Markets closed higher on Tuesday, overcoming early losses incurred during a widespread selloff which occurred after North Korea fired a missile over Japan. However, a measured response from Trump and other global leaders reassured investors, following which markets recovered. Meanwhile, Hurricane Harvey gained strength and pummeled Houston with more rains on Tuesday. With a considerable portion of the total refining capacity of the U.S. out of action, the energy sector slumped.
The Dow Jones Industrial Average (DJIA) closed at 21,865.37, gaining 0.3%. The S&P 500 Index (INX) increased 0.1% to close at 2,446.30. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,301.89, increasing 0.3%. A total of only around 5.3 billion shares were traded on Tuesday, lower than the last 20-session average of 5.9 billion shares. Declinng issues outnumbered advancers on the NYSE by 1.05-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.08-to-1 ratio.
North Korea Test Fires a Missile over Japan
In the latest act of provocation, North Korea fired a ballistic missile over Japan’s Hokkaido on Tuesday. This development was confirmed by a South Korean military official on NBC News.
This act by the renegade nation has been severely criticized by leaders across the globe. The prime minister of Japan, Shinzo Abe stated: “This outrageous action of firing a missile over our country is an unprecedented, grave and serious threat that seriously damages peace and security in the region,” Prime minister Abe also said that he spoke with President Trump over a phone call for 40 minutes and was assured by the President of a ‘strong commitment’ toward Japan’s security. The prime minister even called for an emergency meeting United Nations Security Council.
This incident was followed by mass stock selloff in the U.S. in an effort to move toward safer havens. However, Trump’s comments that "all options are on the table" reassured investors and losses incurred earlier were recouped. This development also led investors to move to safer havens. Consequently, gold futures rose 0.3% to close at $1,318.90 per ounce, hitting its highest level since September 2016.
Analysts are of the view that such ‘sensible’ comments by Trump and leaders from across the globe reassured the investors of global peace and this led to gains for the markets. Some analysts also suggested that market watchers are not disregarding this incident but the prevalent low volumes of trade are amplifying such effects.
Apple Notches Record High
Shares of Apple Inc. (AAPL - Free Report) hit a record high after research firm IDC announced it estimates for the technology giant’s soon-to-be-released iPhone 8. The firm said that it estimates iPhone shipments to sky-rocket 9.1% in 2018 once Apple releases the new iPhone 8, 7S and 7S Plus models. This would mark its biggest increase in shipments since 2015. Apple’s stock gained 0.9% to end at $162.91 a share, thereby pushing the Nasdaq higher. The company possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oil Refineries Remain Closed, Energy Sector Slumps
Hurricane Harvey pummeled Houston with more rain and flooding on Tuesday. With almost 16% of the total refining capacity of the US out of action, the energy sector slumped. Also, slumping oil prices weighed on the energy sector and the Energy Select Sector SPDR Fund (XLE) was down 0.1% on Tuesday.
Economists suggested that it would be weeks before the refineries in Houston became functional once again and this led to decline in demand for oil by the refineries. Shares of refineries operating out the affected region showed an increase on Monday, only to pare some of the gains on Tuesday.
Shares of Delek U.S. Holdings Inc. (DK - Free Report) and PBF Energy Inc. (PBF - Free Report) declined less than 1% whereas the shares of HollyFrontier Corp. (HFC - Free Report) gained a little less than 1%. Gasoline futures also posted gains as the storm gained strength and refineries were forced to shut down.
The Case-Shiller Composite 20 Index increased 5.7% in the three months ending June. The Consumer Confidence index increased to 122.9 from the previous month’s figure of 120, whereas the consensus estimated it to increase to 121.4.
Stocks That Made Headlines
Brown-Forman Q1 Earnings Top on Strong Sales, Stock Up
Brown-Forman Corporation (BF.B - Free Report) reported robust first-quarter fiscal 2018, wherein both earnings and sales topped estimates. (Read More)
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