Benchmarks notched up record highs on Friday following the release of retail sales data which posted its highest reading in more than two years. Broader markets also gained after shares of Bank of America surged after the company beat earnings estimates in the third quarter. Meanwhile, President Trump ‘decertified’ the Iran nuclear deal and also planned to terminate subsidies under Obamacare to health insurers.
The Dow Jones Industrial Average (DJIA) closed at 22,871.72, gaining 0.1%. The S&P 500 Index (INX) increased 0.1% to close at 2,553.17. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,605.80, increasing 0.2%. Advancing issues outnumbered decliners on the NYSE by 1.60-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by 1.09-to-1 ratio. The CBOE VIX increased 0.3% to close at 9.94.
Benchmarks Breach Records
The Nasdaq posted sharp gains on Friday after it amassed 14.29 points and registered its 57th overall record close for 2017. Such gains were boosted by shares of Netflix (NFLX - Free Report) which gained 1.8% to notch close at a record level of $200.82, bolstered by a series of increases in its price target. This comes just ahead of its earnings report slated for Monday. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Dow gained 30.71 points to hit an all-time intraday high of 22,905.33. Gains for the blue-chip index were made possible by shares of American Express Co.(AXP - Free Report) and McDonald’s (MCD - Free Report) , shares of which rallied 1.4% and 0.9%, respectively.
The S&P 500 gathered 2.24 points to hit an intraday record high of 2,557.65. Of the 11 major sectors of the S&P 500, six ended in positive territory, with consumer discretionary, technology and materials stocks leading the advancers. The Consumer Discretionary Select Sector SPDR ETF (XLY), the Materials Select Sector SPDR ETF (XLB) and the Technology Select Sector SPDR ETF (XLK) all gained 0.5%. Shares of Apple Inc. rallied 0.6% and contributed most of the gains for the S&P 500.
Meanwhile, shares of Bank of America (BAC - Free Report) gained 1.5% after the company posted stupendous earnings for third quarter 2017. Despite trading slowdown, loan growth and higher interest rates drove Bank of America Corporation’s third-quarter 2017 earnings of $0.48 per share, which outpaced the Zacks Consensus Estimate of $0.46. The figure was 17% higher than the prior-year quarter. (Read More: BofA (BAC - Free Report) Keeps the Trend Alive, Beats on Q3 Earnings). Such gains also boosted the broader markets.
Trump ‘Decertifies’ Iran’s Nuclear Deal
President Trump chose not to certify Iran’s compliance with a nuclear deal struck in 2015. He reasoned that the country continued to ‘sponsor terrorism’ and in effect disrupted international peace. He also described the deal as ‘one of the worst and most one-sided transactions the United States has ever entered into.’
Trump announced a new strategy for Iran which places fresh sanctions on the country that requires it to cut off its funding toward ‘terrorism.’ He also threatened to terminate the agreement sometime in the future if Iran does not ‘comply’ with the terms of deal.
Trump Decides to End Subsidies under Obamacare
Trump administration also announced that it plans to terminate subsidies worth billions of dollars to health insurers under the Affordable Care Act, also known as Obamacare. Reports suggest that Trump might not end the subsidies if a bipartisan agreement is signed on healthcare.
In an official statement on Thursday night, the White House stated that after consultation with the Justice Department and the Department of Health and Human Services; it has concluded that there is no law which states that subsidies and funds have to be earmarked for health insurers under Obamacare.
The Department of Health and Human Services stated that such payments ‘will be discontinued immediately’ and the administration sought a legal opinion from Attorney General Jeff Sessions.
The Consumer Price Index (CPI) for the month of September increased 0.5%, coming in below the consensus estimate of an increase of 0.6%. This marked the index’s second consecutive increase in as many months. On the other hand, core CPI gained 0.1%, also below the consensus estimate of an increase of 0.2%.
Meanwhile, retail sales in the United States for the month of September increased 1.6%, marking its highest increase in more than two years. Analysts stated that such an increase was bolstered by demand for new automobiles and trucks in the wake of two destructive hurricanes which struck the United States recently. This figure came in line with the consensus estimate of 1.6%. Moreover, retail sales excluding autos surged 1%, more than the consensus estimate of 0.9%.
The consumer-sentiment index released by University of Michigan logged a reading of 101.1 — its highest level since 2004, surpassing the consensus estimate of 95.1.
For the week, the Dow, the S&P 500 and the Nasdaq increased 0.4%, 0.2% and 0.2%, respectively. While the Dow and the S&P 500 have increased for the fifth straight week, the Nasdaq posted its third weekly gain. Meanwhile, the release of the Federal Open Market Committee minutes clearly hinted at a rate hike in December. Moreover, the minutes stated that a majority of the Fed officials voted in favor of the rate hike.
Initial jobless claims plummeted to a six-week low after business resumed in Texas and Florida — areas pummeled by two destructive hurricanes. Moreover, broad based markets gained traction ahead of the beginning of third quarter earnings season as investors remained hopeful of a streak of strong earnings releases.
Stocks That Made Headlines
Cheniere Energy's Sabine Pass Train 4 Comes Online
Cheniere Energy Partners, L.P. (CQP - Free Report) — a subsidiary of liquefied natural gas exporter Cheniere Energy, Inc. (LNG) — recently announced the completion of its fourth liquefaction train at Louisiana facility. (Read More)
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