U.S. stocks rallied once again, with markets closing sharply higher on Wednesday. This saw two of the indexes closing at record highs. The rally was led by financial stocks, boosted by the rise in the benchmark 10-year Treasury yield and partly supported by robust economic data and easing of trade war fears.
The Dow Jones Industrial Average (DJI) gained 1.4%, to close at 25,146.39, its best single-day percentage gain since April 10. The S&P 500 gained 0.9% to close at 2,772.35. The Nasdaq Composite Index closed at 7,689.24, increasing 0.7%. A total of 6.88 billion shares were traded on Wednesday, higher than the last 20-session average of 6.64 billion shares. Advancers outnumbered decliners on the NYSE by a 1.83-to-1 ratio. On Nasdaq, a 1.54-to-1 ratio favored advancing issues.
How did the Benchmark Perform?
The tech heavy Nasdaq gained 51.38 points, as tech stocks pared earlier losses. Also, the Nasdaq registered its third-consecutive all-time closing high. The Dow gained 346.41 points to close above 25,000 points for the first time since Mar 12. Boeing (BA - Free Report) was the best performer on the index gaining 3.2%. Boeing has a Zacks Rank #1 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 23.55 points, to close at its highest level since Mar 12. The Financials Select Sector SPDR Fund (XLF) was the best performer, gaining 1.8%. Of the 11 major S&P 500 sectors, 10 ended in positive territory.
Financial Stocks Gain
On Wednesday, European Central Bank’s chief economist Peter Praet signaled the end of the bond-buying program. Praet said that the bank will discuss next week how to roll back the 30 billion euros ($35 billion) monthly-purchase program. This shows that the economy is on steady track and ECB, which is set to run its asset-purchase program through September, might slow purchases over the next few months, possibly ending by December.
As a result of this, bond prices fell, pushing yields higher. The 10-year Treasury note rose 5.9 basis points to 2.975%, its highest since May 24. This led to a rally in financial stocks. Shares of JP Morgan Chase (JPM - Free Report) and Goldman Sachs (GS - Free Report) rose 2.4% and 1.7%, respectively. Also shares of Bank of America (BAC - Free Report) and Morgan Stanley (MS - Free Report) gained 3.2% and 2.3%, respectively.
Trade war fears have been grpping markets for quite some time now. However, investors shrugged off trade war fears to some extent as on Wednesday after China announced that it will import $70 billion U.S. goods to huge trade deficit gap between the two countries. This reinstated investors’ confidence leading to a rally in stocks.
April Trade Deficit Falls, Nonfarm Productivity Increases
Robust economic data helped boosting investors’ confidence. The U.S. trade deficit fell 2.1% in April, hitting a seven-month low. Understandably, American’s bought less imported goods after Trump started imposing tariffs in March on a range of imported goods from China. Moreover, nonfarm productivity increased at the pace of 0.4% in the first quarter instead of 0.7% reported last month. Also factory output increased 2.7% instead of 2.8%.
Stocks That Made Headlines
Delta's Q2 TRASM View Bullish, Costs Guidance Bearish
Delta Air Lines, Inc. (DAL - Free Report) issued a revised guidance for the second quarter of 2018 at the Deutsche Bank 2018 Global Industrials and Materials Summit held yesterday. (Read More)
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
See This Ticker Free >>