Markets continued to rally on Tuesday supported by strong fourth quarter 2018 earnings. Moreover, investors’ waited for President Trump’s State of The Union address to be delivered late in the evening. All three major stock indexes closed in positive territory.
The Dow Jones Industrial Average (DJI) closed at 25,411.52, gaining 0.7% or 172.15 points. Meanwhile, the S&P 500 Index (INX) increased 0.5% to close at 2,737.70. The Nasdaq Composite Index (IXIC) closed at 7,402.08, rising 0.7%. A total of 6.97 billion shares were traded on Tuesday, lower than the last 20-session average of 7.56 billion shares. Advancers outnumbered decliners on the NYSE by 2.01-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.31-to-1 ratio. The CBOE VIX decreased 1% to close at 15.57, marking the stock market fear gauge’s lowest closed in four months.
How Did the Benchmarks Perform?
The Dow ended in the positive territory for the third straight day. Notably, 21 stocks of the 30-stocks blue-chip index finished in the green, eight ended in the red and one remained unchanged. The tech-heavy Nasdaq Composite finished in the green for second successive day, due to strong performance by large tech stocks.
The S&P 500 closed in positive territory for fifth consecutive days. The Communications Services Select Sector SPDR (XLC) and Consumer DiscretionarySelect Sector SPDR (XLY) were major gainers with 1.1% and 0.9%, respectively. Notably, nine out of 11 sectors of the benchmark index closed in the green while the remaining two finished in the red.
Robust Q4 Earnings
Better-than expected fourth quarter earnings results by several major companies have lifted investors’ confidence.
Alphabet Inc.’s GOOGL non-GAAP earnings of $12.77 in the fourth quarter of 2018 surpassed the Zacks Consensus Estimate of $11.08 per share.Net revenues, excluding total traffic acquisition cost came in at $31.84 billion, outpacing the Zacks Consensus Estimate of $31.28 billion. (Read More)
The Estée Lauder Companies Inc. EL came out with quarterly earnings of $1.74 per share, beating the Zacks Consensus Estimate of $1.54 per share.The company posted revenues of $4.01 billion for the quarter, surpassing the Zacks Consensus Estimate by 2.08%. (Read More)
Ralph Lauren Corp. RL reported third-quarter fiscal 2019 adjusted earnings of $2.32 per share, which surpassed the Zacks Consensus Estimate of $2.14.Net revenues increased 5.1% year over year to $1,725.8 million, surpassing the Zacks Consensus Estimate of $1,666 million. (Read More)
Consequently, shares of Alphabet, The Estée Lauder and Ralph Lauren soared 0.9%, 11.6% and 8.4%, respectively. The Estée Lauder Companies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 RanK (Strong Buy) stocks here.
Trump’s State of The Union Address in Focus
Investors will closely monitor President Donald Trump’s State of The Union address scheduled to be delivered on Feb 5 at 9:00 AM EST. Four major issues are likely to be addressed by the President. First, ongoing conflict between the government and Democrat controlled House of Representatives regarding the funding of wall at the U.S. -- Mexico border. Notably, the United States just witnessed 35 days of partial government shutdown, largest in the history of the country, recently.
Second, clues from the President on the status of the ten-month old U.S. – China trade dispute, which resulted in severe stock market volatility in 2018. Currently, the two countries are observing a 90-day truce period which will come to an end on Mar 1.
Third and fourth, President Trump’s possible comments on drug pricing during the speech and any hints regarding a new infrastructure bill.
The Institute of Supply Management reported that the U.S. Services (non-manufacturing) index for the month of January decreased to 56.7 from 57.6 in December. However, January index data was in line with the consensus estimate. Notably, a reading above 50 indicates expansion of services sector.
Stock That Made Headline
Spirit Q4 Earnings Meet Estimates, Q1 TRASM View Weak
Spirit Airlines, Inc.’s SAVE fourth-quarter 2018 earnings per share (excluding 4 cents from non-recurring items) of $1.38 were in line with the Zacks Consensus Estimate. (Read More)
Southwestern Provides 2019 Production, Capital and Cost Data
Southwestern Energy Co. SWN released projections for 2019 production, capital and operational costs. (Read More)
ExxonMobil to Spend $10B on LNG Export Facility in Texas
Exxon Mobil Corp. XOM announced its final investment decision (FID) for Golden Pass LNG export project in Sabine Pass, TX. (Read More)
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