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Stock Market News For May 9, 2018

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Strong domestic economy and the Trump government's tax codes helped small-cap business optimism index hit to its highest level in May since 1983

Markets erased initial loses to end almost flat on Tuesday following President Donald Trump’s announcement that the United States was withdrawing from the Iran nuclear deal. The broader energy sector overcame earlier losses, as oil prices erased declines on anticipation that sanctions would disrupt crude supplies globally. This saw the S&P 500 ending the day slightly lower. However, the Dow and Nasdaq managed to end the day a shade higher than the previous session.

The Dow Jones Industrial Average (DJI) gained less than 0.1%, to close at 24,360.21. The S&P 500 declined less than 0.1% to close at 2,671.92. The Nasdaq Composite Index closed at 7,266.90, increasing 0.02%. A total of 6.9 billion shares were traded on Monday, higher than the last 20-session average of 6.5 billion shares. Advancers outnumbered decliners on the NYSE by a 1.04-to-1 ratio. On Nasdaq, a 1.19-to-1 ratio favored advancing issues.

How did the Benchmark Perform?

The Dow gained 2.89 points after rising declining as much as 160 points at one time following Trump’s announcement. Shares of Verizon Communications Inc. VZ declined 1.5%, while Nike, Inc. NKE fell 1.3%. However J.P. Morgan Chase JPM was the best performing stock, gaining 1.5%. J.P. Morgan Chase has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The S&P 500 lost 0.71 points, with seven of the 11 major sectors ending in negative territory. The losses were led by the Utilities Select Sector SPDR (XLU) that declined 2.5%. However, the Energy Select Sector SPDR (XLE) and Financial Select Sector SPDR (XLF) gained 0.8% and 0.7%, respectively. Meanwhile, the tech-heavy Nasdaq gained 1.69 points.

U.S Pulls Out of Iran Nuclear Deal

As was widely expected, on Tuesday Trump announced that the United States would be pulling out of Iran nuclear deal and would re-impose sanctions on that country. The international agreement was signed in 2015 and required Iran scale back its nuclear program in exchange for relief from the United States and its allies. Expectations surrounding the announcement led to markets sinking on Monday after hitting the highest level since 2014.

On Tuesday, markets witnessed a choppy session with oil prices initially decreasing on expectations that Iran could increase its oil production in order to sell as much oil as it could before sanctions come into effect.

Oil Price Hits a High Before Falling Again

Trump’s announcement to withdraw from the Iran nuclear deal did not do much to boost oil prices on Tuesday. The broader energy sector overcame earlier losses, as oil prices erased initial declines on anticipation that sanctions would disrupt global crude supplies. The United States’ withdrawal from the deal would mean re-imposition of sanctions, which would escalate the demand of oil compared to production, thus boosting up oil prices.

However, markets took a hit on anticipation that Iran in the meantime would ramp up its oil production and try to sell as much oil as it can before the sanction become effective. This saw oil prices fall. However, markets partially recovered their losses once the bigger picture emerged that oil prices are most likely to turn higher in the future as once the sanctions come to effect. For the day, WTI crude declined 2.4% to $69.06 a barrel and Brent crude slipped 1.7% to settle at $74.85 a barrel.

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Fossil (FOSL) Loss Narrows Y/Y in Q1, Sales Deteriorate

Fossil Group Inc. FOSL released first-quarter 2018 results, wherein both the top and bottom line came ahead of the Zacks Consensus Estimate for the third straight time, and comparable store sales (comps) also increased year over year. (Read More)

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