Microsoft led Dow gainers and a broad tech rally
U.S. stocks rose for a second day in a row on Tuesday, 18 March 2014 with the S&P 500 ending just shy of all-time highs as worries faded that Russia's annexation of Ukraine's Crimea region would lead to further near-term military conflict. The major averages finished the Tuesday session with solid gains.
The Dow Jones Industrial Average advanced 88.97 points, or 0.5%, to 16,336.19. The Nasdaq jumped 53.36 points, or 1.2%, to 4,333.31. The S&P 500 added 13.42 points, or 0.7%, to close at 1,872.25.
Microsoft led Dow gainers and a broad tech rally, jumping 3.9% to finish at its highest level since 2000 on reports its Office suite of software will soon be available on Apple's mobile devices.
Dow component Chevron gained 1% after being added to the US Focus List at Credit Suisse, while also receiving a boost from the 1.7% gain in crude oil ($99.69/bbl).
Russian president Vladimir Putin delivered a speech to the Russian parliament Tuesday. He said Russia will not seek to annex other regions of Asia, after it annexed Crimea. Putin's remarks acted to assuage the market place, as U.S. stock indexes moved higher.
Focus of the market place turns to the meeting of the U.S. Federal Reserve's Open Market Committee (FOMC), taking place on Tuesday and Wednesday. Fed Chair Janet Yellen will deliver her first press conference after the FOMC meeting's conclusion on Wednesday afternoon. It is expected the FOMC will continue on its tapering program, whereby monthly bond purchases are whittled down by $10 billion a month. Recent U.S. economic data has been a mixed bag, which is making it tougher for the market place to read what the Fed's intentions might be.
U.S. economic data released Tuesday was again a mixed bag and did not have a major impact on the markets. The data included the consumer price index, real earnings, new residential construction and building permits. The housing numbers were a bit stronger than expected and also helped to put some upside pressure on the stock indexes, which in turn put some more downside price pressure on the precious metals.
In detail, Housing starts fell 0.2% in February to 907,000 from an upwardly revised 909,000 (from 880,000) in January. The consensus expected housing starts to increase to 915,000. After two months where starts surpassed one million, construction levels in January and February returned to their April - October 2013 pace. There wasn't much evidence of significant shocks from winter weather conditions. Building Permits rose to a seasonally adjusted annualized rate of 1,018,000, which was better than the consensus estimate of 955,000.
Consumer prices edged up 0.1% in February after increasing 0.2% in January. The consensus expected the CPI to increase 0.2%. Energy costs, which provided a sizable boost to the PPI, fell 0.5% in February. A 1.7% decline in gasoline prices offset a 3.6% increase in natural gas costs. Food price growth, which had been very low and stable for the past several months, shot up 0.5% in February. That was the largest one-month increase since September 2011. Most of the food components rose more than their long-term trends. That included a 1.2% increase in meats, poultry, fish, and eggs. Excluding food and energy, core CPI increased 0.1% for a third consecutive month in February. That was exactly what the consensus expected.
Among other stocks under focus, Hewlett-Packard jumped 3.9% after Barclays upgraded the stock to overweight from equal weight. Barclays analyst said H-P could gain share for several quarters in the low-end server business at the expense of Lenovo which has acquired IBM Corp.'s X86 server business. Oracle gained 1.6% in regular trading but fell more than 5% in after-hours action after reporting weaker-than-expected fiscal third-quarter results.
Bullion prices ended substantially lower on Tuesday, 18 March 2014 at Comex. Gold futures fell 1% on Tuesday to settle at their lowest level in a week, with easing concerns surrounding Ukraine and Russia contributing to another rally in U.S. equities, ahead of the much-awaited conclusion to the Federal Reserve's policy meeting this week.
Gold for April delivery fell $13.90, or 1%, to settle at $1,359 an ounce on the Comex division of the New York Mercantile Exchange. Silver prices took an even bigger hit, with May silver losing 1.9%, or 41 cents, to end at $20.86 an ounce, also a one-week low.
Crude oil futures gained nearly 2% on Tuesday, 18 March 2014 as traders looked to the week's supply reports and the conclusion of the Federal Reserve's policy meeting to help gauge oil's next move. Crude oil for April delivery rose $1.62, or 1.7%, to settle at $99.70 a barrel on the New York Mercantile Exchange.
In tomorrrow's weekly inventory report, EIA expects the data to show crude inventories rose by 2.6 million barrels in the week ended 14 March. They also look for a decline of 1.6 million barrels in gasoline stockpiles and a drawdown of 900,000 barrels for distillates, which include heating oil.
Indian ADRs ended mostly higher on Tuesday. In the banking space, ICICI Bank gained 0.56% at $41.48 and HDFC Bank rose 0.78% at $38.64. In the IT space, Infosys was down 0.22% at $54.91 and Wipro added 1.15% at $13.25. In the other sectors, Tata Motors shed 0.75% at $33.19 and Dr Reddy's Laboratories jumped 1.59% at $46.58.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the fourth quarter current account balance (consensus -$87.60 billion) will be announced at 8:30 ET. Also of note, the Federal Open Market Committee will conclude its two-day meeting with the latest policy statement scheduled to be released at 14:00 ET. The statement will be followed by Janet Yellen's first press conference as Fed Chair, scheduled to begin at 14:30 ET.
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