Stock Market News For July 05, 2016

Benchmarks closed in the green on Friday following a higher-than-expected manufacturing data and fading “Brexit” fears. All the three key U.S. indexes posted their fourth straight session rise, with the S&P 500 moving back above the psychological level of 2,100. Moreover, the CBOE Volatility Index (VIX) reached at its lowest level in last three weeks on the first trading day of July. Also, the Dow and S&P 500 registered best weekly gains since Nov 20 and the Nasdaq posted best weekly performance since May 27. Markets were closed on Monday following the Independence Day Holiday.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) increased 0.1%, to close at 17,949.37. The S&P 500 rose 0.2% to close at 2,102.95. The tech-laden Nasdaq Composite Index closed at 4,862.57, gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 5.5% to settle at 14.77. A total of around 6.7 billion shares were traded on Friday, higher than the last 20-session average of 7.7 billion shares. Advancers significantly outpaced declining stocks on the NYSE. For 62% stocks that advanced, 35% declined.

The Institute for Supply Management (ISM) manufacturing index increased from 51.3% in May to 53.2% in June, higher than the consensus estimate of 51.3%. Twelve out of 18 manufacturing industries reported growth, which led the ISM Manufacturing higher. ISM manufacturing index posted its fourth straight monthly rise in June and increased last month at a highest rate in last 15 months. Encouraging manufacturing data had a positive impact on the broader markets.

In company news, shares of Harley-Davidson, Inc. (HOG) jumped 19.8% following a rumor that the company may be acquired by private equity firm, KKR & Co. L.P. (KKR). Gains in Harley-Davidson led the Consumer Discretionary Select Sector SPDR (XLY) 1% higher, which emerged as the biggest advancer among the S&P 500 sectors. Key components including Netflix (NASDAQ:NFLX), Inc. (NFLX), Home Depot (NYSE:HD), Inc. (HD), Amazon.com (NASDAQ:AMZN), Inc. (AMZN), Priceline Group Inc. (PCLN) and Time Warner Inc (NYSE:TWX). (TWX) increased 5.7%, 1.5%, 1.4%, 1.5% and 1.2%, respectively.

Meanwhile, the U.S. Census Bureau reported that construction spending decreased 0.8% from April to a seasonally adjusted annual rate of $1,143.3 billion in May. It was also in contrast to the consensus estimate of 0.6% increase. Although, it fell for second consecutive month, construction spending in the first five month of this year was 8.2% more than the year-over-year’s figure.

Moreover, Autodata reported that domestic vehicle sales in June came in at 13.2 million, which was less than the consensus estimate and May’s reading of 13.8 million and 13.7 million, respectively. Further, total vehicle sales slumped 4.6% in June to 16.7 million, lower than consensus estimate of 17.8 million.

However, total vehicle sales registered its best June in more than a decade. Following which, shares of major automakers, including Ford Motor (NYSE:F) Co. (F) and General Motors Company (NYSE:GM) (GM) increased 1.2% and 2.1%, respectively.

Separately, as per Caixin data, China’s manufacturing PMI declined from 49.2 in May to 48.6 in June. Also, China’s official manufacturing PMI was at 50.0 in June, lower than May’s reading of 50.1.

For the week, both the Dow and S&P 500 increased 3.2% and the Nasdaq rose 3.3%. Benchmarks closed in positive territory for the week following rally in oil prices and reduced “Brexit” concerns.

Britain’s surprising referendum results weighed on key U.S. indexes earlier during the week. However, investors gradually became optimistic and focused on investing mainly in the beaten down sectors.

Moreover, oil prices recovered on a weaker dollar, strikes in Norway and production disruptions in Venezuela. Also, the U.S. Energy Information Administration (EIA) reported a wider-than-expected weekly drop in the U.S. commercial crude oil inventories, which also pushed oil prices northward. Both the WTI and Brent crude increased 5.7% for the week and in turn boosted investor sentiment.

In economic news, first quarter GDP increased at a better-than-expected rate and the Consumer Confidence Index increased last month. Also, personal spending, personal income, personal consumption expenditure price index (PCE) and core PCE rose in May.

In earnings news, NIKE, Inc. (NKE) posted mixed fiscal fourth quarter results. While quarter earnings came in better-than-than expected, revenues failed to beat the Zacks Consensus Estimate.