Home' Trinidad and Tobago Guardian : May 25th 2014 Contents MAY 25 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Call it the Great Slog. Stocks are
bumbling along this year after
a gangbuster 2013. The upward
grind is underscored by the
Standard & Poor s 500 index,
which closed above 1,900 for
the first time on Friday. The index has eked
out a gain of 2.8 per cent this year compared
with a 16 per cent increase over the same peri-
od last year.
Other major indexes haven t fared any bet-
ter. The Dow Jones industrial average and the
Nasdaq composite are barely positive for 2014.
The market s five-year bull run has slowed
as investors become more evenly split between
those that remain optimistic on the outlook
for stocks and the economy, and those that
think it s time for a sell-off. Investors haven t
seen a "correction," Wall Street-speak for a
drop of 10 per cent of more, for an unusually
"People have been waiting for this huge
correction, but as soon as we have even a
little bit of a pullback, people see the value
in it, and they re jumping in," said Karyn
Cavanaugh, senior market strategist at Voya
Cavanaugh believes that there will be a
"spring snapback," in the economy. Company
earnings, already at record levels, will keep
climbing and support stock prices.
The S&P 500 rose 8.04 points, or 0.4 per
cent, to close at 1,900.53. The index first rose
above 1,900 during trading on May 13, but
fell back to close below that level.
The Dow climbed 63.19 points, or 0.4 per
cent, to end at 1,606.27. The Nasdaq rose
31.47 points, or 0.8 per cent, to 4,185.81.
Investors bid up homebuilder stocks fol-
lowing news that sales of new US homes
increased last month.
Lennar rose US$1.55, or 4.0 per cent, to
US$40.54. DR Horton rose 92 cents, or 4.1
per cent, to US$23.57.
The Commerce Department reported that
sales of US new homes rose 6.4 per cent in
April after slumping in the previous two
"While it wasn t a stellar number, it was
not weak and it helps assuage fears" that the
housing recovery is weakening, said Quincy
Krosby, a market strategist with Prudential
Financial. "It really did help set the tone of
On Friday, investors favoured stocks that
stand to fare better than others in a strength-
ening economy. Gains were led by technology,
materials and consumer discretionary stocks.
The S&P 500 has gained 180 per cent since
bottoming out in March, 2009 during the
Great Recession. Stocks are now in the sec-
ond-longest bull market since 1946, according
to data from S&P Capital IQ. The index has
also gone 2½ years without a correction. Typ-
ically those declines occur once every 18
Another sign that investors have been more
nervous this year than last is that while the
S&P 500 has ground higher, the riskier parts
of the stock market, such as small-company
stocks, social media and biotechnology stocks
have had sharp sell-offs.
The Russell 2000, an index that tracks small
company stocks, is down 3.2 per cent this year
at 1,126.19. The index has flirted with a cor-
rection after falling as much as 9.3 per cent
from its March 4 high of 1,208.65.
Many investors still remain optimistic
though, pointing to record company earnings
and the Federal Reserve.
In the first quarter of the year companies
in the S&P 500 earned an average of US$27.59
a share, the second-highest level recorded,
falling just below the US$28.46 per share
earned in the fourth quarter of 2013. Thus far
during the economic recovery, companies have
boosted earnings by cutting costs. As the econ-
omy continues to strengthen the hope among
investors is that overall demand will improve
and corporations will start reporting higher
Corporations "haven t had any real help
from the economy," said John Manley, chief
equity strategist at Wells Fargo Fund Man-
agement. "If the economy ever kicks in, these
people who made more with less can make
a lot more with more, and that s going to sur-
The stock market s rise has also been sup-
ported by the Federal Reserve s policy. Although
policy makers are winding down the stimulus,
many economists don t think that the Fed will
start raising interest rates before the second
half of next year.
LONDON---World stock markets were mostly higher Friday
after Russia promised to respect election results in Ukraine,
suggesting an easing in the region s crisis. Thailand s stock
market sank, a day after the country s military seized power
in a nonviolent coup.
In Europe, Germany s DAX rose 0.5 per cent to
9,768.01 and France s CAC 40 rose 0.3 per cent to
4,493.15. Britain s FTSE 100 shed 0.1 per cent to 6,815.75.
Sentiment improved after Russian President Vladimir Putin
said his country would respect the choice of the Ukrainian
people" in elections this weekend. The move calmed some
concerns of a further ramp-up in sanctions by Western powers
In Asia, Bangkok s SET index fell more than 2.0 per cent
in early trading before moderating its losses to close down
0.6 per cent at 1,396.84. Thailand s currency stabilised after
falling about 0.4 per cent against the dollar after the coup
was announced early Thursday evening.
The relatively muted market reaction to the military takeover
reflects that foreign investors had substantially reduced their
holdings of Thai stocks during the past six months of protests
aimed at unseating the elected government. Net selling of
stocks by foreigners is about US$640 million so far this year,
according to stock exchange data.
Bombings and lawlessness have bruised Thailand s capital
and the military says the coup, which is the second in Thailand
in eight years, is needed to restore stability.
The army is vowing political reforms but also risks worsening
the crisis if its seizure of power inflames the opposing political
The coup is regarded as an "extremely negative development"
by almost all observers, said Michael Every, head of financial
markets research in Asia for Rabobank. It is possible an insur-
gency will begin in the country s north and northeast where
support for the ousted government is strongest, he said.
The backdrop of potential instability and violence will weigh
on the already struggling Thai economy and put pressure on
its baht currency, Every said.
Elsewhere in Asia, Japan s Nikkei 225 closed up 0.9 per
cent at 14,462.17 after the dollar climbed to near 102 yen
overnight. A weaker yen is a plus for Japan s powerhouse
Hong Kong s Hang Seng gained 0.5 per cent to
22,965.86 and Australia s S&P/ASX 200 added 0.2 per
cent to 5,492.80. South Korea s Kospi rose 0.1 per cent
In energy trading, benchmark US crude for July delivery was
up 69 cents at $104.43 a barrel in electronic trading on the
New York Mercantile Exchange. The contract fell 33 cents on
Thursday. In currencies, the euro fell 0.2 per cent to US$1.3627
and the dollar rose 0.3 per cent to 101.98 yen. AP
The Standard & Poor's 500 index snared
its second record high in two weeks Friday.
Despite lighter-than-usual trading ahead
of the Memorial Day weekend, the index
pushed past the 1,900 mark, eclipsing its
previous closing high of 1,897 set early last
Homebuilder stocks rose after the gov-
ernment reported that sales of new homes
increased last month. Investors also bid up
shares in GameStop and Hewlett-Packard
after the companies reported positive
The Dow Jones industrial average rose
63.19 points, or 0.4 per cent, to 16,606.27.
The Standard & Poor's 500 index rose
8.04 points, or 0.4 percent, to 1,900.53.
The Nasdaq composite index rose 31.47
points, or 0.8 per cent, to 4,185.81.
For the week:
The Dow rose 114.96 points, or 0.7 per
The S&P 500 index gained 22.67 points,
or 1.2 per cent.
The Nasdaq composite rose 95.22 points,
or 2.3 per cent.
For the year:
The Dow is up 29.61 points, or 0.2 per
The S&P 500 index is up 52.17 points, or
2.8 per cent.
The Nasdaq is up 9.22 points, or 0.2 per
World markets gain but Thailand shaken by coup
S&P 500 closes above
1,900 for first time
Trader Peter Tuchman, right, works on the floor of the New York Stock Exchange on Friday. Stocks inched higher in quiet trading ahead of the
Memorial Day weekend. (AP
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