Benchmarks closed at record highs on Tuesday, thanks to Fed chair Jerome Powell’s optimistic outlook toward the U.S. economy. In addition, impressive Q3 earnings and revenues reported by some retailers coupled with investors’ high hopes for a U.S.-China trade deal were crucial factors in the indexes’ record performance.
The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — finished in the green on Tuesday after gaining 0.2% each. Dow closed at 28,121.68, the S&P 500 finished at 3,140.52 and the tech-laden Nasdaq Composite closed at 8,647.93.
The fear-gauge CBOE Volatility Index (VIX) declined 2.8% to close at 11.55 on Nov 26. Finally, advancers outnumbered decliners on the NYSE by a 1.34-to-1 ratio.
Fed’s Powell is Optimistic about the Economy
Speaking at the Greater Providence (Rhode Island) Chamber of Commerce on Nov 25, Federal Reserve Chairman Jerome Powell observed an optimistic view of the economy. The Fed chief indicated that the low inflation didn’t call for high interest rates anytime soon.
Powell said the three rate cuts earlier this year (current benchmark rates are in the range of 1.5%-1.75%) boosted home purchases. These purchases, in turn, pushed the U.S. economy’s expansion.
The Fed chief also said that there was ample space for wages to increase as more workers joined the workforce, even with unemployment near a 50-year low of 3.6%.
Retail Q3 Earnings and Revenues Shine
Shares of Best Buy Co., Inc. BBY rose 9.9% after the company reported Q3 earnings of $1.13 per share, beating the Zacks Consensus Estimate of $1.04. A year ago, the retailer had reported earnings of $0.93 per share.
The company, which belongs to the Zacks Retail - Consumer Electronics industry, reported revenues of $9.76 billion for the said quarter, surpassing the Zacks Consensus Estimate by 0.33%. This compares to revenues of $9.59 billion in Q3 2018. (Read more)
Shares of Burlington Stores, Inc. BURL rose 8.5% after Q3 earnings of $1.55 per share, surpassing the Zacks Consensus Estimate of $1.41. This compares to earnings of $1.21 per share in Q3 2018.
The company, which belongs to the Zacks Retail - Discount Stores industry, posted revenues of $1.77 billion for the quarter ended October 2019, which missed the Zacks Consensus Estimate by 1.01%. This compares to revenues of $1.63 billion in Q3 2018. (Read more)
Burlington Stores carries a Zacks Rank #2 (Buy) and Best Buy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Coming to economic news released on Nov 26, the Conference Board Consumer Confidence Index declined in November, following a slight decrease in October. The Index was 126.1 in October, and now stands at 125.5. This marks a decline in consumer confidence for a fourth consecutive month, largely pulled down by softening in consumers’ assessment of current business and employment conditions.
New residential sales declined 0.7% to a seasonally adjusted annual rate of 733,000 units in October, according to the U.S. Census Bureau and the Department of Housing and Urban Development on Nov 26. This was mainly a result of lessening activities in the South and Northeast regions.
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