Better-than-expected GDP growth fails to prop up markets
The US market narrowed its gains during mid-day trading on Wednesday, July 30, 2014, erasing the earlier weekly gains. While investors were waiting for a statement from the Federal Reserve, the US reported better-than-expected gross domestic product (GDP) growth for the second quarter. The US reported a GDP growth of 4% on an annual rate above the expected rate of 3%, with personal consumption increasing 1.9% in Q2. Also, the Fed has announced that it will continue trimming the size of its bond-buying program slowly, with the program likely to end this October.
After the GDP results and some bullish corporate earnings results, the US markets surged, causing it to close mostly on a higher note. During the session, Twitter Inc. (NYSE:TWTR) reported stronger revenue, which sent the company’s stock up 21% in early trading. The S&P 500 closed the day mostly flat at 1,970.07, up 0.01%. The tech-heavy NASDAQ Composite Index ended the session at 4,462.90, gaining 0.45%. However, the Dow Jones Industrial Average finished on a lower note at 16,880.36, losing 0.19% compared to its previous day’s closing.
Wall Street was little changed on Monday, July 28, 2014, beginning the week with moderate gains. The S&P 500 gained 0.03%, closing the day at 1,978.91 on Monday, and Dow Jones Industrial Average advanced 0.13% finishing the day at 16,982.59. On the other hand, the NASDAQ Composite ended at 4,444.91, falling 0.10%. Some of the most actively traded stocks include Rite Aid Corporation (NYSE:RAD) down 3%, Sirius XM Holdings Inc. (NASDAQ:SIRI) down 1.46%, Facebook Inc. (NASDAQ:FB) about flat, and Apple Inc. (NASDAQ:AAPL) down 0.83%.
The US benchmarks started July’s last week by witnessing a large number of merger and acquisition activities in the Consumer Discretionary and Technology sectors. Shares of Family Dollar Stores Inc. (NYSE:FDO) surged 24.85% on Monday, July 28, after accepting a takeover bid from Dollar Tree Inc. (NASDAQ:DLTR). The company’s shares closed the day at $75.70 after witnessing a daily average volume of 35.44 million shares. In another deal, Zillow Inc. (NASDAQ:Z) agreed to buy Trulia Inc. (NYSE:TRLA) for $3.5 billion in stock.
On the other hand, the US equity markets posted heavy losses on Tuesday, July 29, as the investors assessed new deals and discouraging housing data. Further, the NASDAQ Composite Index was weighed down by declines in biotech stocks, closing the session down 0.05% at 4,442.70. The decline in the number of pending home sales negatively impacted home builder stocks. Sales of existing homes in June declined 1.1%, marking the first decline in four months. Added to this, the S&P 500 and the Dow Jones Industrial Average fell by 0.45% and 0.42%, respectively, during the same day.
The shares of the below-mentioned companies were among the top gainers on Wednesday, July 30, 2014:
- Shares of GFI Group Inc. (NYSE:GFIG), a provider of brokerage services, trade execution, market data, trading platforms and other software products through its subsidiaries, rallied 43.73%, closing the day at $4.47. On July 30, 2014, CME Group Inc. (NASDAQ:CME) and GFI announced that they had entered into an agreement under which CME will acquire all the shares of GFI for $4.55 per share, payable in CME common stock.
- A medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform, ZELTIQ Aesthetics Inc.’s (NASDAQ:ZLTQ) stock rose 28.63%, ending the day at $21.34. On July 29, 2014, ZELTIQ Aesthetics announced its Q2 FY2014 financial results. For Q2 FY2014, the company reported net income of $2.80 million, or $0.07 per diluted share.
- Shares of The Rubicon Project Inc. (NYSE:RUBI) gained 27.30% to finish the day at $13.01. The Rubicon pioneered advertising automation. Its technology platform provides leading user reach and is used by hundreds of the world’s premium publishers and applications to connect with top brands around the globe. On July 29, 2014, The Rubicon announced its Q2 FY2014 financial results. For Q2 FY2014, the company reported net loss of $9.43 million, or $0.29 per diluted share.
Some stocks triggered heavy losses for the US equity markets during the trading session on Wednesday, July 30, 2014. Shares in the following companies witnessed a broad sell-off:
- TrovaGene Inc. (NASDAQ:TROVW), a California-based molecular diagnostics company, was among the worst-performing stocks on Wednesday. The stock plummeted 23.08% to close at $2.00.
- Shares in VBI Vaccines Inc. (NASDAQ:VBIV), a biopharmaceutical company, saw its shares plunge 22.40%, finishing the day at $4.40.
- Cellular Biomedicine Group Inc. (NASDAQ:CBMG), a biomedicine firm that develops new treatments for degenerative and cancerous diseases, witnessed a fall of 20.54% in its shares, closing the day at $28.17.
Global Market Snapshot
European stocks closed lower on Wednesday, July 30, little moved by strong US growth data, after weak earnings reports and concerns about a possible escalation of the conflict between Russia and Ukraine.
The FTSE 100 Index finished the session 0.50% lower at 6,775.54, on Wednesday, July 30, 2014, as indicated in the graph below.
On the other hand, Japan’s Nikkei share average climbed during Wednesday’s trading session on account of strong corporate earnings. The index advanced 0.15% on Wednesday, closing at 15,648.64. Japan’s Nikkei 225 Index edged 0.16% lower, finishing Thursday’s session at 15,618.85.
Meanwhile, Hong Kong’s benchmark index climbed to a 42-month high on Wednesday, July 30, with major property developers leading the rise as investors bet on a solid performance for first-half earnings. The Hang Seng Index rose 0.40% for the seventh straight day on Wednesday, July 30, closing at 24,732.21. The index was trading up 0.15% at the time of reporting on Thursday, July 31, 2014.