Dow closes at new high on late-month rally
April turned out to be a surprisingly good month for stocks.
April turned out to be a pretty good month for stocks.
The Dow Jones industrials ($INDU), which had been down as much as 7.3 percent for the year on Feb. 3, finished in the black for the year for the first time.
That said, not all stocks had particularly good months. Biotechs, some technology stocks and anything to which one could attach the term "momentum stock" floundered.
How the markets will perform over the next six months is anyone's guess. The May-October period is typically the weakest six months of the year.
The Dow closed up 45 points on Wednesday, or 0.3 percent, to 16,580.84, breaking its old record of 16,576.66 set on Dec. 31. The Dow's intraday peak is 16,631.63, set on April 4. For the month, the blue-chip index was up 0.8 percent and is up 0.03 percent for 2014.
The Standard & Poor's 500 Index ($INX), up 0.3 percent to 1,884, finished April with a 0.6 percent gain and is up 1.9 percent for the year. The Nasdaq Composite Index ($COMPX) was up 0.3 to 4,115 for the day. But the index fell 2.1 percent for April and is down 1.5 percent for the year. It had been up as much as 4.3 percent for the year on March 5.
It was the momentum stocks that caused all sorts of mischief and ultimately weighed on the Nasdaq. Amazon.com (AMZN) finished down about 9.5 percent for the month, at $304.13. Since peaking at the end of January, the shares have fallen about 25 percent.
Tesla Motors (TSLA) fell 15.8 percent from an April 2 peak of $230.89 to as low as $184.32. It rebounded 12.8 percent to $207.89. Twitter (TWTR) suffered a lot. Shares fell 16.5 percent for the month, in part because its first-quarter earnings were a disappointment. The shares are down 38.8 percent for the year.
The biotech stocks were the real villains as the market was hit by a flood of initial public offerings from companies with little revenue and no profits. So, the SPDR S&P Biotech exchange-traded fund (XBI) fell 9.7 percent for the month. The iShares Nasdaq Biotechnology Index Fund (IBB) was off 2.6 percent.
The market rally was aided by the Federal Reserve, which left its key interest rates unchanged. The central bank did trim its purchases of Treasury and mortgage securities by a total of $10 billion a month. Interest rates, however, remained steady. The 10-year Treasury yield fell to 2.648 percent from 2.695 percent on Tuesday. The yield is down 12.5 percent for the December 31 yield of 3.026 percent.
The market pushed rates lower because the Commerce Department said the economy had a weak first quarter, mostly because of the brutal winter. The Fed acknowledges that as well but believes growth will strengthen this spring and summer.
Crude oil prices fell Wednesday, with light sweet crude hitting $99.74 a barrel in New York. That appears to reflect ample domestic inventories and an easing of tensions in Ukraine and elsewhere. Crude was down 1.8 percent for the month but is up 1.3 percent for the year. Gold fell 40 cents to $1,295 an ounce. It was up 0.9 percent for the month and is up 78 percent for the year. The gains reflect a falling dollar and increased global tensions.
The big winner among commodities was coffee, up 15.7 percent for the month at $2.0585 a pound in New York futures trading. It's up 86 percent for the year, mostly because of a terrible drought in Brazil, the largest coffee-producing country. Ultimately, that will mean higher retail prices.
Also higher for April were corn, soybeans and wheat, all up by more than 10 percent. Those increases may push some food prices higher, particularly beef, chicken and pork.
Charley Blaine, "April turned out to be a pretty good month for stocks. Surprisingly good."
Charley, what's so surprising about it? Corporate America is still buying their Own Stock in Record Amounts and the cost of Funding that has likely gone down, not up since the First of the Year. The True Test will come once the FED no longer is buying anything and the effects of things like Japan's new Tax Hike taking hold.
China is still a massive Black Hole, Euro-Zone unemployment still around 12%, while Global Debt has increased 40% since the Great Recession. GDP numbers for us very Weak while the Pain of Robbing Peter to Pay Paul has yet to be truly felt. We only delay the inevitable.
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