U.S. stocks closed lower on Wednesday following disappointing earnings results from videogame companies. Moreover, investors failed to get any clear cut picture about the government’s future course of action from President Trump’s State of The Union address. All three major stock indexes finished in the red.
The Dow Jones Industrial Average (DJI) closed at 25,390.30, declining 0.1%. Meanwhile, the S&P 500 Index (INX) decreased 0.2% to close at 2,731.62. The Nasdaq Composite Index (IXIC) closed at 7,375.28, losing 0.4%. A total of 6.70 billion shares were traded on Wednesday, lower than the last 20-session average of 7.50 billion shares. Decliners outnumbered advancers on the NYSE by 1.50-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.09-to-1 ratio. The CBOE VIX decreased 1.2% to close at 15.38.
How Did the Benchmarks Perform?
The Dow ended in negative territory ending a three-day winning streak. Notably, 15 stocks of the 30-stocks blue-chip index finished in the green, fourteen ended in the red and one remained unchanged. The tech-heavy Nasdaq Composite finished in the red after two-straight days, due to weak performance by large tech stocks.
The S&P 500 closed in negative territory reversing its five-day winning run. The Communications Services Select Sector SPDR (XLC) declined significantly by 2.24%. Notably, seven out of 11 sectors of the benchmark index closed in the red while the remaining four finished in the green.
Disappointing Earnings Results
Wall Street witnessed a disappointing day on the earnings front on Wednesday, especially due to big videogame makers.
Take-Two Interactive Software Inc. (TTWO - Free Report) reported third quarter fiscal 2019 adjusted earnings per share of $1.57, lagging the Zacks Consensus Estimate of $2.75. Net revenues were $1.25 billion, missing the Zacks Consensus Estimate of $1.49 billion. (Read More)
Electronic Arts Inc. (EA - Free Report) reported third quarter fiscal 2019 adjusted earnings per share of $0.86, lagging the Zacks Consensus Estimate of $1.93. Net revenues were $1.29 billion, missing the Zacks Consensus Estimate of $1.6 billion. (Read More)
Meanwhile, pharmaceutical major Eli Lilly and Co. (LLY - Free Report) reported fourth-quarter 2018 adjusted earnings per share of $1.33, which missed the Zacks Consensus Estimate of $1.36. Quarterly revenues of $6.44 billion beat the Zacks Consensus Estimate of $6.34 billion. (Read More)
Consequently, shares of Take-Two Interactive Software, Electronic Arts and Eli Lilly plunged 13.8%, 13.3% and 1%, respectively. Take-Two Interactive Software carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 RanK (Strong Buy) stocks here.
President Trump’s State of The Union Address
President Trump’s latest State of The Union address delivered late Tuesday evening, failed to provide any clear cut message. Trump mentioned that United States and China are working to resolve trade dispute while maintaining that any agreement should “include real, structural change to end unfair trade practices, reduce our chronic trade deficit and protect American jobs.”
The President called for fresh infrastructure legislation but refrained from mentioning planned expenditure on this count. Trump reaffirmed the urgency for building border fencing with Mexico but did not comment about imposing a national emergency to achieve this goal.
The President said most elected representatives have a number of issues in common, which include cutting “the price of healthcare and prescription drugs.”Later in his speech, Trump said that it was “unacceptable that Americans should pay vastly more than people in other countries for the exact same drugs.” (Read More: Winners & Losers from Trump's State of the Union Address)
Trade Talk to Continue
A high level U.S. delegation comprising Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit China’s capital Beijing early next week to arrive at an amicable solution to the eleven month old trade disputes between the two countries. Notably, the two countries are currently observing a trade truce which will come to end on Mar 1.
The Department of Labor reported that the U.S. manufacturing productivity had increased 1.3% in the fourth quarter of 2018 compared with 1.1% in the third quarter.
Stock That Made Headline
SkyWest Rewards Investors With Dividend Hike & New Buyback
In a regulatory filing, SkyWest Inc. (SKYW - Free Report) announced that its board of directors has approved a new share repurchase program worth $250 million. (Read More)
National Oilwell Q4 Earnings Lag, Sales Top Estimates
National Oilwell Varco Inc. (NOV - Free Report) reported earnings of 3 cents in fourth-quarter 2018, missing the Zacks Consensus Estimate of 8 cents per share. (Read More)
Genesee & Wyoming Q4 Earnings Top Estimates, Rise Y/Y
Genesee & Wyoming Inc.’s (GWR - Free Report) fourth-quarter earnings (excluding 6 cents from non-recurring items) of $1 per share surpassed the Zacks Consensus Estimate of 90 cents. (Read More)
Prudential Q4 Earnings Miss, Revenues Beat Estimates
Prudential Financial Inc.’s (PRU - Free Report) fourth-quarter 2018 operating net income of $2.44 per share missed the Zacks Consensus Estimate by 15.3%. (Read More)
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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