Stock Market News for October 2, 2012 - Market News
October 02 2012 - 4:06AM
Zacks
Stocks ended mixed on the first
trading day of the fourth quarter as positive manufacturing data
was somewhat offset by discouraging comments from the central bank
chairman. Benchmarks started the day on a winning note boosted by a
surprise jump in manufacturing sector activity. However, a chunk of
the gains were eroded after Federal Reserve Chairman Ben Bernanke
suggested that the rate of growth might be “insufficient to put
people back to work”.
The Dow Jones Industrial Average
(DJI) gained 0.6% and closed at 13,515.11. The Standard & Poor
500 (S&P 500) rose 0.3% and finished yesterday’s trading
session at 1,444.49. The tech-laden Nasdaq Composite Index closed
at 3,113.53, after falling 0.1%. The fear-gauge CBOE Volatility
Index (VIX) added 3.8% to settle at 16.32. Consolidated volumes on
the New York Stock Exchange, American Stock Exchange and the Nasdaq
were roughly 6.3 billion shares, marginally lower than the
year-on-year daily average volume of 6.38 billion. The advancers on
the New York Stock Exchange outpaced the declining stocks; as for
60% stocks that gained, 37% stocks closed lower.
The initial spark for the day was
provided by a report from the Institute for Supply Management (ISM)
that said economic activity in the manufacturing sector had
expanded for the first time since May. An increase in new orders
and employment drove the manufacturing sector higher in September.
According to the ISM, “The PMI registered 51.5 percent, an increase
of 1.9 percentage points from August's reading of 49.6 percent,
indicating a return to expansion after contracting for three
consecutive months. The New Orders Index registered 52.3 percent,
an increase of 5.2 percentage points from August, indicating growth
in new orders after three consecutive months of contraction”. For
the first time in four months the PMI registered a reading above
50. The report noted: “A reading above 50 percent indicates that
the manufacturing economy is generally expanding; below 50 percent
indicates that it is generally contracting”. Consensus estimates
had projected the figure to come in at 49.9%.
Separately, PMI data was also
released for China and the Euro-zone. The euro zone PMI for
September was revised upward to 46.1 from its earlier reading of
46. The August reading for the same was 45.1. The PMI readings
suggested contraction as it remained below 50. Nonetheless, the
euro rose against the dollar by 0.3% following the paltry
improvement in the region’s PMI. Separately, China's official PMI
was up from 49.2 in August to 49.8 in September.
Meanwhile, the U.S. Department of
Commerce said construction spending had decreased 0.6% from July to
a seasonally adjusted annual rate of $837.1 billion in August. This
was the biggest decline since July last year and the second
consecutive month of declines.
As already mentioned, comments from
the Fed Chairman had somewhat dented the markets yesterday.
Speaking at the Economic Club of Indiana, Bernanke defended the
bond buying plan. However, investor sentiment took a hit when he
said the economy is unable to grow at a pace fast enough to reduce
the high level of unemployment. He said: “Our concern is not really
a recession. Our concern is that growth will continue but at a pace
that’s insufficient to put people back to work”.
Separately, investors awaited
Moody’s verdict on Spain’s sovereign rating. Moody’s Investors
Service has so far left the financial arena apprehensive over
whether it will downgrade the country’s sovereign rating to
‘junk’.
However, Moody’s made a statement
regarding the quantum of funds that would be required to revive
Spanish banks. Previously, consultant Oliver Wyman had said around
59.3 billion euros ($76.3 billion) would be required to revive the
Spanish banks. But, Moody’s said that such recapitalization is
“credit positive, but may be insufficient.”
Coming to the sectors, Consumer
Staples Select Sector SPDR (XLP) was the major gainer, surging
0.7%. Among the stocks, Kraft Foods Inc. (NASDAQ:KFT), Monster
Beverage Corp. (NASDAQ:MNST), The Coca-Cola Company (NYSE:KO),
Philip Morris International Inc. (NYSE:PM) and The Procter &
Gamble Company (NYSE:PG) gained 2.8%, 1.8%, 1.2%, 0.9% and 0.1%,
respectively.
KRAFT FOODS INC (KFT): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
MONSTER BEVERAG (MNST): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis Report
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