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Stock Market News for Jan 16, 2018

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All three key U.S. indexes experienced gains last week on the back of upbeat earnings results from key banks and encouraging economic data. Additionally, energy stocks moved upward following a rally in oil prices. Additionally the passage of the much-awaited Republican tax Bill last year, now known as the Tax Cuts and Jobs Act of 2017 also boosted sentiment. Markets remained closed on Monday due to Martin Luther King Jr. Day.

Q4 Earnings Season Commences

A slew of earnings results from major banks kicked off the fourth-quarter earnings season. Shares of JPMorgan Chase & Co. (JPM - Free Report) rose 1.7% on Friday after its fourth-quarter earnings of $1.76 per share handily surpassed the Zacks Consensus Estimate of $1.69. Its revenues also beat the Zacks Consensus Estimate. (Read More: JPMorgan Q4 Earnings Beat Thanks to Investment Banking)

Additionally, United States’ biggest asset manager BlackRock, Inc’s (BLK - Free Report) shares advanced 3.3% on Friday after its fourth quarter earnings per share and revenues beat their respective Zacks Consensus Estimate. (Read More: BlackRock's Q4 Earnings Beat Estimates, Expenses Rise)

Economic Data Mostly Positive

Economic data remained upbeat except for weak job additions and fall in PPI and ISM Services Index. On the jobs front, the U.S. added 148,000 jobs in December, below November’s readings of 252,000 job additions. The unemployment rate, meantime, continued to remain at a 17-year low.

The ISM manufacturing index rose from 58.2% in November to 59.7% in December, per the Institute for Supply Management. However, the ISM Services Index fell to 55.9% in December from 57.4% in November.

Meanwhile, the Bureau of Labor Statistics reported that CPI gained 0.1%, while PPI fell 0.1%. Further, the U.S. Census Bureau reported a rise of 0.4% in retail and food services sales in December to $495.4 billion. Retail sales increased for the fourth straight month, ending 2017 on a high.

Oil Prices Rally Northward

A number of factors have propelled oil prices upward in recent times. These include OPEC and fellow exporters’ decision to extend their production-cut agreement beyond March 2018.Production cuts are expected to continue till 2018-end along with improved demand outlook. Adding to the positive momentum, energy bodies OPEC and IEA recently raised global oil demand forecasts for 2018, helping to tighten the market significantly.

Increase in oil prices led the Energy Select Sector SPDR (XLE) to advance 11.3% over the last one month, emerging as the best performing sector of S&P 500. Some of its key components, including Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) rose 11.6% and 5.8%, respectively. While Chevron possess a Zacks Rank #1 (Strong Buy), Exxon Mobil hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tax Bill Optimism Boosts Sentiment

Last month, the House of Representatives cast their vote in favor of the Republican tax overhaul Bill after the initial version of the House Bill included three provisions which did not fulfill the Byrd Rule. The provisions include criteria used to determine whether private university grants were subject to excise taxes, allowing families to utilize 529 plans to bear home-schooling costs and the name of the Bill.

The Bill was passed by the House for the second time after Senate Republicans passed the tax overhaul Bill, excluding these provisions. The Senate voted 51-48 in favor of the Bill, which permanently slashes corporate tax rates from 35% to 21%. Further, companies will be allowed to pay a 5% tax on reinvested earnings and 10% tax on deferred cash earnings. Optimism over the Tax Cuts and Jobs Act of 2017, continued to have a positive impact on markets during this month.

Stocks That Made Headlines

Sysco Set to Bring Kent Frozen Foods Under Its Wings

Sysco Corporation (SYY - Free Report) inked a deal to buy Kent Frozen Foods, a leading foodservice provider in the United Kingdom. (Read More)

Shell Expands Renewable Foothold, Buys Stake in Silicon Ranch

Royal Dutch Shell plc (RDS.A - Free Report) recently inked a deal to acquire a 43.8% stake in Silicon Ranch Corporation from Partners Group. (Read More)

ExxonMobil Finds Hydrocarbons in P'nyang South-2 Well

ExxonMobil Corporation has confirmed the availability of hydrocarbons in P’nyang South-2 well, located in the Western Province of Papua New Guinea. (Read More)

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