $99.48 on the New York Mercantile Exchange.
Participation was well below average with less than 600 million shares changing hands at the NYSE.
Indian ADRs ended mixed on Monday. In the IT space, Infosys shed 0.47% at $53.22 and Wipro was down 1% at $11.91. In the banking space, ICICI Bank rose 3.63% at $44.26 and HDFC Bank ADR gained 1.29% at $40.83. In the other sectors, Tata Motors slipped 0.27% at $37.32 and Dr Reddy's Laboratories was ended flat at 45.88.
Tomorrow, the Trade Balance for March (consensus -$42.50 billion) will be released at 8:30 ET.
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