MarketView for May 5

Summary

Most of the major equity indexes ended the trading day in positive territory as the latest economic data indicated strength in the services sector. It did not hurt that Apple rose above $600 for the first time since late 2012.

Limiting the day's gains, however, were concerns over an escalation of tensions between Ukraine and pro-Russia separatists. Ukrainian forces were ambushed by separatists, triggering heavy fighting on the outskirts of the rebel stronghold of Slaviansk, a day after a Ukrainian police station in Odessa was stormed.

The Institute for Supply Management's services sector index hit its fastest pace in eight months during April, exceeding expectations. It was the latest report to offer upbeat news on the economy after an unusually harsh winter.

Apple rose 1.4 percent to end the day at $600.96, leading both the S&P 500 and Nasdaq higher. Late in the session, the stock broke above $600, and it closed above that level for the first time since October 26, 2012.

Shares of Fannie Mae and Freddie Mac gained after activist investor William Ackman recommended the shares of mortgage finance giants during the Sohn Investment Conference in New York. Fannie closed up 3 percent at $4.10, while Freddie was up 6.3 percent at $4.23.

On the downside, shares of JPMorgan Chase fell 2.4 percent to end the day at $54.22, making it the largest encumbrance on the S&P 500. The bank said late Friday it expects second-quarter revenue from bond and equity trading to decline about 20 percent from a year ago.

Pfizer fell 2.6 percent to $29.96. The pharmaceutical giant reported revenues well below Street expectations.

After the bell, shares of American International Group fell 1.9 percent to $51.70. The company announced a 27 percent drop in quarterly income.

During the regular session, Target fell 3.5 percent to $59.87. Chief Executive and Chairman Gregg Steinhafel will leave as a result of the data breach last year that hurt earnings, customer confidence and prompted congressional hearings.

Shares of B/E Aerospace were up 9.3 percent to $97.22. German aircraft seating manufacturer Recaro said it was studying the possibility of buying B/E Aerospace assets after the company announced a surprise review.

Approximately 5 billion shares changed hands on the major equity exchanges, well below the 6.7 billion share average for the last five sessions, according to data from BATS Global Markets.

Service Sector Growth Continues

Growth within the services sector accelerated in April, rising at the fastest pace in eight months as new orders rose sharply and overall activity at the fastest rate since early 2008, the Institute for Supply Management reported on Monday.

According to the ISM its services sector index hit 55.2 in April from 53.1 in March, topping expectations for a read of 54.1. The data provides further evidence that economic activity is regaining momentum after lagging through much of the winter, a lull largely blamed on harsh weather.

The April number marked the 52nd straight month the index was above 50, the level that separates expansion from contraction, and was the latest sign the impact of the harsh winter was ebbing. Moreover, the April pace was the highest since August's reading of 57.9, which had been a seven-year high.

The gauge of business activity surged to 60.9 from 53.4 in March and was well above analysts' forecasts of 54.4. The 7.5-point jump was that measure's largest monthly increase since February 2008 when it rose 10.3 points.

The new orders index rose to 58.2, up 4.8 points from 53.4 the month before. That marked the largest monthly increase since March 2010, when it jumped 7.5 points. Both the new orders and business activity indexes were their highest overall since August.

The employment index fell to 51.3 from 53.6 in March, although that conflicts with a strong reading on private-sector services employment reported by the Labor Department on Friday. The government data showed service-sector hiring expanded last month by the most in 11 months, with 220,000 private-sector services jobs added.