Stock Market News for Feb 1, 2018

Benchmarks closed in the green on Wednesday after two straight days of declines. Boeing reached an all-time high after releasing upbeat fourth-quarter earnings results and a strong full-year projection, which in turn boosted key indexes. However, markets lost some of their gains after the Fed’s stated that inflation was likely to reach its desired level in the medium term and projected gradual increase in key rates. 

Although, key indexes finished marginally higher on the last trading day of January, all of them registered record gains for the month. While, the Dow and the S&P 500 registered their best monthly performance since March 2016, the tech-heavy Nasdaq posted its highest monthly increase since October 2015.

How the Benchmarks Fared?

The Dow Jones Industrial Average (DJI) increased 0.3%, to close at 26,149.39. The S&P 500 rose 0.1% to close at 2,823.81. The tech-laden Nasdaq Composite Index closed at 7,411.48, gaining 0.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 12% to close at 13.01. A total of around 8.05 billion shares were traded on Wednesday, higher than the last 20-session average of 7.18 billion shares. Advancers outnumbered decliners on the NYSE by a 1.14 -to-1 ratio. On Nasdaq, a 1.61-to-1 ratio favored declining issues.

What Moved the Benchmarks?

Shares of The Boeing Company BA rose 4.9% settling at its best levels ever, after the aircraft manufacturer posted fourth-quarter earnings per share and revenues that beat the respective Zacks Consensus Estimate. (Read More)

For the full year, Boeing’s operating profit jumped 76% year-over-year to $10.3 billion. Net earnings for the company climbed 67% from 2016 to $8.2 billion in 2017. Also, the company’s commercial airplanes' 2018 delivery expectations are reiterated at a record level of 810 to 815 airplanes, which was higher than 2017’s total deliveries of 763 aircrafts.

Upbeat fourth quarter earnings results and strong 2018 earnings and airplanes delivery outlook contributed to Boeing’s incredible performance. On Wednesday, Boeing contributed 114 points to the blue-chip index, Dow and was one of the best performers among all the S&P 500 companies.

Additionally, Electronic Arts Inc.’s EA shares advanced 7% after the gaming company reported fiscal third-quarter non-GAAP earnings of $2.22 per share, beating the Zacks Consensus Estimate of $2.18. (Read More)

Advanced Micro Devices, Inc’s AMD increased 6.8% after it posted fourth-quarter non-GAAP earnings of $0.08 per share, surpassing the Zacks Consensus Estimate of $0.05 per share. Both the tech companies were biggest contributor to S&P 500’s gains during the day. (Read More)

Fed’s Policy Statement in Focus

On Wednesday, the Federal Reserve opted to leave benchmark rates unchanged within the 1.25%-1.5% range. In its two-day Federal Open Market Committee (FOMC) policy statement following the meeting ended Jan 31, the Fed indicated that economic activity has increased at a “solid rate” and will continue to grow at a “moderate pace.”

Additionally, per the statement, labor market remains strong, while inflation will likely “move up” in 2018 and will reach the desired 2% rate in the “medium term.” The FOMC also said federal funds rate is likely to increase at a “gradual” pace in coming months.

Rising rate hike prospects as early as Fed’s next policy meeting in March weighed on investor sentiment and limited some of Wednesday’s gains. Higher rate environment and optimism of steady economic growth and higher inflation weighed on bond prices.

Lower bond prices supported the 10-year U.S. Treasury yield, which was at 2.722% on Wednesday, hovering near its highest settlement in almost four years. Also, 2-year yield was at around 2.15%. High treasury yields also weighed on broader equity markets to a certain extent.

According to ADP’s ADP private sector payrolls report for January, 234,000 new jobs were created during the month, Further, December’s results were revised downward by 8000 jobs, but still tallied at 242,000. Separately, according to the National Association of Realtors, pending home sales for the month of December increased 0.5%, better than November’s reading of a rise of 0.3%.

Monthly Roundup

For the month, the Dow, the S&P 500 and the Nasdaq increased 5.8%, 5.6% and 7.4%, respectively. The passage of the Tax Cuts and Jobs Act of 2017, which permanently slashes corporate tax rates from 35% to 21%, last December contributed to January’s gains. Additionally, in its Beige Book, the Fed provided an encouraging outlook about the U.S. economy, which in turn also boosted investor sentiment

Moreover during the month, the Senate gave its consent to pass a short-term spending Bill that ends the recent government shutdown. Additionally, upbeat fourth-quarter earnings season, which include a very strong revenue momentum, an above-average proportion of positive surprises and an unusually positive revisions trend for the current and coming quarters, also contributed to strong market performance.

Stocks That Made Headlines

Qualcomm Beats Q1 Earnings and Revenue Estimates

Qualcomm QCOM reported strong financial results for first-quarter fiscal 2018, with the top and the bottom lines beating the Zacks Consensus Estimate. (Read More)

AT&T Beats on Q4 Earnings & Revenues, Issues '18 Outlook

AT&T T reported impressive fourth-quarter 2017 financial results, with the top and the bottom lines beating the Zacks Consensus Estimate. (Read More)

Tractor Supply Q4 Earnings Top, Issues 2018 View

Tractor Supply Company TSCO delivered better-than-expected results in fourth-quarter 2017, wherein both the top and bottom line topped estimates. (Read More)

Altria Q4 Earnings Improve Y/Y, Makes Management Changes

Altria Group Inc. MO came out with fourth-quarter 2017 results, wherein it continued its robust trend of year-over-year bottom-line growth. (Read More)

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
AT&T Inc. (T) : Free Stock Analysis Report
 
Boeing Company (The) (BA) : Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
Tractor Supply Company (TSCO) : Free Stock Analysis Report
 
Altria Group (MO) : Free Stock Analysis Report
 
Electronic Arts Inc. (EA) : Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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