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Stock Market News for Oct 22, 2019

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Wall Street ended higher on Monday following positive development on U.S.-China trade war front and better-than-expected performance by U.S. corporates in the third quarter of 2019. Moreover, the U.K. parliament has forced prime minister Boris Johnson to ask for an extension of the Brexit deadline. All three major stock indexes closed in the green.

The Dow Jones Industrial Average (DJI) gained 0.2% to close at 26,827.64. The S&P 500 climbed 0.7% to close at 3,006.72. Meanwhile, the Nasdaq Composite Index closed at 8,162.99, surging 0.9%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.8% to close at 14. A total of 5.92 billion shares were traded on Monday, lower than the last 20-session average of 6.55 billion. Advancers outnumbered decliners on the NYSE by a 1.95-to-1 ratio. On Nasdaq, a 2.09-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The Dow closed in positive territory with 19 components of the 30-stock blue-chip index closing in the green while 10 ended in red and 1 remained unchanged. The Nasdaq Composite also finished in the green due to strong performance of large-cap technology stocks.

The S&P 500 also ended in the green adobe the psychological barrier of 3,000 for the first time since Sep 18. The Energy Select Sector SPDR (XLE), Financials Select Sector SPDR (XLF) and Technology Select Sector SPDR (XLK) soared 1.8%, 1.4% and 1.1%, respectively. Notably, nine out of total 11 sectors of the benchmark index closed in the green while two finished in red.

Positive Development on Trade War Front

As per a Bloomberg report, on Oct 18, Chinese vice premier said, “China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one trade agreement.” On Oct 21, President Donald Trump said efforts to end a U.S. trade war with China were going well as the first phase of the trade deal is likely to be signed in the middle of next month.

U.S. Trade Representative Robert Lighthizer told reporters that White House is aiming to finalize the first phase of the deal at the Asia-Pacific Economic Cooperation meetings in Chile on Nov. 16 and 17, where the two presidents are supposed to meet.

White House economic adviser Larry Kudlow said that the Trump administration could withdraw its proposed 15% tariff on $160 billion of Chinese goods effective Dec 15, if negotiations continue to go well.

Brexit Likely to be Delayed Further

On Oct 19, after a majority voting, the U.K. parliament has forced prime minister Boris Johnson to ask the European Union for a three-month extension to the Oct. 31 deadline to exit from the trade bloc. The prime minister’s effort to seek another trust vote in parliament on Oct 21 was thwarted by the U.K. House of Commons Speaker John Bercow, who declared that a new vote “would be repetitive and disorderly.”

Consequently, Boris Johnson’s attempt to quit EU even with no deal by Oct 31 was denied by British lawmakers. Several industry researchers have warned that such as situation will have severe negative impact on the global economy and financial markets.

Better-Than-Expected Third-Quarter Earnings Results

Halliburton Co. HAL reported third-quarter 2019 adjusted earnings per share of $0.34, in line with the Zacks Consensus Estimate. Revenues of $5.6 billion were slightly lower than the Zacks Consensus of $5.8 billion. Shares of Halliburton surged 6.4% yesterday.

SAP SE SAP reported third-quarter 2019 adjusted earnings per share of $1.45, surpassing the Zacks Consensus Estimate of $1.38. Revenues of $7.57 billion were in line with the Zacks Consensus Estimate. Shares of SAP surged 2.8% yesterday.

Both Halliburton and SAP carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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