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Stock Market News For Jan 21, 2019

Zacks Equity Research
Fed Chair Powell remains troubled by uncertainty over trade, global growth and unresolved issues with Brexit and the U.S. debt ceiling.

The bull-run of the U.S. stocks continued for the fourth straight day on Friday following positive news on the trade war front. These developments helped investors ignore concerns about the month long partial shutdown of the U.S. government. All three major stock indexes ended in the green. For the week also, indexes closed in positive territory.

The Dow Jones Industrial Average (DJI) closed at 24,706.35, gaining 1.4% or 336.25 points. The S&P 500 Index (INX) also climbed 1.3% to close at 2,670.71. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,157.23, rising 1%. A total of 7.99 billion shares were traded on Friday, lower than the last 20-session average of 8.44 billion shares. Advancers outnumbered decliners on the NYSE by 2.93-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 2.26-to-1 ratio.  The CBOE VIX decreased 1.4% to close at 17.80.

How Did the Benchmarks Perform?

The Dow ended in positive territory for the fourth successive day. Notably, all 30 stocks of the blue-chip index finished in the green. The tech-heavy Nasdaq Composite also ended in the green after rallying for four straight days, due to strong performance by large-cap tech stocks.

The S&P 500 closed in positive territory for the fourth consecutive day. The Energy Select Sector SPDR (XLE), Industrials Select Sector SPDR (XLI) and Financials Select Sector SPDR (XLF) are major gainers with 2%, 1.7% and 1.6%, respectively. Notably, all 11 sectors of the benchmark index closed in the green.

Positive Developments on Trade War Front

On Jan 18, Bloomberg reported that China has offered to ramp up imports from the United State in the next six years. Total value of these imports will be $1 trillion which will bring down massive trade deficit that United States is currently bearing with China to zero in 2024. Some officials who are engaged in the ensuing United States – China trade negotiations have revealed this information. Notably, the United States had a trade deficit of $323 billion with China in 2018.

On Jan 16, The Wall Street Journal reported that the U.S. government is contemplating a proposal regarding lifting of some tariffs imposed on China. This will act as an incentive to the Asian economic giant to make deeper concessions to the United States.However, a Treasury Department spokesperson later denied the news.

China has already provided assurance of importing "a substantial amount" of agricultural, energy and manufactured goods and services from the United States.The three-day meeting between mid-level delegations of the United States and China ended on a positive note on Jan 5. This meeting had laid the foundation for further negotiations to forge a permanent deal in order to resolve the trade disputes between the two largest trading nations of the world.

Consequently, shares of trade-sensitive stocks like The Boeing Co, BA, Caterpillar Inc. CAT and Deere & Co. DE were up 1.6%, 2.2% and 2.8%, respectively. The Boeing carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

On Jan 18, Federal Reserve reported that the U.S. industrial production increased 0.3% in December 2018, higher than the consensus estimate of 0.2%. Manufacturing production grew 1.1% in December, its biggest gain since February 2018. Capacity utilization for the manufacturing sector increased to 76.5% in December from 75.8% in November.

Weekly Roundup

For the week as a whole, all three major stock index finished in the green. The Dow rose nearly 3%. The S&P 500 and Nasdaq Composite gained 2.9% and 2.7%, respectively. Indexes recorded their first weekly gain for four straight weeks since August 2018. Strong economic data, Fed’s hint of softer monetary stance in 2019 and several positive developments on the trade war front acts as catalysts for investors.

Zacks' Top 10 Stocks for 2019

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