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Stock Market News for Jul 2, 2019

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Wall Street closed sharply higher on Monday buoyed by a trade truce between the United States and China. Moreover, OPEC and Russia jointly agreed to extend crude oil production cut in order to stabilize prices. All three major stock indexes closed in the green with S&P 500 recorded its new all-time high level.

The Dow Jones Industrial Average (DJI) soared 0.4% or 117.47 points to close at 26,717.43 The S&P 500 surged 0.8% to close at 2,964.33. Meanwhile, the Nasdaq Composite Index closed at 8,091.16, jumping 1.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 6.8% to close at 14.06. A total of 7.04 billion shares were traded on Monday, lower than the last 20-session average of 7.15 billion. Advancers outnumbered decliners on the NYSE by a 1.57-to-1 ratio. On Nasdaq, a 1.50-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The Dow closed in positive territory with 25 components of the 30-stock blue-chip index closing in the green while five finished in the red. The tech-heavy Nasdaq Composite ended in the green for fourth consecutive days due to strong performance by semiconductor stocks. The S&P 500 also closed in positive territory after touching an all-time high of 2,977.86. The Technology Select Sector SPDR (XLK) and Financials Select Sector SPDR (XLF) gained 1.6% and 1.2%, respectively. Notably, nine out of total 11 sectors of the benchmark index closed in the green while two ended in the red.

Positive Development on Trade War Front

On Jun 29, Presidents Trump and Xi agreed to restart trade negotiations in a meeting at the G-20 summit. Both sides have decided to hold off from imposing further tariffs for the time being. Moreover, the U.S. government has decided to ease some restrictions on Chinese telecom behemoth Huawei. The Trump administration has decided to allow U.S. tech companies to sell products that will not harm U.S. national security to Huawei. On the other hand, China has agreed to increase import of U.S. farm products to a considerable extent.

Consequently, shares of leading semiconductor makers like Skyworks Solutions Inc. SWKS, Micron Technology Inc. (MU - Free Report) and Broadcom Inc. AVGO climbed 6%, 3.9% and 4.3%, respectively. Broadcom carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OPEC and Russia To Maintain Oil Production Cut

On Jul 1, OPEC decided to extend crude production controls until early next year. Russia and its allies are likely to okay this agreement at a meeting in Vienna on Jul 2. The current quota of OPEC calls for a cut of 1.2 million barrel of crude oil per day. Saudi Arabia is currently producing 9.7 million barrels of crude oil per day and has a spare capacity of 2.3 million barrels per day. Meanwhile, the United States is currently producing 12.1 million barrels of crude oil per day. 

Economic Data

On Jul 1, the Institute of Supply Management (ISM) reported that its index for U.S. manufacturing came in at 51.7 for June. Although the reading fell below May’s level of 52.1, it marginally exceeded the consensus estimate of 51.3. Notably, 12 out of total 18 industries reported growth.

Construction spending fell 0.8% in May compared with a 0.4% gain in April. The consensus estimate in May was for a gain of 0.2%.

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