US Markets Climb After Two-day Drop

Edited by Vani Rao

Positive momentum seen in 9 of 10 sectors, led by Consumer Discretionary

The US equity markets witnessed heavy losses on Monday, July 7, 2014, as the NASDAQ Composite ended at 4,451.53, down 0.77%. Moreover, the Dow Jones Industrial Average finished the day 0.26% lower at 17,024.21, while the S&P 500 closed at 1,977.65, down 0.39%.

This downtrend in the US markets continued on Tuesday, July 8, 2014, with all the three indexes finishing in the red. The NASDAQ Composite ended at 4,391.46, down 1.35%, the Dow Jones Industrial Average finished the day 0.69% lower at 16,906.62, and the S&P 500 closed at 1,963.71, down 0.70%. The losses were broad-based as 9 of the 10 sectors ended the session in negative territory on the day.

However, on Wednesday, July 9, 2014, the US equity markets recovered, opening higher and remained modestly higher throughout the day. The corporate earnings season got off to a positive start, helping lift the stock markets after two days of continuous declines. As the companies begin reporting Q2 earnings this week, investors will be looking for signs that the strengthening US economy has translated into profits for major companies. The stock markets on Wednesday climbed further after the Federal Reserve released the minutes from its latest policy meeting in June. The minutes pointed to the likely end of the Fed’s asset-buying program, also known as quantitative easing, in the month of October this year.

The S&P 500 closed the day at 1,972.83, up 0.46%, as shown in the graph below. The Dow Jones Industrial Average and the NASDAQ Composite Index gained 0.47% and 0.63%, respectively, on July 9, 2014. The gains were broad-based as 9 of the 10 sectors ended the session in positive territory, leading by the Consumer Discretionary sector, which advanced 1.22%. The Energy and Information Technology sectors mapped gains of 0.64% and 0.48%, respectively, to trigger gains in the broader markets.

Source: Bloomberg
Source: Bloomberg

Movers

The shares of the below-mentioned companies finished among the top gainers on Wednesday:

  • Shares of CymaBay Therapeutics Inc. (NASDAQ: CBAY), a clinical-stage biopharmaceutical company, surged 20.62%, closing the day at $7.78.
  • A developer and marketer of video display processing technology for digital video applications, Pixelworks Inc.’s (NASDAQ: PXLW) stock rose 14.87%, ending the day at $8.73.
  • Shares of AeroVironment Inc. (NASDAQ: AVAV) gained 12.18%, to finish the day at $1.75. AeroVironment provides technology solutions and designs, develops, produces, supports, and operates an advanced portfolio of unmanned aircraft systems and electric transportation solutions. On July 8, 2014, AeroVironment announced its full-year FY2014 and Q4 FY2014 financial results. For Q4 FY2014, the company reported net income of $8.05 million, or $0.35 per diluted share. For the full-year FY2014, the company reported net income of $13.71 million, or $0.60 per diluted share.

Shakers

Some stocks triggered heavy losses for the US equity markets during the trading session on Wednesday. Shares in the following companies witnessed a broad sell-off:

  • Gigamon Inc. (NYSE: GIMO), a leader in traffic visibility solutions, emerged as among the worst-performing stocks on Wednesday. The stock plummeted 32.40% to close at $12.29, after the company announced preliminary results for Q2 FY2014 ended June 28, 2014. The company will report results after the market closes on July 24, 2014.
  • Shares in Viggle Inc. (NASDAQ: VGGL), an entertainment marketing and rewards platform, saw its shares plunge 12.73%, finishing the day at $3.29.
  • UBIC Inc. (NASDAQ: UBIC), a leading provider of e-discovery and digital forensic services for Asia and the world, witnessed a decline of 11.50% in its shares, closing at $14.47.

Global Market Snapshot

The release of Fed’s minutes from its latest policy meeting had far-reaching effects in the global markets as well. The stocks in the Asian markets and outside Japan rose, as investors speculated that increasing Chinese exports and imports signalled that growth in the world’s second-largest economy is stabilizing.

The FTSE 100 Index finished the session 0.30% lower at 6,718.04, on Wednesday, July 9, 2014, as indicated in the graph below.

Source: Bloomberg
Source: Bloomberg

Meanwhile a mixed sentiment was observed in the Asian markets. Japan’s Nikkei 225 Index fell 0.08%, finishing the session at 15,302.65, as the market continued to be dragged down by lacklustre performances of major bourses in Europe and the US.

Source: Bloomberg
Source: Bloomberg

On the other hand, the Hong Kong Hang Seng Index slid 1.6% to close at 23,176.07, the steepest decline since June 23, 2014.

Source: Bloomberg
Source: Bloomberg

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