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Stock Market News For Jan 22, 2019

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The second week of January was a fabulous one for Wall Street. All three major stock indexes gained significantly in the last week. Several positive developments on the U.S. – China trade war front and strong economic data strengthened investors’ confidence in risky assets like equities. Markets remained closed on Monday due to Martin Luther King Jr. Day.

Fourth Quarter 2018 Earnings Season Commences

A slew of earnings results from major banks kicked off the fourth-quarter 2018 earnings season. As of Jan 18, 55 S&P 500 members, who constitute for 15.1% of the index’s total market capitalization, have reported fourth quarter results. Total earnings for these 55 index members are up 16.9% from the same period last year on 9% higher revenues.

For fourth quarter 2018 as a whole, total earnings for the S&P 500 index are expected to be up +10.7% from the same period last year on +5.3% higher revenues. (Read More: Key Takeaways from Q4 Earnings Results Thus Far)

Strong Economic Data

On Jan 18, Federal Reserve reported that U.S. industrial production increased 0.3% in December 2018, higher than the consensus estimate of 0.2%. Manufacturing output grew 1.1% in December, its biggest gain since February 2018. U.S. manufacturing was boosted by the production of motor vehicles, construction supplies, business supplies and materials. Capacity utilization for the manufacturing sector increased to 76.5% in December from 75.8% in November.

Positive Developments on Trade War Front

On Jan 18, Bloomberg reported that China has offered to ramp up imports from the United State in the next six years. Total value of these imports will be $1 trillion which will bring down massive trade deficit that United States is currently bearing with China to zero in 2024. Notably, the United States had a trade deficit of $323 billion with China in 2018.

On Jan 16, The Wall Street Journal reported that the U.S. government is contemplating a proposal regarding lifting of some tariffs imposed on China. This will act as an incentive to the Asian economic giant to make deeper concessions to the United States.However, a Treasury Department spokesperson later denied the news.

China has already provided assurance of importing "a substantial amount" of agricultural, energy and manufactured goods and services from the United States.The three-day meeting between mid-level delegations of the United States and China ended on a positive note on Jan 5.

Consequently, shares of trade-sensitive stocks like The Boeing Co, (BA - Free Report) , Caterpillar Inc. (CAT - Free Report) and Deere & Co. (DE - Free Report) were up 1.6%, 2.2% and 2.8%, respectively. The Boeing carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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