Wall Street ended mixed on Thursday after investors received strong earnings numbers amidst lingering concerns over trade negotiations. The Dow ended in the red while both the S&P 500 and Nasdaq Composite finished in positive territory. Meanwhile, the partial government shutdown continued to be another cause of worry for market participants.
The Dow Jones Industrial Average (DJI) closed at 24,553.24, losing 0.1%. The S&P 500 Index (INX) rose 0.1% to close at 2,642.33. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,073.46, also increasing 0.7%. A total of 6.94 billion shares were traded on Thursday, lower than the last 20-session average of 7.88 billion shares. Advancers outnumbered decliners on the NYSE by 2.15-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.64-to-1 ratio. The CBOE VIX decreased 3.2% to close at 18.89.
How Did the Benchmarks Perform?
The Dow ended in negative territory reversing some of previous day’s gains. Notably, 18 stocks of the 30-stocks blue-chip index finished in the red while twelve ended in green. The tech-heavy Nasdaq Composite ended in the green for second-straight day, due to strong performance by semiconductor stocks.
The S&P 500 closed in positive territory for the second consecutive days. The Technology Select Sector SPDR (XLK) gained 0.8% while Consumer Staples Select Sector SPDR (XLP) lost 1.2%. Notably, eight out of 11 sectors of the benchmark index closed in the green while the remaining three in the red.
Pessimistic News on Trade War Front
On Jan 24, U.S.Commerce Secretary Wilbur Ross told CNBC the United States is still "miles and miles" from reaching a deal with China. On Jan 22, White House economic advisor Larry Kudlow conformed that the U.S. government has rejected a trade planning meeting with China scheduled to be held this week on the ground of disagreements over intellectual property rights. Kudlow said no intermediate gatherings had been scheduled other than the visit by China’s Vice Premier Liu He.
A major concern for the Trump administration is that China is stealing intellectual property from U.S. companies by unfair means. This is the central point of trade conflict between the two largest trading countries of the world. Notably, the two countries are currently going through a 90-day truce period related to imposition of fresh tariffs on each other. The deadline will come to an end on Mar 1.
Strong Fourth Quarter Earnings Results
Thursday’s stock market rally was backed by strong results of several major U.S. companies, especially from airlines industry.
Southwest Airlines Co. LUV delivered strong fourth-quarter 2018 results wherein both the top and bottom line outpaced the Zacks Consensus Estimate. Consequently, shares of Southwest Airlines surged 6.3%. (Read More)
JetBlue Airways Corp. JBLU also reported strong fourth-quarter 2018 results wherein both the top and bottom line surpassed the Zacks Consensus Estimate. Consequently, shares of JetBlue Airways soared 5.1%.
Shares of American Airlines Group Inc. AAL climbed 6.4% after reporting fourth quarter 2018 results wherein the bottom line surpassed the Zacks Consensus Estimate while the top line fell below the same. (Read More)
All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growing Concerns over Partial Government Shutdown
The partial government shutdown, which extended into its 34th day is likely to take a toll on the U.S. economy. A pair of competing bills to reopen the government failed in the Senate. House of representative Speaker Nancy Pelosi said Democrats have decided to block President Donald Trump from giving his State of the Union address in the House chamber until the shutdown ends.
Meanwhile, Trump’s top economic adviserKevin Hassett warned in an interview that continuation of partial government shutdown for an indefinite time period may lead to a zero growth rate of U.S. GDP in the first quarter of 2019.
On Jan 24, the Department of Labor reported that weekly jobless claims decreased 13,000 to a seasonally adjusted 199,000 (below the threshold 200,000 level) for the week ended Jan 19. The data was better than the consensus estimate of 217,000 and was the lowest level experienced since mid-November 1969. Moreover, initial claims for the week ended Jan 12 was revised downward by 1,000 to 212,000 from 213,000.
Stocks That Made Headline
Intuitive Surgical Earnings Miss, Revenues Beat in Q4
Intuitive Surgical, Inc. ISRG reported adjusted earnings of $2.96 per share in the fourth quarter of 2018, which fell short of the Zacks Consensus Estimate of $2.99. (Read More)
Norfolk Southern's Q4 Earnings Beat on Volume Growth
Norfolk Southern Corp. NSC delivered fourth-quarter 2018 earnings of $2.57 per share, surpassing the Zacks Consensus Estimate of $2.30. (Read More)
Alaska Air Group's Q4 Earnings & Revenues Top Estimates
Alaska Air Group, Inc. ALK delivered fourth-quarter 2018 adjusted earnings per share of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents. (Read More)
Starbucks Q1 Earnings & Revenues Surpass Estimates
Starbucks Corp. SBUX reported impressive first-quarter fiscal 2019 results, wherein both top and bottom line surpassed the respective Zacks Consensus Estimate for the third straight quarter. (Read More)
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