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Wall Street closed sharply higher on Tuesday to open February’s trading sessions after a tumultuous January. U.S. stock markets ended in positive territory for third successive days after a hawkish Fed has shaken market participants’ confidence. All three major stock indexes finished in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 273.38 points to close at 35,405.24. Notably, 19 components of the 30-stock index ended in green while 11 in red. The tech-heavy Nasdaq Composite finished at 14,346, advancing 0.8% or 106.12 points due to strong performance by large-cap technology stocks.
Meanwhile, the S&P 500 rose 0.7% to end at 4,546.54. Eight out of eleven sectors of the benchmark index closed in positive territory while three in red. The Energy Select Sector SPDR (XLE), the Materials Select Sector SPDR (XLB), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) rallied 3.6%, 1.5% 1.4% and 1.4%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 11.6% to 21.96. A total of 11.71 billion shares were traded on Tuesday, lower than the last 20-session average of 12.45 billion. The S&P 500 registered 18 new 52-week highs and one new 52-week low. The Nasdaq Composite posted 43 new 52-week highs and 18 new 52-week lows.
Bank Stocks Rally
U.S. stock markets routed in January with the Fed raising the tapering of the quantitative easing program and Chairman Jerome Powell’s indication that the central bank will not hesitate to take harsh measures to contain inflation.
Several economists and financial experts have said that markets have already discounted four rate hikes this year of 25 basis points each. However, many market participants have expressed fear that the Fed may raise the benchmark interest rate by 50 basis points that too as early as in March.
The yield curve of the U.S. government bonds has stiffened significantly since mid-January in anticipation of stricter measures taken by the Fed to combat soaring inflationary pressure. On Feb 1, the yield on the benchmark 10-Year U.S. Treasury Note rose 2 basis points to 1.8%.
A hike in risk-free market interest rate will raise the cost of funds, which in turn will enable the financial companies to widen the spread between longer-term assets, such as loans, with shorter-term liabilities, thus boosting the sector’s profits margin.
The Institute of Supply Management reported that U.S. manufacturing index dropped to a 14-month low of 57.6% in January compared with 58.7% in December. Notably, any reading above 50 indicates expansion in manufacturing activities. The new orders index dropped to 57.9%, the lowest level in a year and a half. The index of prices paid rose to 76.1% in January from 68.2% in December.
Construction spending rose 0.2% in December compared with 0.4% in November.
The Department of Labor reported that job openings in December came in at nearly 11 million. The rate of job openings as a percentage of the labor force remained flat at 6.8%. Job vacancies rose 1.4% month-over-month in December at 10.92 million. Job quits level dropped 3.6% month-over-month in December at 4.34 million. The quit rate edged down to 2.9%. Layoffs and discharges tumbled to 10.7% in December to stay at 1.17 million.
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Stock Market News for Feb 2, 2022
Wall Street closed sharply higher on Tuesday to open February’s trading sessions after a tumultuous January. U.S. stock markets ended in positive territory for third successive days after a hawkish Fed has shaken market participants’ confidence. All three major stock indexes finished in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 273.38 points to close at 35,405.24. Notably, 19 components of the 30-stock index ended in green while 11 in red. The tech-heavy Nasdaq Composite finished at 14,346, advancing 0.8% or 106.12 points due to strong performance by large-cap technology stocks.
Meanwhile, the S&P 500 rose 0.7% to end at 4,546.54. Eight out of eleven sectors of the benchmark index closed in positive territory while three in red. The Energy Select Sector SPDR (XLE), the Materials Select Sector SPDR (XLB), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) rallied 3.6%, 1.5% 1.4% and 1.4%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 11.6% to 21.96. A total of 11.71 billion shares were traded on Tuesday, lower than the last 20-session average of 12.45 billion. The S&P 500 registered 18 new 52-week highs and one new 52-week low. The Nasdaq Composite posted 43 new 52-week highs and 18 new 52-week lows.
Bank Stocks Rally
U.S. stock markets routed in January with the Fed raising the tapering of the quantitative easing program and Chairman Jerome Powell’s indication that the central bank will not hesitate to take harsh measures to contain inflation.
Several economists and financial experts have said that markets have already discounted four rate hikes this year of 25 basis points each. However, many market participants have expressed fear that the Fed may raise the benchmark interest rate by 50 basis points that too as early as in March.
The yield curve of the U.S. government bonds has stiffened significantly since mid-January in anticipation of stricter measures taken by the Fed to combat soaring inflationary pressure. On Feb 1, the yield on the benchmark 10-Year U.S. Treasury Note rose 2 basis points to 1.8%.
A hike in risk-free market interest rate will raise the cost of funds, which in turn will enable the financial companies to widen the spread between longer-term assets, such as loans, with shorter-term liabilities, thus boosting the sector’s profits margin.
Consequently, shares of banking giants like The Goldman Sachs Group Inc. (GS - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and Wells Fargo & Co.(WFC - Free Report) rallied 2.6%, 1.7% and 3.3%, respectively. The Goldman Sachs and Wells Fargo carry a Zacks Rank # (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Institute of Supply Management reported that U.S. manufacturing index dropped to a 14-month low of 57.6% in January compared with 58.7% in December. Notably, any reading above 50 indicates expansion in manufacturing activities. The new orders index dropped to 57.9%, the lowest level in a year and a half. The index of prices paid rose to 76.1% in January from 68.2% in December.
Construction spending rose 0.2% in December compared with 0.4% in November.
The Department of Labor reported that job openings in December came in at nearly 11 million. The rate of job openings as a percentage of the labor force remained flat at 6.8%. Job vacancies rose 1.4% month-over-month in December at 10.92 million. Job quits level dropped 3.6% month-over-month in December at 4.34 million. The quit rate edged down to 2.9%. Layoffs and discharges tumbled to 10.7% in December to stay at 1.17 million.