U.S. stocks closed mostly lower on Wednesday. Renewed trade related conflicts between the United States and China resulting in imposition of retaliatory tariffs overshadowed strong earnings momentum. Both the Dow and S&P 500 ended in negative territory while Nasdaq Composite managed to finish in the green.
The Dow Jones Industrial Average (DJI) closed at 25,583.75, declining 0.2%. The S&P 500 Index (INX) lost 0.75 points to close at 2,857.70. However, the Nasdaq Composite Index (IXIC) closed at 7,888.33, gaining less than 0.1%. A total of 5.95 billion shares were traded on Wednesday, lower than the last 20-session average of 6.31 billion shares. Decliners outnumbered advancers on the NYSE by 1.22-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.04-to-1 ratio. The CBOE VIX decreased 0.7% to close at 10.85, its lowest close since January.
How Did the Benchmarks Perform?
The Dow ended in negative territory with 15 components of the 30-stock blue-chip index closed in the red, while other 15 finished in the green. The tech-heavy Nasdaq Composite has gained seven days in a row, its longest winning run since Mar 12.
The S&P 500’s decline was led by a 0.8% decrease in Consumer Staples Select Sector SPDR (XLP) and 0.7% loss of Energy Select Sector SPDR (XLK). Notably, seven out of 11 sectors of the benchmark index closed in the red while 4 ended in the green.
Trade Conflicts Linger
On Aug 8, the Chinese Ministry of Commerce announced a 25% tariff on $16 billion worth of U.S. goods. China has revealed a list of 333 U.S. goods mainly from industries like large passenger cars and motorcycles, various types of fuels as well as fiber optical cables, on which fresh tariffs will be implemented.
On Aug 7, the U.S. Trade Representative's office published a list of 279 Chinese import product lines, which will be subject of 25% tariffs worth $16 billion and will be implemented on Aug 23.
This is the second part of the first phase of $50 billion tariffs that the Trump administration has decided to impose on Chinese imports. Notably, China has already imposed 25% tariffs on $34 billion U.S. imports.
Earnings Expectations Skyrocketed
U.S. corporates have so far posted better-than-expected for the second quarter of 2018. However, some corporate behemoths, which posted their quarterly results after the closing bell on Aug 6, failed to meet investor’s expectations.
The Walt Disney Co. (DIS - Free Report) reported disappointing results for the third quarter of fiscal 2018 wherein both the top and bottom line fell below the Zacks Consensus Estimate. (Read More)
Papa John's International Inc. (PZZA - Free Report) missed the top line while its bottom line barely met the consensus mark in the second-quarter 2018. (Read More)
Snap Inc. (SNAP - Free Report) posted strong second quarter earnings results with both the top and bottom line surpassing the Zacks Consensus Estimate. However, the company’s Daily Active Users base shrunk by a significant 3 million in the reported quarter. (Read More)
Consequently, stock prices of Disney, Papa John’s and Snap were down 2.2%, 5.2% and 6.8%, respectively.
Stocks That Made Headlines
Copa Holdings Q2 Earnings Lag Estimates, Plunge Y/Y
Copa Holdings, S.A. (CPA - Free Report) put up a disappointing performance in the second quarter of 2018 with lower-than-expected earnings and revenues. (Read More)
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