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Stock Market News for April 21, 2017

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Benchmarks finished in the green on Thursday, following the release of strong earnings reports and encouraging comments on tax related changes. Treasury Secretary Steven Mnuchin’s encouraging comments on President Donald Trump’s proposed tax reforms lifted the broader markets. Meanwhile, Trump’s called for a government probe into foreign steel imports, which boosted the sector’s stocks.

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) gained 0.9% to close at 20,578.71. The S&P 500 rose 0.8% to close at 2,355.84, just below its 50-day moving average. The tech-laden Nasdaq Composite Index gained 0.9% to a record close of 5,916.78. The fear-gauge CBOE Volatility Index (VIX) declined 5.2% to 14.15. A total of around 6.6 billion shares were traded on Thursday, higher than the last 20-session average of 6.3 billion shares. Advancers outpaced declining stocks on the NYSE. For 69% stocks that advanced, 28% declined.     

Earnings Season

American Express Company (AXP - Free Report) released its first quarter 2017 financial results. The company reported adjusted earnings per share (EPS) of $1.34, beating the Zacks Consensus Estimate of $1.28 but declined 8% year over year. The company posted revenues of $7.9 billion surpassing the Zacks Consensus Estimate of $7.7 billion. 

Shares of American Express Company jumped 5.9% following its earnings release and the card processor emerged as the best performer for the Dow.

CSX Corporation (CSX - Free Report) emerged as one of the best performers of the S&P 500, following the release of its first quarter financial results. The company posted earnings  of $0.51 per share, outpacing the Zacks Consensus Estimate of $0.43. Also, quarterly earnings were 37.8% above the year-ago figure. Moreover, the company recorded revenues of $2,869 million beating the Zacks Consensus Estimate of $2,729.7 million and improved 10% year over year.

American Express Company and CSX Corporation’s outperformance improved investor confidence which ultimately had a positive impact on the broader market.The broader Financial Select Sector SPDR (XLF) advanced 1.7% and emerged as the best performing sector of S&P 500. Some of the key holdings of the financial sector in S&P 500 including Goldman Sachs Group Inc (GS - Free Report)   and Wells Fargo & Co (WFC - Free Report) gained by 1.9% and 2.6% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, Philip Morris International Inc. (PM - Free Report) came out with first-quarter 2017 results, wherein adjusted earnings of $0.98 a share missed the Zacks Consensus Estimate of $1.03. Further, the company’s net revenues (excluding excise taxes) dipped 0.3% to $6,064 million, and also came below the Zacks Consensus Estimate of $6,427 million. Shares of Philip Morris fell 3.5% following the company’s dismal earnings release.

Treasury Secretary’s Comment on Tax Reform

At the Institute of International Finance, Treasury Secretary Steven Mnuchin said that Trump’s proposed tax reform plans are not related to the fate of a new healthcare bill. He said the Trump administration would unveil a tax bill in near future. The failure to pass a new healthcare bill has had a negative impact on investor confidence. Investors have raised concerns over Trump administration’s ability to implement his pro-growth agenda, including tax cuts. Encouraging comments from Mnuchin about a new tax package raised investor sentiment which ultimately helped stocks gain.

Mnuchin also commented that top House Republicans are making efforts to repeal and replace Obamacare. This statement comes one month after Republicans failed to pass the healthcare bill through the House of Representatives. These comments reduced fears among investors that the failure of the healthcare bill would further delay the implementation of tax reforms

Trump’s comments

Steel stocks surged after Trump directed the Commerce Department to investigate the impact of imports of non U.S. made steel on U.S. national security. Shares of United States Steel Corporation (X - Free Report) and AK Steel Holding Corporation (AKS - Free Report) gained 7.4% and 8.6% respectively.

Economic Data

For the week ending April 15, initial jobless claims increased to 244,000 from the previous week's unrevised level of 234,000.However, the 4-week moving average decreased to 243,000 from the previous week's unrevised average of 247,250.

Meanwhile, continuing jobless claims registered a drop of 49,000 to 1.98 million, indicating the strongest U.S. labor market in recent years.   

Stocks that made Headlines

Mattel Falls on Wider-than-Expected Q1 Loss, Sales Lag

Shares of Mattel Inc. (MAT - Free Report) declined nearly 7% in afterhours trading on Apr 20, after the company reported weak results for the first quarter of 2017. (Read More)

Proofpoint Q1 Loss Narrows, 2017 Guidance Revised Up

Shares of Proofpoint Inc. (PFPT - Free Report) went up sharply in the after-hour trade and bounced back from a steep drop during the normal trading session as the computer security software firm reported better-than-expected first-quarter top-line results and raised its outlook for 2017. (Read More)

IMAX Corp Q1 Earnings Break Even, Revenues Miss Mark

IMAX Corporation (IMAX - Free Report) , based in Mississauga, Canada, reported mixed results in the first quarter of 2017. (Read More)

GATX Corp's Q1 Earnings & Sales Top, Shares Gain

GATX Corporation (GATX - Free Report) reported better-than-expected earnings per share and revenues in the first quarter of 2017. (Read More)

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