Major market indexes ended in the green on Wednesday after minutes of the Federal Reserve’s July meeting revealed the central bank’s willingness to carry out policy changes in a bid to sustain the U.S. economy. Wall Street also derived strength from strong quarterly results of Target (TGT - Free Report) and Lowe's Companies (LOW - Free Report) .
The Dow Jones Industrial Average climbed 0.9% to close at 26,202.73 on Aug 21. The broader S&P 500 followed suit, rising 0.8% to finish at 2,924.43. The Nasdaq Composite ended in the green as well, closing at 8,020.21 after gaining 0.9%. The fear-gauge CBOE Volatility Index (VIX) slumped 9.7% to close at 15.80 on Wednesday. Lastly, advancers outnumbered decliners on the NYSE by a 2.51-to-1 ratio.
Minutes of Fed’s July Meeting Induce Hope
The minutes of the Federal Open Market Committee’s July 30-31 discussions were released on Aug 21, which cleared the air around how the monetary policy-making body decided upon a rate cut. The minutes indicated that most participants voted to lower the benchmark interest rate by 25 basis points to a range of 2%-2.25%.
The document stated that a majority of the participants considered the 0.25% rate cut “as part of a recalibration of the stance of policy, or mid-cycle adjustment.”
The minutes further stated that the nature of risks the economy was facing and the lack of clarity regarding when those risks might be resolved required policymakers to be flexible and focus on the “implications of incoming data for the outlook.”
Target and Lowe’s Report Great Q2 Earnings
Target’s quarterly earnings of $1.86 per share easily beat the Zacks Consensus Estimate of $1.61. The retailer also posted revenues of $18.42 billion for the last quarter, which surpassed the Zacks Consensus Estimate by 0.50%.
Target’s introduction of new brands, increased same-day delivery options, cost reduction strategies and rationalization of supply chain etc pushed earnings and revenue growth. Target carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. (Read more)
Lowe's reported quarterly earnings of $2.15 per share, which surpassed the Zacks Consensus Estimate of $2. The home improvement company’s revenues of $20.99 billion for the quarter ended July 2019 also beat the Zacks Consensus Estimate by 0.07%.
The company’s strong digital presence, growth in home improvements product categories and increased focus on Pro customers boosted its Q2 earnings and revenue. Lowe's sports a Zacks Rank #3 (Hold). (Read more)
Lastly, when it comes to economic data, sales of existing homes increased 2.5% in July from the month before. According to a National Association of Realtors report on Aug 21, existing home sales rose to a seasonally adjusted annual rate of 5.42 million last month. These comprised of single-family homes, townhomes, condominiums and co-ops etc. Overall sales rose 0.6% on an annualized basis (from 5.39 million in July 2018).
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