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Stock Market News For Apr 11, 2019

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AB InBev (BUD) is a favored stock due to strong sales trends, strength in global brands and robust outlook. However, soft earnings trend due to currency headwinds and cost inflation cannot be ignored.

Wall Street closed higher on Wednesday after Fed reaffirms its dovish monetary stance in FOMC minutesof its latest meeting. Moreover, positive news on the trade war front also strengthened investors’ confidence. All three major stock indexes finished in the green,

The Dow Jones Industrial Average (DJI) closed at 26,157.16, gaining 6.58 points. The S&P 500 Index (INX) advanced 0.4% to close at 2,888.21. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,964.24, increasing 0.7%. A total of 6.15 billion shares were traded on Wednesday, lower than the last 20-session average of 7.20 billion shares. Advancers outnumbered decliners on the NYSE by 2.85-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 2.26-to-1 ratio.  The CBOE VIX decreased 6.9% to close at 13.30. 

How Did the Benchmarks Perform?

The Dow ended in positive territory after declining for two-straight days with 19 stocks of the 30-stock index finishing in the green while eleven ended in the red. The tech-heavy Nasdaq Composite finished in the green due to strong performance by large-cap tech stocks.

The S&P 500 also closed in the green reversing previous day’s losses. The Real Estate Select Sector SPDR (XLRE) and Technology Select Sector SPDR (XLK) gained 0.8% and 0.7%, respectively.  Notably, eight out of eleven sectors of the broad-market index closed in the green while three finished in the red.

Fed Reiterates Dovish Monetary Stance

Per the latest FOMC minutes, the majority of Fed policymakers  have decided to stick to the central bank’s March decision of not hiking interest rate, signifying that the benchmark interest rate will likely remain within its existing range of 2.25 – 2.5% for the rest of the year.

Despite record-low unemployment and rising nominal wage rate, inflation remains below the target level of the central bank. This has compelled the Fed to stick to its stand of not raising interest rate in 2019. The central also remains concerned about an impending global economic slowdown which might affect the U.S. economy.

The Fed also said thata hike in rates may be considered at the end of this year if U.S. economic fundaments improve. 

Positive Development on Trade Front

Treasury Secretary Steven Mnuchin said the U.S. and China are making progress on a trade deal, including resolving a key sticking point which includes full protection for U.S. intellectual property. Both countries have decided to establish enforcement offices to deal with the negotiation process. Munchin also said that meeting with Chinese Vice Premier Liu He on Tuesday was “productive.” The Next round of talks will take place on Wednesday.

As a result of positive developments, shares of trade-sensitive stocks like Caterpillar Inc. CAT and Apple Inc. AAPL increased 0.9% and 0..6%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brexit Dateline Extends

The British parliament which has rejected Prime Minister Theresa May’s Brexit deal, has failed to reach a consensus agreement despite voting on the issue twice. On Apr 10, European Union and the U.K. government agreed to extend the Brexit deadline till Oct 31.

Economic Data

The Department of Labor reported that Consumer Price Index (CPI) for March increased 0.4%, in line with the consensus estimate. Householdinflation rose by the highest percentage in 14 months. CPI increased in March owing tosharp rise in costs of food, gasoline and rent.

However, core CPI –- the key inflation metric, which excludes erratic price changes of food and energy –- rose 0.1% in March, below the consensus estimate of 0.2%. Year over year, core CPI declined to 2% compared with 2.1% in February. This marks the smallest yearly increase in core CPI since February 2018.

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