The stock markets in the United States fluctuated and eventually ended the trading with the Dow Jones and Russell 2000 slightly lower while the S&P 500 and NASDAQ a bit higher.
Investors are evaluating whether the recent rally of equities was overdone. Today, the weak performance of stocks in the health care sector offset the faster-than-expected growth of retail sales. The NASDAQ Biotechnology Index dropped more than 2% led by the slump of Biogen Idec Inc (NASDAQ:BIIB).
The Department of Commerce reported that the retail sales rose 0.3% in September as consumers increased spending in restaurants and clothing driven by lower gas prices. Economists expected a 0.2% increase in retail sales.
In a telephone interview with Bloomberg, John Fox, research director at Fenimore Asset Management said, “Retail sales were good and the preponderance of the evidence were continuing on the path we’ve been on which is an improving economy.”
Fox added. “All those great things are no secret, though, and that’s priced into stocks right now. The thing the gives me pause is valuation.”
Economic data showed that the economy of the United States is withstanding a global slowdown as the Federal Reserve ended its bond-buying program. The S&P 500 rose 9.5% to a record level on November 11 from a six-month low in October. The index is trading at 17x earnings, its highest valuation since 2009, according to Bloomberg.
Robert Pavlik, chief market strategist at Banyan Partners LLC commented, “People are looking for a holiday rally and may be asking if it’s happened already. The small retail beat isn’t going to do it. “
According to him, the stock markets will experience a “little pause.” Pavlik added, “We can’t continue to climb up this ladder forever.”
- Dow Jones Industrial Average (DJIA) – 17,636.93 (-0.09%)
- S&P 500- 2,039.93 (+0.03%)
- NASDAQ- 4,688.54 (+0.18%)
- Russell 2000- 1,174.98 (-0.04%)
- EURO STOXX 50 Price EUR- 3,059.99 (+0.10%)
- FTSE 100 Index- 6,654.37 (+0.29%)
- Deutsche Borse AG German Stock Index DAX- 9,252.94 (+0.05%)
- Nikkei 225- 17,490.83 (+1.14%)
- Hong Kong Hang Seng Index- 24.087.37 (+0.56%)
- Shanghai Shenzhen CSI 300 Index- 24,087.38 (+0.28%)
Stocks in Focus
The stock price of Amazon.com, Inc. (NASDAQ:AMZN) gained nearly 4% to $328.20 per share. The e-commerce giant settled its disagreement with Hachette Book Group. Amazon’s Dabid Naggar said the deal provides specific financial incentives for the publisher to set its e-book prices lower, which he believes a great win for readers and authors.
The shares of Hertz Global Holdings, Inc. (NYSE:HTZ) declined more than 4% to $21.69 per share after the company stated that it will restate its quarterly and annual financial statements for 2011 to 2013. The company said its accounting review and investigation are still ongoing.
Twitter Inc (NYSE:TWTR) climbed more than 4% to $41.58 per share driven by the report from analysts at Morgan Stanley that its ad products and technology line-up is impressive. The analysts believed that the company’s MoPub can deliver compelling ROI.