Benchmarks closed higher on Wednesday as investors cheered news that the Federal Reserve has left benchmark interest rates unchanged near zero, along with rally in tech stocks and upbeat quarterly earnings report.
The Dow Jones Industrial Average (DJI) added 160.29 points or 0.6%, to close at 26,539.57 and the S&P 500 rose 40 points or 1.2% to close at of 3,258.44. The Nasdaq Composite Index closed at 10,542.94, adding 140.85 points or 1.4%.The fear-gauge CBOE Volatility Index (VIX) decreased 5.3%, to close at 24.10. Advancing issues outnumbered declining ones for 2.85-to-1 ratio on the NYSE and a 1.93-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
All the 11 major sectors of S&P 500 closed in the positive territory, with energy and financial sectors leading the rally by adding at least 2% on Wednesday. Additionally, gains of at least 1% in shares of Facebook, Apple, Alphabetand Amazon also helped benchmarks rally. The CEO’s of these tech giants testified in front of the U.S. lawmakers following the yearlong anti-trust probe running on these firms.
The blue-chip Dow was boosted by gains from JPMorgan Chase & Co. (JPM - Free Report) , American Express Company (AXP - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) of at least 2.3%. While, 2.8% decline in shares of The Boeing Company (BA - Free Report) capped gains for the 30-composite index.
Overall, the S&P 500 posted 35 new 52-week highs and no new lows, while the Nasdaq Composite recorded 65 new highs and12 new lows.
Fed Keeps Rates Unchanged
On Wednesday, the Federal Reserve Chairman Jerome Powell announced that it has kept its benchmark interest rates unchanged near zero. Powell pledged once again to provide stimulus until the US economy has recovered from the coronavirus pandemic’s impact.
Additionally, he mentioned that the American households and the jobs market have shown slight improved since May. However, rising coronavirus cases in many states have hampered the pace of economic recovery and the Fed will maintain its historic stimulus measures until they are confident the economy has “weathered” the health crisis.
Q2 Earnings Rolls In
As of Jul 29, 205 of the S&P 500 members have reported Q2 results and total earnings are already down 40.2% on 7.6% lower revenues with 76.1% beating EPS estimates and 64.9% beating revenue estimates. Even though the earnings growth pace is the lowest since 2008’s recession, the EPS beats percentages are tracking above what we had seen from the same group of index members in the last two reporting cycles. (Read More: An Improving Earnings Outlook Despite Covid-19 Concerns)
However, on the same day, Boeing reported adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.93. Boeing’s revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate of $12.61 billion for the quarter ending June 2020. Revenues at commercial airplane segment plunged 65% to $1.63 billion due to lower delivery volume. The airplane maker delivered 20 commercial planes down 78%. The segment also incurred operating loss of $2.76 billion. (Read More)
Additionally, shares of General Motors Company (GM - Free Report) shed 1.7% even after the company posted narrower-than-anticipated loss of 50 cents per share in the second-quarter 2020, against the Zacks Consensus Estimate of loss of $1.72. The carmaker reported revenues of $16,778 million, missing the Zacks Consensus Estimate of $20,475 million. Lower production due to the coronavirus pandemic hurt the quarterly results. (Read More)
General Motors carriers a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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