Benchmarks ended in the green on Friday as markets breathed a sigh of relief after the longest government shutdown in history came to an end. Meanwhile, expectations that the Fed will not raise the federal funds rate in its next meeting also boosted markets. Finally, China’s decision to boost its slowing economy also proved to be one of the catalysts which boosted the markets.
The Dow Jones Industrial Average (DJI) increased 0.8%, to close at 24,737.20. The S&P 500 increased 0.9% to close at 2,664.76. The tech-laden Nasdaq Composite Index closed at 7,164.86, gaining 1.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.5% to close at 18.61. Advancers outnumbered decliners on the NYSE by a 5.82-to-1 ratio. On Nasdaq, a 3.28-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow surged 184 points to end the session in positive territory. Gains for the 30-stock index were rather broad-based. The biggest gainer for the Dow was Apple (AAPL - Free Report) , shares of which gained 3.3% after investors’ appetite for risk increased following end of the 35-day partial government shutdown.
Following such developments, shares of Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Facebook (FB - Free Report) gained 1%, 1.6% and 2.2%, respectively. Meanwhile, S&P 500 gained 22.4 points to also finish in the green. Of the 11 major sectors of the S&P 500, nine ended in the green, with materials and tech shares leading the advancers. The Materials Select Sector SPDR ETF (XLB) and the Technology Select Sector SPDR ETF (XLK) gained 1.9% and 1.6%, respectively.
The Nasdaq rallied 91.4 points to close in positive territory. Gains for the tech-heavy index were buoyed by Starbucks (SBUX - Free Report) , shares of which gained 3.6% after reporting impressive first-quarter fiscal 2019 results. Adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate of 65 cents and grew 15.4% on a year-over-year basis. (Read More)
Investors also rejoiced positive management conference calls throughout the week where the executives remained upbeat about the general business conditions in 2019.
Trump’s Deal to End Shutdown
After continuing for a record 35 days, the partial government shutdown finally came to an end on Friday. The surprise decision was made after President Trump and Democratic congressional leaders agreed on a continuing resolution to keep the government funded and opened till Feb 15.
However, legislators continued to debate over whether the border wall funding should be approved or not. Meanwhile, Trump stated that this temporary arrangement will enable disbursal of payments to federal employees. Such developments were welcome by the investors.
Fed to Maintain a Dovish Stance in 2019
The Wall Street Journal reported on Jan 25, that Fed officials were close to a decision about ending the unwinding of the central bank’s humongous balance sheet which started back in 2017. Further, expectations that Fed would take a more dovish stance related to future rate hikes also boosted market sentiments. Experts believe that the Fed is unlikely to hike rates at its upcoming meeting.
China’s Efforts to Counter Economic Slowdown
China’s central bank, the People's Bank of China (PBOC) reported on Jan 25 that it was planning to release approximately $37 billion in additional cash to banks, in a bid to counter an economic slowdown. The motive behind such a move is because of certain changes in the targeted reserve requirement ratio reductions for banks in China. Such developments boosted investor sentiments.
For the week, the Dow and the Nasdaq gained 0.1% each. However, the S&P 500 declined 0.2% in the last week. Meanwhile, the Dow posted its fifth straight week of gains. Upbeat earnings results throughout the last, holiday-shortened week boosted markets. Markets remained closed on Jan 21 due to Martin Luther King Jr. Day.
Meanwhile, the partial government shutdown continued to be another cause of worry for market participants. Also, trade related conflict between the United States and Chins kept investors on tenterhooks. However, Trump’s decision to end the longest-ever shutdown in history brought much needed relief to investors.
Stocks That Made Headlines
GATX Rewards Shareholders Via Dividend Hike & New Buyback Plan
In a shareholder-friendly measure, GATX Corporation (GATX - Free Report) announced a hike in its dividend payout and approved a new share buyback program. (Read More)
Zacks' Top 10 Stocks for 2019
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