Stock Market News for July 30, 2015 - Market News

Benchmarks ended higher on Wednesday after Fed’s policymakers kept key interest rates unchanged and acknowledged that the economy and job market are strengthening. A batch of upbeat quarterly earnings reports and a rebound in Chinese shares also added to the bullish sentiment. Meanwhile, energy shares gained the most as oil prices moved north.

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The Dow Jones Industrial Average (DJI) gained 0.7% to close at 17,751.39. The Standard & Poor’s 500 (S&P 500) also advanced 0.7% to 2,108.57. The tech-laden Nasdaq Composite Index closed at 5,111.73; increasing 0.4%. The fear-gauge CBOE Volatility Index (VIX) dropped almost 7% to settle at 12.50. A total of about 7.2 billion shares were traded on Wednesday, higher than the month-to-date average of 6.7 billion. Advancers outpaced declining stocks on the NYSE. For 71% stocks that advanced, 27% declined.
 
The Federal Open Market Committee’s two-day policy meeting which ended on Wednesday gave no clear indication on the timing of the first rate hike. However, the door for a September rate hike was kept open.
 
The policy makers said: “The labor market continued to improve, with solid job gains and declining unemployment”. The committee also said that “economic activity has been expanding moderately in recent months” and that there has been “moderate” improvement in consumer spending levels along with an “additional improvement” in the housing market.
 
These comments did raise speculations of a possible rate hike in September or at the most in December. However, the committee also mentioned “inflation continued to run below the Committee's longer-run objective.” The central bank’s inflation target is 2%.
 
Meanwhile, a slew of upbeat earnings results boosted investor sentiment. Shares of Gilead Sciences Inc. (GILD) gained 2.3% a day after the company posted second quarter earnings per share of $3.10, beating the Zacks Consensus Estimate of $2.83. Revenues of $8.2 billion also beat the Zacks Consensus Estimate of $7.4 billion.
 
Northrop Grumman Corporation (NOC) reported second quarter earnings per share of $2.47 that came in ahead of the Zacks Consensus Estimate of $2.33. However, revenues of $5.89 billion marginally lagged the Zacks Consensus Estimate of $5.90 billion. Shares of Northrop Grumman climbed 6.2%, its biggest one-day percentage gain in five years.
 
Additionally, strong operational execution and successful cost-out initiatives helped International Paper Company (IP) post better-than-expected earnings results. MasterCard Incorporated’s (MA) earnings were in-line with expectations. Shares of MasterCard gained 1.7%, while International Paper’s shares fell 3.6% due to revenue miss.
 
Among the 259 S&P 500 members that have reported second quarter earnings results, total earnings are up 3.2% on essentially flat revenues (up 0.2%). About 73.1% have outpaced EPS estimates and 47.3% beat top-line expectations.
 
A rebound in Chinese shares also lifted investor sentiment. The Shanghai Composite Index gained 3.4% to close at 3,789.16, while the smaller Shenzhen Composite rose 4.1% to 2,198.81. Chinese regulator had vowed to halt the recent selloff in China’s stock market by purchasing more shares and dealing severely with those involved in short selling.
 
On the domestic front, the Energy Select Sector SPDR (XLE) gained 1.36%, the highest among the S&P 500 sectors. Energy shares gained due to rise in oil prices. The prices of WTI crude oil and Brent crude oil increased 1.7% and 0.2% to $48.79 per barrel and $53.38 a barrel, respectively.
 
Dow components Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) advanced 0.8% and 0.9%, respectively. Other key stocks from the energy sector including Schlumberger Limited (SLB), ConocoPhillips (COP) and Transocean Ltd (RIG) increased 1.7%, 1.3% and 2.4%, respectively. Overall, all 10 sectors of the S&P 500 ended in the green.
 
In economic news, the National Association of Realtors reported that Pending Home Sales Index, a forward looking indicator based on contract signings, went down 1.8% to 110.3 in June. The consensus estimate had projected a rise by 1.5%.

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