Back to top

Stocks Wobble As Trade Worries Ail Sentiment

Read MoreHide Full Article

Monday, August 6, 2018

U.S. stock index futures were marginally lower on Monday. Strong performances by U.S. corporates in the second-quarter were overshadowed by lingering trade conflict between the United States and China. Berkshire Hathaway Inc.’s (BRK.B - Free Report) earnings per share for the second quarter 2018 were $4.87, up 182% year over year. Newell Brands Inc. (NWL - Free Report) , SeaWorld Entertainment Inc. (SEAS - Free Report) , Sotheby's (BID - Free Report) and Tyson Foods Inc. (TSN - Free Report) will release earnings before the open.

On Aug 3, China threatened to impose $60 billion of tariffs on U.S. goods in retaliation against Trump administration’s decision to impose 25% tariff on Chinese exports. Meanwhile, ongoing global trade conflict has taken a toll on German manufacturing orders which plunged 4% in June compared with May.

Wall Street ended sharply higher on Friday. Strong second-quarter earnings results have helped investors to ignore renewed trade conflicts between the United States and China and weaker-than-expected non-firm payroll data for July. All three major indexes closed in positive territory.

The Dow Jones Industrial Average (DJI) closed at 25,462.58, gaining 0.5% or 136.42 points. The S&P 500 Index (INX) also increased 0.5% to close at 2,840.35. The Nasdaq Composite Index (IXIC) closed at 7,812.02, advancing 0.1%. A total of 5.96 billion shares were traded on Friday, lower than the last 20-session average of 6.29 billion shares. Advancers outnumbered decliners on the NYSE by 1.51-to-1 ratio. However, on the Nasdaq, decliners had an edge over advancers by 1.41-to-1 ratio.  The CBOE VIX decreased 4.5% to close at 11.64.

For the Dow, 27 components of the 30-stock blue-chip index closed in the green, while only 3 finished in the red. The tech-heavy Nasdaq Composite also rose buoyed by strong performance of large-cap tech giants.

The S&P 500’s gain was led by a 1.3% increase in Real Estate Select Sector SPDR (XLRE) and 1.2% rise in Consumer Staples Select Sector SPDR (XLP). Notably, 10 out of 11 sectors of the benchmark index closed in the green while 1 ended in the red.

U.S. corporates have so far posted robust results for the second-quarter 2018, maintaining the terrific earnings momentum which was started since the first-quarter 2018. In the second-quarter, total earnings of S&P 500 companies are expected to be up 23.9% from the same period last year on 9.3% higher revenues.

Tech behemoth Apple Inc. (AAPL - Free Report) , which became the first publicly traded U.S. company to cross a market cap of $1 trillion on Aug 2, further extended its gain on the last day of the week. On Friday, share price of Apple rose 0.3%. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On Aug 3, the Chinese government threatened United States to impose tariffs on $60 billion of U.S. goods if the Trump administration goes ahead with its plan to impose new import duties on Chinese exports.

China’s Ministry of Commerce unveiled a list of 5,200 American products on which tariffs can be charged within the range of 5% to 25%. Most of these products are from meat, chemicals, leather products and auto-parts industries.

On Aug 3, The Labor Department reported that the U.S. non-firm job additions increased by 157,000 for the month of July, missing the consensus estimate of 192,000. However, job additions for May and June were revised upward by a combine 59,000.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>



More from Zacks Ahead of Wall Street

You May Like