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Stock Market News For Sep 21, 2018

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Wall Street ended sharply higher on Thursday as blue-chip stocks induced broad-based rally leading to record high closes for the Dow and S&P 500. The Nasdaq Composite also posted impressive gains. Strong U.S. economic fundamentals, robust labor market and growing confidence of investors that trade-related conflicts may not be as worse as was earlier believed to be fueled market uptrend.

The Dow Jones Industrial Average (DJI) closed at 26,656.98, climbing 1% or 251.22 points. The S&P 500 Index (INX) advanced 0.8% to close at 2,930.75. The Nasdaq Composite Index (IXIC) closed at 8,028.23, gaining 1%. A total of 6.88 billion shares were traded on Thursday, higher than the last 20-session average of 6.31 billion shares. Advancers outnumbered decliners on the NYSE by 2.15-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 2.68-to-1 ratio.  The CBOE VIX increased 0.4% to close at 11.80.

How Did the Benchmarks Perform?

The Dow closed in positive territory for the third straight day closing at an all-time high closing. The previous record high was set in Jan 26. Notably, 28 components of the 30-stock blue-chip index finished in the green while two ended in the red.

The S&P 500 finished in the green for the third straight day also closing at an all-time high. The last record high was set in Aug 29. The benchmark index’s gain was led by an increase of 1.3% in Consumer Staples Select Sector SPDR (XLP) and a 1.2% rise in Technology Select Sector SPDR (XLK). Notably, all the 11 sectors of the broad-market index ended in the green.

The tech-heavy Nasdaq Composite ended in the green reversing its previous day’s loss due to strong showing by large-cap tech giants. The tech-laded index has regained its psychologically important 8,000 level and is just 1.3% away from its all-time high set in Aug 30.

Blue-chip Stocks Fueled Market Rally

Recent strong momentum in stock markets has been primarily fueled by large-cap blue-chip stocks with investors shrugging off trade war jitters. A strong U.S. economy, robust job market and record corporate profits in the first half of 2018 are more than offsetting trade inflicted wounds.

Moreover, relatively soft retaliatory measures taken by China against the latest round of U.S. tariffs were welcomed by investors. On Sep 17, President Trump announced of levying a tariffs worth $200 billion on Chinese goods. The new tariffs will be implemented from Sep 24. However, on Sep 18, China retaliated with tariffs on just $60 billion of U.S. goods. Notably, the rate of tariff was kept within the range of 5% to 10% compared with 20% to 25% stated earlier.

Meanwhile, the U.S. government set the tariff rate at 10% which will be increased to 25% from Jan 1, 2019. This was in contrast to Trump administration’s earlier stand of imposing 25% tariff from the beginning. The market anticipates that by lowering tariff rate for the time being the government has given time to corporates to adjust to the changed scenario.

Consequently, shares of trade-sensitive stocks like The Boeing Co. (BA - Free Report) , Caterpillar Inc. (CAT - Free Report) , Apple Inc. (AAPL - Free Report) and Amazon.com Inc. (AMZN - Free Report) were up 0.6%, 2.1%, 0.8% and 0.9%, respectively. Apple carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Labor reported that initial jobless claims fell by 3,000 to a seasonally adjusted level of 201,000 for the week ended Sep. 15, marking its lowest level since November 1969.  The figure was lower than the consensus estimate of 203,000.

The National Association of Realtors reported that the level of seasonally adjusted existing-home sales was registered at 5.34 million in August, remaining flat sequentially. However, the figure missed the consensus estimate of 5.37 million.

The Philadelphia Fed reported that its manufacturing index in September jumped to a two-month high at 22.9. The reading was a major improvement from the August reading of 11.9.

Stock That Made Headline

American Airlines Now Jumps on the Bag Fee Hike Bandwagon

Putting all speculations to rest, American Airlines Group Inc. (AAL - Free Report) has finally joined its rivals in increasing its baggage fees. (Read More)

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