Major U.S. benchmarks ended mostly in the green on Friday as investors continued to cheer Donald Trump’s win in the Presidential election. While the Dow registered gains for the fifth consecutive sessions and finished at all-time record highs for second straight days, the Nasdaq finished in positive territory following an impressive recovery in tech stocks. Though the S&P 500 finished in the red on Friday, it managed to register highest weekly gain since Oct 2014. While the Dow posted best weekly performance since Dec 2011, the Nasdaq registered biggest weekly increase since February.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 0.2%, to close at 18,847.66. The tech-laden Nasdaq Composite Index closed at 5,237.11, rising 0.5%. However, the S&P 500 fell 0.1% to close at 2,164.45. Meanwhile, the fear-gauge CBOE Volatility Index (VIX) declined nearly 4.4% to settle at 14.17. A total of around 9.6 billion shares were traded on Friday, higher than the last 20-session average of 7.5 billion shares. Advancers outpaced declining stocks on the NYSE. For 53% stocks that advanced, 45% declined.
What Boosted Markets?
Rally in financial stocks since Trump’s win continued to boost investor sentiment on Friday. Investors continued to speculate that the Trump Presidency will boost economic growth and inflation rate in days ahead through new policies including expansionary infrastructure spending and tax cuts. While such expectations led yields on the Treasury notes to hit several month highs, they increased chances of rate hike in the near-term.
Separately, Fed Vice Chairman Stanley Fischer also indicated that the central bank has started to believe that inflation rate in the U.S. is on the verge of picking up significantly, which may result in a rate hike. Speaking at a conference organized by the Central Bank of Chile, Fisher said: “In my view, the Fed appears reasonably close to achieving both the inflation and employment components of its mandate.”
This had a positive impact on financial stocks and led the Financial Services Select Sector SPDR (XLFS) to gain 0.5%. The sector was the biggest performer among the broader S&P 500 sectors. Shares of The Goldman Sachs Group, Inc. (GS), Bank of America Corporation (BAC) and Morgan Stanley (MS) gained 1.5%, 1.4% and 1.2%, respectively. All the three companies hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Separately, shares of NVIDIA Corporation (NVDA) surged 29.8%, its best one-day performance since May 2003, after reporting better-than-expected fiscal third quarter results and impressive year-over-year growth in both top and bottom lines. Impressive performance of this Zacks Rank #2 (Buy) company helped the technology sector to end in the green on Friday, which in turn boosted the Nasdaq. (Read More: NVIDIA (NVDA) Q3 Earnings & Revenues Top, Outlook Strong)
Moreover, preliminary reading of the University of Michigan’s consumer sentiment index rose from 87.2 in October to 91.6 this month. It was also higher than the consensus estimate of 87.9. However, the Energy Select Sector SPDR ETF (XLE) took a beating on Friday after the Organization of the Organization of Petroleum Exporting Countries (OPEC) reported that crude output rose 240,000 barrel per day (bpd) to 33.64 million during October. Prices of WTI and Brent crude declined 2.9% and 2.4% to $43.21 a barrel and $44.75 per barrel, respectively. XLE was the worst performing sector among the broader S&P 500 sectors.
Reasons Behind Record Weekly Gains
While benchmarks ended in the green for the fast two days of the previous week following speculations of Hillary Clinton’s win in the election, indexes registered healthy gains over the last three days after a surprise Trump victory led investors to speculate that Trump Presidency may boost the U.S. economy. Most of last week’s gains came on the back of a rally in healthcare and financial stocks. While Clinton’s defeat played the main role in boosting healthcare stocks, rising expectations of a rate hike helped financial stocks surge.
Stocks That Made Headlines
Grainger (GWW) Reports October Sales, Provides Guidance
At its analyst meeting, W.W. Grainger, Inc. (GWW) provided an outlook for sales and earnings in 2016 and 2017. (Read More)
J. C. Penney (JCP) Q3 Loss Lower than Expected, Sales Lag
J. C. Penney Company Inc. (JCP) reported adjusted loss per share of 21 cents in the third quarter of fiscal 2016, narrower than the Zacks Consensus Estimate of a loss of 22 cents. (Read More)
Harman (HAR) to be Acquired by Samsung for $8B in Cash
Harman International Industries, Incorporated (HAR) is being acquired by Asian giant, Samsung Electronics, in an all cash deal worth $8 billion (or $112 per share representing 28% premium to Nov 11, 2016 closing price). (Read More)
ConocoPhillips Plans Divestments Worth $8 Billion in 2017
U.S. independent ConocoPhillips (COP) recently announced plans to commence a multi-billion dollar divestment program next year in order to survive price volatility. (Read More)
Medtronic Launches Orthopedic Solutions for Joint Surgery
Medical device major Medtronic plc (MDT) recently announced the launch of Medtronic Orthopedic Solutions, a comprehensive offering for total joint replacement episodes of care. (Read More)
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