Back to top

Image: Bigstock

Stock Market News For Aug 20, 2018

Read MoreHide Full Article

Wall Street continued its winning streak on Friday as high-level delegations of the United States and China are set resume trade talks next week.  Moreover, Mexico expressed its willingness to resolve bilateral trade issues with the United States by the middle of next week. Optimistic views from several fronts on global trade-related concerns have restored investor’s confidence in risky assets like equities. Consequently, all the major stock indexes closed in the green.

The Dow Jones Industrial Average (DJI) closed at 25,669.32, gaining 0.4% or 110.59 points. The S&P 500 Index (INX) was up 0.3% to close at 2,850.13. The Nasdaq Composite Index (IXIC) closed at 7,816.33, increasing 0.1%. A total of 6.06 billion shares were traded on Friday, lower than the last 20-session average of 6.53 billion shares. Advancers outnumbered decliners on the NYSE by 2.45-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.41-to-1 ratio.  The CBOE VIX decreased 6% to close at 12.64.

How Did the Benchmarks Perform?

The Dow ended at 25,669.32, marking its highest close since Feb 26. Notably, 23 components of the 30-stock blue-chip index closed in the green, while six finished in the red and one remained unchanged. Tech-heavy Nasdaq Composite also managed to finish in the green for the second straight trading day. 

The S&P 500’s gain was led by a 1% increase in Real Estate Select Sector SPDR (XLRE), 0.8% hike in Consumer Staples Select Sector SPDR (XLP) and 0.7% gain Materials Select Sector SPDR (XLB).  Notably, ten out of 11 sectors of the benchmark index closed in the green while one ended in the red.

Both American Tower Corp. (AMT - Free Report) and Simon Property Group Inc. (SPG - Free Report) , the largest two companies in the Real Estate Select Sector SPDR increased 1%. Both the companies carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Trade-related Concerns Eased

High-level delegations of the United States and China will hold a round of negotiations next week to reach some kind of an agreement related to tariff-related issues. Notably, both countries have imposed $50 billion of tariffs on each other escalating the fear of a global trade war.

On Aug 17, The Wall Street Journal reported that both the U.S. and Chinses negotiators will try their best to reach to a middle path which will eventually pave the way for a summit between President Donald Trump and Chinese leader Xi Jinping in November.

Meanwhile, Mexico’s economy minister, Ildefonso Guajardo stated that he is hopeful to resolve all outstanding bilateral issues on the North American Free Trade Agreement (NAFTA) by the middle of next week. Notably, NAFTA is facing vulnerability since June when the Trump administration imposed tariffs on metals imported from both Mexico and Canada.

Robust Earnings Momentum

U.S. corporates have posted robust earnings results for the second quarter of 2018. So far, 467 S&P 500 members have reported their quarterly results. Total earnings of these companies are up 25.5% on 9.9% higher revenues.For the S&P 500 index as a whole, total second-quarter earnings are expected to be up 24.9% from the same period last year on 9.7% higher revenues.

If the current earnings expectation of second-quarter for the S&P 500 index as a whole materializes, it will be the highest quarterly growth pace in almost 8 years, exceeding the first-quarter 2018’s earnings growth rate of 24.6%.

Weekly Roundup

For the whole week ended Aug 17, performances of the three major indexes were mixed. While The Dow and S&P 500 rallied 1.4% and 0.6%, respectively, tech-laden Nasdaq Composite was down 0.3%.

During the week, the market witnessed volatility due to geopolitical concerns, especially, the decimation of Turkish Lira, primarily due to mismanagement of the country’s economy resulting in skyrocketing foreign debt and soaring inflation. In addition, imposition of U.S. sanctions on political reasons also reduced the Lira’s exchange value leading to panic on global stock markets.

However, several optimistic views related to global trade war concerns, be it between the United States and China or NAFTA, has strengthened investor’s confidence in equities. Consequently, both the Dow and S&P 500 posted significant weekly gains.

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>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


American Tower Corporation (AMT) - free report >>

Simon Property Group, Inc. (SPG) - free report >>