Benchmarks closed higher on Wednesday after President Trump reached an agreement with key members of Congress to extend the debt ceiling deadline. This was done to aid the relief funding for victims of Hurricane Harvey. However, another category 5 Hurricane Irma gained momentum and is slated for land fall on the coast of Florida this weekend. News of Irma’s coming sent the timeshare and vacation stocks lower. Meanwhile, Fed’s Vice Chairman announced his plans to retire in mid-October, citing ‘personal reasons’ behind his decision.
The Dow Jones Industrial Average (DJIA) closed at 21,807.64, gaining 0.3%. The S&P 500 Index (INX) increased 0.3% to close at 2,465.54. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,393.31, increasing 0.3%. A total of only around 6.3 billion shares were traded on Wednesday, lower than the last 20-session average of 5.8 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.65-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.27-to-1 ratio.
Debt Ceiling Deadline to be Extended
Markets closed higher on Monday after President Trump agreed with congressional leaders to support the extension of the debt ceiling deadline in order to fund a relief program to tackle the aftermath of Hurricane Harvey. This short-term debt ceiling extension comes as a part of the Hurricane Harvey relief Bill which provides government funding for the victims of Hurricane Harvey. Senate Majority Leader Mitch McConnell also expressed support for the package.
Extension of the debt ceiling is primarily part of the agenda of the Democrats. Senate Minority Leader Chuck Schumer and House Democratic Leader Nancy Pelosi announced that a decision to push through the Bill was reached after Trump reached an agreement with congressional leaders in a meeting at the White House.
The idea to push deadline ahead by only three months was met with open criticism by members of the GOP. House Speaker Paul Ryan termed the proposition by as "ridiculous" and "unworkable." Such comments hurt the investor sentiment. The House approved almost $8 billion on Wednesday as a part of the Hurricane Harvey relief funding. However, this did not include the debt ceiling extension or provisions for government spending.
Possible Fallout of Hurricane Irma
The likelihood of a category 5 hurricane, Irma, hitting the coast of Florida this weekend has increased, according to the National Hurricane Center. The eye of the hurricane passed over the island of Barbuda on Wednesday, moving northwest toward Puerto Rico. Hurricane Irma’s northern eye-wall pummeled Anguilla and is currently moving 90 miles east of San Juan, Puerto Rico.
Market watchers closely followed the hurricane and its likely fallout sent timeshare stocks lower on Wednesday. Shares of Hilton Grand Vacations (HGV - Free Report) and Marriott International (MAR - Free Report) declined 1.4% and 1% respectively.
Energy Shares Gained Momentum
Energy shares gained on Wednesday after oil refineries resumed action on Wednesday. Resumption of business led to increased demand for oil by the refineries thereby boosting energy shares.
Nine of the 11 main sectors of the S&P 500 ended in the green on Wednesday, with energy leading the advancers. The Energy Select Sector SPDR Fund (XLE) was up almost 1.6%. Shares of Chevron Corp. (CVX - Free Report) and Exxon Mobil Corp. (XOM - Free Report) gained nearly 2% on Wednesday. These gains pushed both the S&P 500 and the Dow higher. Both the companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stanley Fischer Announces Resignation from the Fed
Federal Reserve Vice Chairman Stanley Fischer announced on Wednesday that he plans to step down from his post, citing ‘personal reasons’ for his decision. Fischer plans to quit in mid-October, whereas his term would have officially ended in June next year and his term as a Fed governor would have termed in early 2020.
Economists commented that Fischer’s departure would raise speculations about whether Fed Chairwoman Janet Yellen would continue with her role. Moreover, market watchers would be closely watching Fed’s moves as lower than targeted levels of inflation make it difficult for the central banks to raise rates. Investors also have a keen eye on European Central Bank's monetary policy meeting scheduled for Thursday.
Fed released its Beige book report on Wednesday. As per the report, the U.S. economy recorded a "modest to moderate" pace of growth over past few weeks. "Prices rose modestly overall across the country," the report said, indicating slow rates of inflation growth. Further, the report suggested that Fed’s measure of inflation pulled back to 1.4% in July on a year over year basis, recording its slowest rate of expansion in over a year and a half. In other economic news, the ISM Services Index increased to 55.3, in line with the consensus estimate.
Stocks That Made Headlines
Hewlett Packard Q3 Earnings & Revenues Top, Shares Up
Hewlett Packard Enterprise Company (HPE - Free Report) , yesterday, reported encouraging third-quarter fiscal 2017 results, wherein the bottom line not only came ahead of its estimates but also surpassed the Zacks Consensus Estimate. (Read More)
Leggett Slips on Yet Another View Cut, More Downside Ahead?
Steel price volatility seems to be taking a toll on Leggett & Platt Incorporated (LEG - Free Report) , as the company cut its 2017 outlook for the second time in less than two months. (Read More)
Deere to Buy Blue River Technology, Adds Competitive Edge
Deere & Company (DE - Free Report) will acquire Sunnyvale, CA-based, Blue River Technology, a pioneer in bringing machine learning to agricultural spraying equipment. (Read More)
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