Markets closed higher on Monday as first quarter earnings continued and investors awaited the Fed’s decision on the future of rate hikes post the culmination of its two-day meeting on Wednesday. The three major benchmarks ended in the positive territory with the S&P 500 and the Nasdaq closing at record highs for the second consecutive session.
The Dow Jones Industrial Average (DJI) increased less than 0.1%, to close at 26,554.39. The S&P 500 increased 0.1% to close at 2,943.03. The tech-laden Nasdaq Composite Index closed at 8,161.85, gaining 0.2%. The fear-gauge CBOE Volatility Index (VIX) increased 2.7% to close at 13.07. Advancers outnumbered decliners on the NYSE by a 1.58-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
The Dow gained 11.1 points to close in the green. Gains for the 30-stock index were propelled by a 1.9% rally in the shares of Goldman Sachs (GS - Free Report) . The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 3.2 points to also end in the green. Of the 11 major sectors of the S&P 500, only four ended in positive territory, with financials leading the advancers. The Financial Select Sector SPDR ETF (XLF) increased 1% on Monday. Further, the broader index closed at an all-time high for the second day on the trot.
Moreover, the S&P 500 also surpassed its previous intraday record of 2,940.91 it had hit on Sep 21, 2018. Gains for the broader index were also supported by a rally in the shares of Bank of New York Mellon Corporation (BK - Free Report) and Citigroup Inc. (C - Free Report) , shares of which gained 2% and 2.2%, respectively.
Meanwhile, the Nasdaq surged 27.7 points to also close at an all-time high for the second consecutive session. Gains for the tech-heavy index were broad-based. Notably, this also marked the first consecutive record closes for both the S&P 500 and the Nasdaq since their four-day streak of back-to-back gains in August 2018.
Meanwhile, earnings season continued in full swing with 164 S&P 500 companies expected to report their first-quarter 2019 earnings in the week ahead.
Fed’s Two-Day Policy Meeting in Focus
Investors had a keen eye on Fed’s latest policy meeting scheduled to culminate on Wednesday. Marketwatchers largely expect the Fed to hold interest rates steady. The CME Group’s FedWatch tool predicts a 97% probability that the interest rates would remain unchanged.
However, Fed Chief Jerome Powell’s comments post the meeting is what investors would watch closely because it will shed light on what the members of Federal Open Market Committee (FOMC) think about the future of rate hikes in the country.
Meanwhile, a group of investors also expect the Fed to cut interest rates before the year-end despite the U.S. economy advancing at its fastest pace in past four years in the first quarter of 2019. This is because growth was propelled by a rise in inventories and growth in exports. Moreover, experts do not expect the exports and inventories to remain strong in the remaining part of this year.
Per the latest reports from the Bureau of Economic Analysis on Apr 26 U.S. GDP increased at 3.2% in the first quarter of 2019, surpassing the consensus estimate of 2.1%.
U.S. – China Trade Talks to Resume in Beijing
A new round of trade negotiations between the United States and China is set to begin in Beijing this week. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin is expected to meet Chinese vice pemier Liu He on Tuesday.
On the economic data front, the Core PCE inflation levels for March showed that prices of commodities rose 1.6% at a yearly rate in March from 1.7% in the previous month. Meanwhile, personal income increased 0.1% in March.
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