Despite the fears about the effect of the recession expressed by band leaders going into the Carnival season, the streets of San Fernando overflowed with masqueraders yesterday.
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US stocks rally, break three-day slump
NEW YORK—US stocks rallied yesterday, ending a slump that had ushered in the New Year. The Standard and Poor’s 500 index climbed the most in three weeks, led by gains for health care stocks. UnitedHealth Group, the nation’s largest health insurer, and Johnson & Johnson both climbed on recommendations for brokerage firms.
After three straight declines, the S&P 500 would have matched its worst opening of a year since 1978 had it closed lower for a fourth day. The stock market’s slow start to 2014 contrasts with last year’s exceptional performance, when the S&P 500 climbed to record levels after surging almost 30 per cent.
“To me the trend still looks up, even though we’ve been chopping around,” said Bill Stone, chief investment strategist at PNC Wealth Management Group. The economy “seems to be in the mode that you would expect corporate earnings to continue to grow.” The S&P 500 rose 11.11 points, or 0.6 per cent, to 1,837.88, the biggest gain since December 18. Nine of the 10 sectors that make up the index rose.
The Dow Jones industrial average climbed 105.84 points, or 0.6 per cent, to 16,530.94 The Nasdaq composite gained 39.50 points, or 1 per cent, to 4,153.18. UnitedHealth group gained US$2.27, or 3.1 per cent, to US$76.51 after analysts at Deutsche Bank said they expected the nation’s largest health insurance company to charge customers more in premiums this year.
Johnson & Johnson climbed US$1.96, or 2.1 per cent, to US$94.29 after analysts at RBC Capital raised their outlook on the stock to “outperform,” in part due to optimism on sales of the diabetes drug Invokana. Investors were also encouraged by the easy passage in a Senate vote late Monday of Janet Yellen’s nomination to take the helm at the Federal Reserve. The vote puts an economist in the post who has backed the Fed’s recent efforts to stimulate the economy with low interest rates and huge bond purchases.
The confirmation is a reminder that the Fed’s policies of stimulating the economy will likely continue, said Kristina Hooper, U.S. Investment Strategist at Allianz Global Investors. “It’s just a nice little halo effect,” said Hooper.
Investors will get more insight into the Fed’s thinking when minutes from the Federal Open Market Committee are released today. The Fed announced after its last meeting that it would begin winding down its monthly US$85 billion bond-buying program. That stimulus was a major support for last year’s rally in stocks.
Despite yesterday’s gains, stocks have started the year off on uncertain footing. Materials companies have declined 1.6 per cent so far this year, led by Cliffs Natural Resources. The mining company, which was the second-biggest loser in the S&P 500 last year, is extending its slump. It’s down 7 per cent this year. Manufacturers and vendors of consumer staples, such as grocers, tobacco companies and brewers, have also struggled in the first few days of this year. They’re down 1.2 per cent.
In government bond trading, the yield on the 10-year Treasury note fell to 2.94 per cent from 2.96 per cent Monday. The most important piece of economic news to be released this week will come on Friday when the Labor Department releases its jobs report for December. The report will influence the Fed’s decision on how quickly it will reduces its bond purchases in the coming months. Among the biggest losers on Tuesday was Netflix.
The online video streaming company, the biggest gainer in the S&P 500 last year, fell US$20.07, or 7.8 per cent, to US$339.50, after analysts at Morgan Stanley cut their outlook on the stock to “underweight.” The brokerage says the online video service will face increasing competition from services such as Hulu Plus, Amazon Prime and HBO GO. In commodities trading, the price of oil rose 24 cents, or 0.3 per cent, to US$93.67 a barrel.
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