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Stock Market News For Sep 28, 2018

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Wall Street ended on a positive note on Thursday as a series of robust U.S. economic reports lifted investor confidence. Strong economic fundamentals have once again aided market participants’ appetite for relatively risky assets like equities. The broad-based market rally helped all three major stock indexes to close in the green.

The Dow Jones Industrial Average (DJI) closed at 26,439.93, advancing 0.2%. The S&P 500 Index (INX) gained 0.3% to close at 2,914.0. The Nasdaq Composite Index (IXIC) closed at 8,041.97, increasing 0.7%. A total of 6.2 billion shares were traded on Thursday, lower than the last 20-session average of 6.8 billion shares. Advancers outnumbered decliners on the NYSE by 1.22-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.01-to-1 ratio.  The CBOE VIX decreased 3.7% to close at 12.41. 

How Did the Benchmarks Perform?

The Dow ended in positive territory reversing its three-day long losing streak. Notably, 17 components of the 30-stock blue-chip index finished in the green while thirteen ended in the red.

The S&P 500 also finished in the green, recovering from a four-day long downturn. The benchmark index’s gain was led by an increase of 1% in Utilities Select Sector SPDR (XLU), 0.9% rise in Communications Services Select Sector SPDR (XLC) and 0.6% hike in Technology Select Sector SPDR (XLK). Notably, eight out of 11 sectors of the broad-market index finished in positive territory while three closed in negative territory.

The tech-heavy Nasdaq Composite ended in the green reversing its previous day’s downtrend. The index also regained the psychologically important 8,000 level due to broader market rally.

Solid Economic Data Raises Investors’ Confidence

On Sep 27, Bureau of Economic Analysis of the Department of Commerce confirmed in its third and final estimate that the U.S. economy grew 4.2% in the second quarter of 2018. The figure was highest since the third quarter of 2014 and the third-best growth rate since the Great Recession of 2008-2009. On an average, in the first half of 2018, the U.S. economy grew 3.2%, higher than 3% annual GDP growth that the Trump administration desires.

The U.S. Census Bureau of the Department of Commerce reported that new orders for manufactured durable goods in August increased $11.1 billion from July reaching $259.6 billion. The 4.5% monthly increase in durable goods orders is more than double than the consensus estimate of an increase of 2.1%. In July, durable goods orders declined by 1.2%. Although the core capital goods orders (excluding aircrafts) declined 0.5% in August, the figure was up 7.4% year over year.

The Department of Labor reported that jobless claims for state unemployment benefits rose 12,000 to a seasonally adjusted level of 214,000 for the week ended Sep. 22. The reading was slightly higher than the consensus estimate of 213,000. The increase may be due to last week’s Hurricane Florence which temporarily displaced some workers. Despite this, the reading remains near a 49-year low.

These strong economic data indicates a robust U.S. economy supported by a healthy manufacturing sector and tight labor market. Consequently, shares of some of the major companies including Apple Inc. (AAPL - Free Report) , Walgreens Boots Alliance Inc. (WBA - Free Report) and NIKE Inc. (NKE - Free Report) increased 2.1%, 1.2% and 1%, respectively. Apple carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Housing Data

On Sep 27, National Association of Realtors' reported that seasonally adjusted index for pending home sales in August fell 1.8%, significantly higher than the consensus estimate of a decline of 0.4%. This was the fourth monthly decline in the past five months. August’s reading also indicates slowest pace of pending home sales since January.  

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