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Stock Market News for May 19, 2017

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Benchmarks finished in the green on Thursday, boosted by gains in technology shares and upbeat jobless claims data. Meanwhile, the Dow was helped by gains made by Wal-Mart, which moved northward following an encouraging earnings report. However, the controversy relating to investigation into former National Security Adviser Mike Flynn’s involvement with Russian sources kept investors cautious.

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 0.3% or 56.09 points to close at 20,663.02. The S&P 500 rose 0.4% to close at 2,365.72. The tech-laden Nasdaq Composite Index advanced 0.7% to close at 6,055.13. A total of around 8.2 billion shares were traded on Thursday, higher than the last 20-session average of 7 billion shares. The fear-gauge CBOE Volatility Index (VIX) closed at 14.17. Advancers outnumbered declining stocks on the NYSE by a 1.03 to 1 ratio. 

Technology Shares Gain

Technology stocks rebounded on Thursday following expectations regarding changes to the US tax code that would allow companies to repatriate overseas funds to the US at a lower rate. Earlier, Trump administration had released a short tax-reform plan which included provisions for "one-time tax on trillions of dollars held overseas."  This overseas fund is expected to boost the U.S. economy through capital investments and creation of employment opportunities.

US companies are speculated to hold more than $2 trillion profits overseas. As per fourth-quarter company filings compiled by UBS, last year, Microsoft (MSFT - Free Report) had the largest profits among S&P 500 companies kept abroad. Gains in technology stocks had a positive impact on the Nasdaq. The broader Technology Select Sector SPDR (XLK) advanced 0.6%, emerging as the best performing sector of S&P 500. Some of the key holdings of the technology sector in the S&P 500 including Apple Inc. (AAPL - Free Report) and Facebook Inc. (FB - Free Report) advanced 1.5% and 1.9% respectively.

Moreover, shares of Inc. (AMZN - Free Report) gained 1.5%. The rise in the shares of the tech shares had a positive impact on the broader markets.

Dow Boosted By Wal-Mart Stores

Shares of Wal-Mart Stores Inc. (WMT - Free Report) advanced 3.2%, following the release of the company’s better-than-expected earnings in first-quarter fiscal 2018. However, revenues of the company marginally lagged the Zacks Consensus Estimate. The company reported earnings of $1.00 per share which beat the Zacks Consensus Estimate of $0.96. However, the total revenue came in at $117.5 billion which fell short of the Zacks Consensus Estimate of $117.6 but increased 1.4% year over year.

Wal-Mart is delivering positive comps at Wal-Mart U.S., after delivering negative comps since the third quarter of fiscal 2013. Moreover, traffic improved for the ninth consecutive quarter, owing to the company’s efforts to modernize stores for higher footfall and improvement in consumer spending. Strong performance from Wal-Mart had a positive impact on investors’ sentiment, which ultimately had a positive impact on the Dow.

Positive Economic Data

As per the Labor Department, seasonally adjusted initial jobless claims decreased to 232,000 in the week ending May 13. This is the second lowest weekly reading since the economy began to recover almost eight years ago. The figure saw a decline of 4,000 from the previous week's unrevised level of 236,000. The four week moving average was recorded at 240,750, a decrease of 2,750 from the previous week's unrevised average.

Moreover, continuing claims declined by 22,000 to 1.9 million in early May, marking its lowest level in twenty-nine years. Strong economic data had a positive impact on the investors’ confidence which ultimately had a positive impact on the broader market.

Mike Flynn’s Involvement with Russian sources

Meanwhile, investors kept a close watch on the political crisis that heightened following the controversy relating to investigation into former National Security Adviser Mike Flynn’s involvement with Russian sources.  According to a memo written by former FBI Director James Comey, Trump had tried to stop the FBI from probing into former National Security Adviser Michael Flynn's connections with Russia.

As per a Reuters’ report released on Thursday, Michael Flynn and other members of Trump’s campaign team had exchanged a minimum of eighteen phone calls or emails with Russian sources during the presidential campaign in 2016. Meanwhile, former FBI head Robert Mueller was appointed by Deputy Attorney General Rod Rosenstein to probe possible collaboration between the Trump campaign and Russia as special counsel.

Stocks that made Headlines

Hibbett Beats on Q1 Earnings, Lowers FY18 Forecast

Hibbett Sports Inc. (HIBB - Free Report) came out with first-quarter fiscal 2018 results, wherein both top and bottom lines declined year over year. (Read More)

Gap Q1 Earnings & Sales Top Estimates, Stock Gains

The Gap Inc. (GPS - Free Report) reported solid first-quarter fiscal 2017 results, wherein both earnings and sales topped estimates. (Read More)

Salesforce Up on Q1 Earnings Beat and Upbeat Guidance

Shares of Inc. (CRM - Free Report) went up in the after-hours trade yesterday following better-than-expected results for first-quarter fiscal 2018. (Read More)

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