Wall Street gained for the third straight session on Thursday as investors grew more optimistic about a possible solution to the U.S.-Mexico trade conflict. After choppy trading in the initial hours, markets steadied after reports emerged that the Trump administration was likely to delay imposing tariffs on Mexico. All three major stock indexes ended in the green.
The Dow Jones Industrial Average (DJI) surged 0.7% or 181.10 points to close at 25,720.66. The S&P 500 soared 0.6% to close at 2,843.49. Meanwhile, the Nasdaq Composite Index closed at 7,615.55, gaining 0.5%. The fear-gauge CBOE Volatility Index (VIX) decreased 1% to close at 15.93. A total of 6.72 billion shares were traded on Thursday, lower than the last 20-session average of 7.12 billion. Advancers outnumbered decliners on the NYSE by a 1.50-to-1 ratio. On Nasdaq, a 1.27-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with 26 components of the 30-stock blue-chip index closing in the green while four finished in the red. The Dow rally continued for the fourth successive day, its longest winning streak since Mar 18.
The S&P 500 also closed in the green for the third consecutive day.The Energy Select Sector SPDR (XLE) and Materials Select Sector SPDR (XLB) climbed 1.9% and 1.2%, respectively notably, all eleven sectors of the benchmark index closed in the green. Moreover, tech-heavy Nasdaq Composite ended in positive territory for three successive days, due to strong performance by trade-sensitive large-cap stocks.
Positive Development on U.S-Mexico Trade Spat
On Jun 6, Bloomberg reported that President Donald Trump was considering delaying imposing tariffs on Mexican imports. Talks between U.S. and Mexican officials resumed Thursday afternoon after a break down on the previous day.
CNBC reported that the United States had asked Mexico to restrain Central American asylum seekers so that illegal migrants should stay in Mexico “for the duration of their immigration proceedings,” Mexico has agreed to this concern of the United States.
Per CNBC, Mexico will deploy 6,000 National Guard soldiers at its border with Guatemala, a Central America republic, so that no illegal migrant can use that country as a corridor to enter into the United States without proper documents.
Notably on Jun 4, Bloomberg reported that Senate Republicans have decided to oppose President Trump’s decision to impose 5% tariff on all imports from Mexico.These duties will come into to force from Jun 10 unless Mexico stops the flow of illegal migrants to the United Sates.
Consequently, shares of oil behemoths that have substantial exploration activities in the Mexican gulf region like Chevron Corp. CVX and Exxon Mobil Corp. XOM gained 2.6% and 1.8%, respectively. Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ECB Adopts Dovish Monetary Stance
The European Central Bank (ECB) decided to keep its overnight deposit interest rate unchanged at minus 0.4% President Mario Draghi further said that the central bank has extended the period for keeping rates this low into at least the first half of 2020 instead of first half of 2019 as stated earlier. An impending global slowdown owing to trade conflict is the primary reason for adopting dovish stance.
Department of Labor reported that initial jobless claims remained flat at 218,000 for the week ended Jun 1. However, the consensus estimate was for 214,000 claims. Notably, previous week’s jobless claims were upward by 3,000 to 218,000. The four-week moving average of so-called continuing claims slipped 1,000 to 1.67 million.
The Department of Commerce reported that the U.S. trade deficit decreased to $50.8 billion in April mostly in line with the consensus estimate of $50.6 billion. Trade deficit for March was revised upward from 50 billion to $51.9 billion.
The productivity of U.S. non-farm workers increased at a 3.4% annual rate in the first quarter, missing the consensus estimate of an increase of 3.5% year over year.
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