The major U.S. averages were widely mixed but stock prices mostly higher on Tuesday after reopening following the Presidents’ Day holiday. Tech shares and small cap stocks were higher while blue chips were weaker. NASDAQ led the way with a 0.7% gain, rising for an eighth straight session to reach a 13-year high, while the Russell 2000 index of small-cap stocks rose a full 1%. But the Dow finished in the red, losing 0.2%, dragged down by a 3.8% drop in shares of Coca-Cola, which reported disappointing sales. The S&P 500 gained 0.1%, with seven of its 10 sectors closing higher. Bond prices were also higher, with the 10-year Treasury note rising about 3/8 of a point to reduce its yield about three basis points to 2.71%. Commodities prices were sharply higher, led by crude oil. West Texas Intermediate jumped more than 2% to over $102 a barrel, its highest level in four months.
In Asia, the Nikkei 225 stock index rebounded 3.1% Tuesday following additional stimulus measures by the Bank of Japan. The Bank unexpectedly expanded the size of a lending program that allows commercial banks to borrow money from the central bank at low interest rates in order to spur lending to businesses. The central bank will now offer funds at a fixed 0.1% rate for four years, up from one to three years. “We made the decision to send a strong message that we want to stimulate lending and strengthen growth potential,” Gov. Haruhiko Kuroda said. The Nikkei gained 0.6% on Monday but was down more than 3% combined in the previous two sessions. The index is down nearly 9% since the beginning of the year after gaining nearly 60% last year. Elsewhere in the region stock prices were mixed. Hong Kong stocks rose 0.2%. The Shanghai composite fell 0.8% while India’s Sensex rose by that amount.
European stocks were narrowly mixed. Germany’s DAX index was unchanged after the ZEW Center’s index of German investor and analyst expectations dropped an unexpectedly large six points in February to 55.7, its second straight monthly decline after hitting a seven-year high of 62 in December. The Stoxx Europe 600 was also unchanged. Italian stocks rose slightly while French stocks were down marginally.
Economic statistics released Tuesday were on the weak side. The National Association of Home Builders housing market index dropped to 46 in February.
That was down a record 10 points from both the previous month’s reading and the consensus forecast, which was expecting no change. While some of the drop was blamed on the weather, the NAHB also noted that homebuilders are having trouble “meeting ongoing and future demand due to a shortage of lots and labor.” Readings below 50 indicate that more builders view conditions as poor than good. Builder confidence declined in all four regions, led by a 14-point drop in the West, which has largely avoided harsh winter weather. In a separate report, the New York Federal Reserve Bank’s Empire State general business conditions index remained positive but dropped sharply in February to 4.48 from 12.51 the previous month, well below the 8.5 Street forecast.
Reports/dates/facts/links worth paying attention to over the next week:
- February 19: Housing starts for January; producer price index for January; minutes of the Federal Open Market Committee’s January 29 meeting released.
- February 20: Consumer price index for January; weekly unemployment claims; leading indicators for January; Philadelphia Fed survey for February.
- February 21: Existing home sales for January.
Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.