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Stock Market News For Feb 28, 2019

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U.S. stocks closed mostly lower on Wednesday as investors digested crucial congressional testimonies. Moreover, escalation of various geopolitical tensions also kept investors away from equity markets. The Dow and S&P 500 ended in negative territory while Nasdaq Composite inched up slightly.

The Dow Jones Industrial Average (DJI) closed at 25,985.16, declining 0.3%. The S&P 500 Index (INX) decreased 0.1% to close at 2,792.38. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,554.51, gaining 0.1%. A total of 7.30 billion shares were traded on Wednesday, lower than the last 20-session average of 7.34 billion shares. Decliners outnumbered advancers on the NYSE by 1.05-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.07-to-1 ratio.  The CBOE VIX decreased 3.1% to close at 14.70.       

How Did the Benchmarks Perform?

The Dow ended in negative territory for the second successive day. Notably, 16 stocks of the 30-stocks blue-chip index finished in the green while thirteen ended in the red and one unchanged. UnitedHealth Group Inc. (UNH - Free Report) was major loser with a loss of 4.9%. UnitedHealth Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 RanK (Strong Buy) stocks here.

The S&P 500 closed in the red for second consecutive days. Each of the Communications Services Select Sector SPDR (XLC) and Health Care Select Sector SPDR (XLV) lost 0.5%.  Notably, seven out of 11 sectors of the benchmark index closed in the red while four ended in green. The tech-heavy Nasdaq Composite finished in the green reversing its previous day’s losses, due to good performance across the board.

Powell Adopts Dovish Stance

On Feb 27, in his testimony before the House Committee, Fed Chair Jerome Powell saidthat the central bank will not downsize its $4 trillion balance sheet this year. On Feb 26, in his testimony before the Senate Banking Committee, Powell said that while the U.S. economy is currently at good shape, it may face headwinds from economic slowdown in China, Japan and Eurozone.

He added that while job market data and wage growth called for further rate hikes, some important economic indicators have softened in the last one month. Consequently, the Fed will maintain its dovish monetary stance at least for the time being.

Other Testimonies Add to Concerns

On Feb 27, in his testimony before the Ways and Means Committee of the House,U.S. Trade Representative Robert Lighthizer said that the United States and China still have a long way to go before reaching a meaningful solution.

He added that merely raising imports of U.S. goods to $1.2 trillion will not solve the problem. China needs to change its code of conduct related to intellectual properties of high-tech products while dealing with U.S. corporates.

Additionally, Michael Cohen, President Donald Trump’s former personal lawyer, called Trump a “conman”, in his testimony before the House committee. However, Cohen also added that he had no direct evidence to prove that Trump was depending on Russia to boost his chances as the next U.S. President during 2016 Presidential campaign.

Geopolitical Concerns

On Feb 26, British Prime Minister Theresa May stated that “in the event the Brexit deal fails to secure parliamentary approval on March 12, she will allow lawmakers two further votes.”  This is the first time the U.K. government announced that it is mulling over options to postpone Brexit.

Reportedly, on Mar 13, the British House of Commons will be given a chance to agree on no-deal Brexit which will take place on Mar 29. Although no-deal is the default option in the Article 50 process, it can be voted down. Then, the Commons will have a chance to request May for a short extension to Article 50, postponing Brexit by a few months.

Moreover, President Trump and his North Korean counterpart Kim Jong Un on Feb 27, are meeting in the Vietnamese capital of Hanoi to discuss about nuclear disarmament of North Korea and its compensation package. Both leaders have expressed optimism about a successful meeting. However, failure to reach a solution will have negative impact on markets.  

Additionally, political conflicts between two south Asian neighbors – India and Pakistan – escalated since Feb 14, when 49 Indian paramilitary personnel were killed in a terrorist attack in Kashmir. After that the diplomatic relationship between the two countries worsened significantly with both sides exercising their air power. 

Economic Data

The Department of Commerce reported that factory orders for the month of December increased 0.1%, lagging the consensus estimate of an increase of 0.5%.

National Association of Realtors reported that pending home-sales surged 4.6% in January to a reading of 103.2. However, pending home-sales declined 2.3% year over year, reflecting the 13th straight month of year-over-year declines.

The U.S. Census Bureau reported that U.S. trade deficit in goods (excluding services) increased 12.8% in December to $79.5 billion from $70.5 billion in November.

Stock That Made Headline

BP Brings Angelin Online, to Deliver 2 More Upstream Projects

BP plc. (BP - Free Report) recently announced that the company has commenced production from the Angelin development, located 60 kilometres off the south-east coast of Trinidad and Tobago. (Read More)

Southwest to Begin Hawaiian Flights Soon With FAA Nod

Per Reuters, Southwest Airlines Co. (LUV - Free Report) has finally received an approval for its long-awaited plans to operate flights to the Hawaiian Islands. (Read More)

Apache Q4 Earnings Top on Permian Production Strength

U.S. energy firm Apache Corp. (APA - Free Report) reported fourth-quarter earnings per share – excluding one-time items – of 31 cents, ahead of the Zacks Consensus Estimate of 25 cents. (Read More)

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