US Equity Markets Rally on Upbeat Economic Data

Edited by Vani Rao

US equities hit a new high buoyed by durable goods orders and consumer confidence data

The US equity markets rose for the fourth consecutive trading session on Tuesday, May 27, 2014, driven by a string of positive data releases. On May 27, 2014, reports from the US Department of Commerce showed that orders for goods meant to last at least three years rose 0.8% after a 3.6% gain in the previous month. The median forecast of 68 economists surveyed by Bloomberg had expected durable goods orders to drop by 0.7%. Moreover, orders for defence capital goods climbed 39.3%, its largest rise since December 2012. The upbeat durable goods data, which climbed for a third month in April, followed the solid US housing data, indicating that the US economy is gaining momentum in the past two months. Meanwhile, a separate report from the Conference Board showed that the US consumer confidence increased to 83 in May from 81.7 a month earlier.

US Equities at New High

Buoyed by the latest data reports, the S&P 500 closed at a record high for a second straight session on Tuesday, May 27, 2014. The benchmark S&P 500 Index gained 11.38 points, or 0.60%, to close at the record high of 1,911.91, as shown in the graph below. The Dow Jones Industrial Average and NASDAQ Composite Index also mapped gains of 0.42% and 1.22%, respectively. The positive momentum was observed in nine out of ten sectors, led by Information Technology, which rose 0.99%, while Financials and Utilities gained 0.98% and 0.82%, respectively, to usher gains in the broader markets.

Source: Bloomberg
Source: Bloomberg

Movers

Tracking gains in the US equity markets, the shares of the below-mentioned companies contributed to the bullish market sentiment and finished as the top gainers of the day:

  • Shares of Hillshire Brands Company (NYSE:HSH) surged 22.07%, after Pilgrim’s Pride Corp. (NASDAQ:PPC) made an offer to acquire the meat producer for $6.4 billion.
  • Shares of struggling retailer Aeropostale Inc. (NYSE:ARO) rose 14.96%, after it declared that it had secured $150 million in financing from Sycamore Partners.
  • Shares of pharmaceutical company Dyax Corp. (NASDAQ:DYAX) gained 27.42% to finish the day at $8.41, following positive tests from rival pharmaceutical drugmaker BioCryst Pharmaceuticals (NASDAQ: BCRX). Dyax Corp. is developing a hereditary angioedema drug based on similar lines.

Shakers

In sharp contrast to the overall positive market sentiment, the following stocks exerted a drag on the US equity markets during the trading session on Tuesday, May 27, 2014.

  • Frontline Ltd. (NYSE:FRO) emerged as the worst performer. The Bermuda-based shipping company fell by 16.43% after it reported a net loss of $12.1 million in its quarterly results.
  • Shares in WSP Holdings Ltd. (NYSE:WH), a leading Chinese manufacturer of API (American Petroleum Institute)and non-API seamless casing, tubing, and drill pipes used in oil and natural gas exploration, plunged by 8.22% to close the session at $2.01.
  • Stocks of Gold Field Ltd. (NASDAQ:GFI), a South Africa-based gold producer, slid 6.91% on Tuesday, closing the day at $3.64.

Global Market Snapshot

Following cues from the upbeat US equity markets, Japan’s benchmark Nikkei 225 Index extended its gains to the fourth consecutive trading to close at its seven-week high of 14,636.52 on Tuesday, May 27, 2014, as shown in the graph below. More details about the global currency trends can be accessed here.

Source: Bloomberg
Source: Bloomberg

On the other hand, the Hong Kong Hang Seng Index was pulled down by the weak Chinese banking stocks. Wharf Holdings, a developer and owner of shopping malls in Hong Kong, fell by 3.5% to trigger losses in the Hang Seng Index. The index edged lower by 0.08%, to close at 22,944.30, as indicted in the graph below.

Source: Bloomberg
Source: Bloomberg

Meanwhile, the FTSE 100 Index finished the session 0.43% higher at 6,844.94, on Tuesday May 27, 2014. The FTSE 100 Index received support from financial sector stocks led by HSBC Holdings, Royal Bank of Scotland, and Barclays, which rose 1.25%, 0.70%, and 0.50%, respectively.

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