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Benchmarks finished mostly in the red on Thursday as investors switched from equities to bonds after Treasury bond yields continued to hover near their best levels since April 2014. Additionally, weak earnings results from United Parcel Service weighed on the broader S&P 500. Further, the tech-heavy index, Nasdaq fell ahead of major tech earnings. However, rising rate hike prospects pushed financial blue-chips like Goldman Sachs and JPMorgan upward, which in turn boosted the Dow.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 0.1%, to close at 26,186.71. However, the S&P 500 fell 0.1% to close at 2,821.98. The tech-laden Nasdaq Composite Index closed at 7,385.86, losing 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 1.6% to close at 13.75. A total of around 7.80 billion shares were traded on Thursday, higher than the last 20-session average of 7.23 billion shares. Decliners outnumbered advancers on the NYSE by a 1.24 -to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues.
What Moved the Benchmarks?
In its two-day policy statement following the meeting ended Jan 31, the Fed indicated that the labor market remained strong, while inflation will likely “move up” in 2018 and will reach the desired 2% rate in the “medium term.” The central bank also said federal funds rate is likely to increase at a “gradual” pace in coming months.
Tighter labor market and prospects of rise in inflation raised rate hike prospects as early as Fed’s next policy meeting in March, which in turn weighed on investor sentiment. Higher rate environment and optimism of steady economic growth and higher inflation weighed on bond prices.
Lower bond prices supported the 10-year U.S. Treasury yield, which increased from 2.722% on Wednesday to 2.773% on Thursday, its best levels since April 2014. Also, 30-year U.S. Treasury yield surged more than 3% for the first time since May 2017. High treasury yields weighed on broader equity markets to a great extent.
Q4 Earnings Continue to Hog Attention
On the earnings front, shares of United Parcel Service, Inc. (UPS - Free Report) decreased 6.1% despite posting upbeat fourth-quarter earnings results. (Read More) High level of shipping costs during the holiday season weighed on the package delivery company’s net profit, which in turn dragged down share performance.
Additionally, PayPal Holdings, Inc’s (PYPL - Free Report) shares declined 8.1% after its former parent company, eBay Inc. (EBAY - Free Report) decided to rely less on the company for processing payments. Separately, the company posted fourth-quarter earnings per share and revenues, which beat their respective Zacks Consensus Estimate. (Read More)
Meanwhile, tech stocks took a breather on Thursday ahead of earnings from major tech companies like, Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) and Alphabet Inc. (GOOGL - Free Report) .
Economic Data Bolsters Rate Hike Chances
Per the Bureau of Labor Statistics preliminary data, non-farm business sector labor productivity declined 0.1% in the fourth quarter of 2017. The decrease was in contrast to previous quarter’s increase of 2.7%.
Moreover, the ISM manufacturing index declined from 59.3% in December to 59.1% in January. But the index remained at its best level since June 2004. Reading above 50 indicates expansion in the activity. Additionally, ISM Prices Index advanced from 68.3% in December to 72.7% in January, reaching its highest levels in seven years.
Additionally, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 1,000 to 230,000 in the week ending Jan 27, its lowest level in more than 44 years. Low initial claims indicate a tighter labor market, which along with increase in factory prices cemented rate hike prospects further.
High rate hike chances had a positive impact on the Financial Select Sector SPDR (XLF), which rose 1%. Some of its key holdings, The Goldman Sachs Group, Inc. (GS - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) rose 1.7% and 1%, respectively. Goldman Sachs hasa Zacks Rank #3 (Hold), JPMorgan holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Clorox Company (CLX - Free Report) posted robust second-quarter fiscal 2018 earnings per share which beat estimates, while revenues lagged the same. (Read More)
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Image: Bigstock
Stock Market News for Feb 2, 2018
Benchmarks finished mostly in the red on Thursday as investors switched from equities to bonds after Treasury bond yields continued to hover near their best levels since April 2014. Additionally, weak earnings results from United Parcel Service weighed on the broader S&P 500. Further, the tech-heavy index, Nasdaq fell ahead of major tech earnings. However, rising rate hike prospects pushed financial blue-chips like Goldman Sachs and JPMorgan upward, which in turn boosted the Dow.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 0.1%, to close at 26,186.71. However, the S&P 500 fell 0.1% to close at 2,821.98. The tech-laden Nasdaq Composite Index closed at 7,385.86, losing 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 1.6% to close at 13.75. A total of around 7.80 billion shares were traded on Thursday, higher than the last 20-session average of 7.23 billion shares. Decliners outnumbered advancers on the NYSE by a 1.24 -to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues.
What Moved the Benchmarks?
In its two-day policy statement following the meeting ended Jan 31, the Fed indicated that the labor market remained strong, while inflation will likely “move up” in 2018 and will reach the desired 2% rate in the “medium term.” The central bank also said federal funds rate is likely to increase at a “gradual” pace in coming months.
Tighter labor market and prospects of rise in inflation raised rate hike prospects as early as Fed’s next policy meeting in March, which in turn weighed on investor sentiment. Higher rate environment and optimism of steady economic growth and higher inflation weighed on bond prices.
Lower bond prices supported the 10-year U.S. Treasury yield, which increased from 2.722% on Wednesday to 2.773% on Thursday, its best levels since April 2014. Also, 30-year U.S. Treasury yield surged more than 3% for the first time since May 2017. High treasury yields weighed on broader equity markets to a great extent.
Q4 Earnings Continue to Hog Attention
On the earnings front, shares of United Parcel Service, Inc. (UPS - Free Report) decreased 6.1% despite posting upbeat fourth-quarter earnings results. (Read More) High level of shipping costs during the holiday season weighed on the package delivery company’s net profit, which in turn dragged down share performance.
Additionally, PayPal Holdings, Inc’s (PYPL - Free Report) shares declined 8.1% after its former parent company, eBay Inc. (EBAY - Free Report) decided to rely less on the company for processing payments. Separately, the company posted fourth-quarter earnings per share and revenues, which beat their respective Zacks Consensus Estimate. (Read More)
Meanwhile, tech stocks took a breather on Thursday ahead of earnings from major tech companies like, Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) and Alphabet Inc. (GOOGL - Free Report) .
Economic Data Bolsters Rate Hike Chances
Per the Bureau of Labor Statistics preliminary data, non-farm business sector labor productivity declined 0.1% in the fourth quarter of 2017. The decrease was in contrast to previous quarter’s increase of 2.7%.
Moreover, the ISM manufacturing index declined from 59.3% in December to 59.1% in January. But the index remained at its best level since June 2004. Reading above 50 indicates expansion in the activity. Additionally, ISM Prices Index advanced from 68.3% in December to 72.7% in January, reaching its highest levels in seven years.
Additionally, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 1,000 to 230,000 in the week ending Jan 27, its lowest level in more than 44 years. Low initial claims indicate a tighter labor market, which along with increase in factory prices cemented rate hike prospects further.
High rate hike chances had a positive impact on the Financial Select Sector SPDR (XLF), which rose 1%. Some of its key holdings, The Goldman Sachs Group, Inc. (GS - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) rose 1.7% and 1%, respectively. Goldman Sachs hasa Zacks Rank #3 (Hold), JPMorgan holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Made Headlines
Clorox Beats on Q2 Earnings, Raises FY18 EPS View
The Clorox Company (CLX - Free Report) posted robust second-quarter fiscal 2018 earnings per share which beat estimates, while revenues lagged the same. (Read More)
Deckers Beats on Q3 Earnings, Raises FY18 Outlook
Deckers Outdoor Corporation (DECK - Free Report) delivered better-than-expected third-quarter fiscal 2018 results. (Read More)
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks. >>