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Stock Market News For Mar 6, 2018

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The Dow roared back to life on Monday ending its four-session long losing streak. Both the S&P 500 and the Nasdaq also ended in positive territory. Such gains were made possible after investors believed risks associated with a possible trade war were overblown. Instead, they chose to focus on encouraging ISM Services Index data. Investors also keenly followed the progress of elections in Germany and Italy.

The Dow Jones Industrial Average (DJI) increased 1.4% to close at 24,874.76. The S&P 500 gained 1.1% to close at 2,720.94. The tech-laden Nasdaq Composite Index closed at 7,330.70, increasing 1%. The fear-gauge CBOE Volatility Index (VIX) decreased 7.3% to close at 18.17. A total of 6.91 billion shares were traded on Monday, considerably lower than the last 20-session average of 8.3 billion shares. Advancers outnumbered decliners on the NYSE by a 2.82-to-1 ratio. On Nasdaq, a 2.20-to-1 ratio favored advancing issues.

How did Benchmarks Fare?

The Dow amassed a whopping 336.7 points, erasing losses it incurred earlier in the session, to end the day in the green. Gains for the blue-chip index were supported by a 3.2% surge in the shares of Caterpillar (CAT - Free Report) .

The S&P 500 added 29.7 points to also end in the positive territory. All of the 11 major segments of the S&P 500 ended in the green, with utilities and real estate shares leading the gainers. The Utilities Select Sector SPDR ETF (XLU) and Real Estate Select Sector SPDR (XLRE) gained 2% and 1.4%, respectively.

Gains for the broader index were also supported by a surge in shares of Harley-Davidson, Inc. (HOG - Free Report) , which gained 2.3% in intraday trade. Meanwhile, the EU has said that it will impose tariffs on classic American products such as bourbon, jeans and Harley motorcycle, but doesn’t seem keen on further measures at this point. This further led the investors to believe that such issues are rather overblown. Meanwhile, the Nasdaq rose 72.8 points to end in the green. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors Look beyond Trade War Fears

On Friday, Trump said that the U.S. will impose a 25% tariff on steel imports and a 10% tariff on aluminum. Such protectionist trade measures triggered a lot of concern among corporations and consumers. Tariffs will increase the cost of companies that rely heavily on aluminum and steel, like auto and plane makers.

Trump’s contentious tariff announcement raised apprehensions about retaliation from China and other major U.S. trading partners. China cautioned America to abide by multilateral trade rules and not to harm the delicate global economy.

Such announcements also invited flak from global leaders, with the European Union saying that they would impose tariffs on $3.5 billion worth of U.S. imports, as per Reuters. Trump retaliated by warning the European Union of dire consequences if it objected to the new tariffs. In the event of an objection from EU, Trump threatened to impose a new set of tariffs on European autos.

Trump also tweeted over the weekend that the United States is losing on every trade deal it is currently a part of. He further stated in his tweet, “Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead.”

Meanwhile, a Chinese government official stated that China was thinking to soon restart discussions with United States regarding trade disputes. However, possibility of such a discussion was negated by a spokesperson from White House, who stated that there were no plans for such a meeting. However, such developments did not have much of an impact on the markets as the investors played down possible threats of a trade war.

Elections in Europe

Investors keenly followed the results of elections in Italy which yielded no clear winner. What baffled investors even further was the fact that anti-EU and euro-skeptic political parties performed far better than initial forecasts.

Meanwhile, in Germany, Angela Merkel won her fourth term as Chancellor even as the Social Democratic Party of Germany agreed to form a coalition in a bid to end the political instability that had gripped the country recently. This is likely to be Merkel’s last term as Chancellor.

Economic Data

The Institute of Supply Management (ISM) reported that its ISM Services Index decreased from 59.9% in January to 59.5% in February. However, the index came in considerably higher than the consensus estimate of 58.4%. U.S. service sector activity has now expanded for ninety seven consecutive months on the back of a strong upside in business activity and new orders.

Stocks That Made Headlines

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