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Stock Market News For Aug 6, 2018

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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.

How Did the Benchmarks Perform?

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.

Robust Second-Quarter Earnings Results

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.

U.S. – China Trade War Fear Reignites

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.

Economic Data

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.

Unemployment rate in July fell 0.1% to 3.9%, its lowest level in nearly 50 years. This was at per with the consensus estimate. Average hourly earnings increased 2.7% over the same period a year ago, in line with consensus estimate.

The Institute of Supply Management (ISM) reported that activity index for the U.S. services sector in the month of July was 55.7%, lagging the consensus estimate of 58.2%. Commerce Department data revealed that the U.S. trade deficit (including goods and services) was $46.3 billion in June, higher than the consensus estimate of $45.7 billion.

Weekly Roundup

Last week was a good one for Wall Street. The S&P 500 and Nasdaq Composite gained 0.8% and 1%, respectively. The Dow 30 also gained less 0.1%. Notably, The S&P 500 and Dow posted their fifth straight weekly gains, the first time since 2018.

A rally among tech stocks driven by strong performance of Apple coupled with robust second-quarter earnings results helped the broader S&P 500 and tech-laden Nasdaq to close in the green. However, renewed concerns over trade conflict’s with China made the blue-chip index little volatile although it also gained marginally over last week. 

Stocks That Made Headlines

Petrobras Q2 Earnings Surge in Best Quarter Since 2011

Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) announced second-quarter earnings per ADS of $0.44, ahead of the Zacks Consensus Estimate of $0.31. (Read More)

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