Benchmarks closed higher on Thursday as U.S. service sector growth slipped and investors became hopeful that signs of economic slowdown will evoke the Federal Reserve to lower interest rates for the third time this year.
The Dow Jones Industrial Average (DJI) rose 0.5% or 122.42 points to close at 26,201.04. The S&P 500 rose 0.8% to close at 2,910.63. The Nasdaq Composite Index closed at 7,872 gaining 1.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 7.5% to close at 19.12. Advancers outnumbered decliners on the NYSE by a 1.80-to-1 ratio. On Nasdaq, a 1.56-to-1 ratio favored advancers issues.
How Did the Benchmarks Perform?
All 11 major sectors of the S&P 500 rose on Thursday. The energy index led the rise by 1.3%. On the other hand a rally in Microsoft Corporation (MSFT - Free Report) and Facebook, Inc’s (FB - Free Report) shares by 1.2% and 2.7%, contributed highest in the S&P 500′s gain.
Facebook carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Services-Sector Growth Slips
The Institute for Supply Management reported that the non-manufacturing index dropped to 52.6. In a poll of 67 economists conducted by Reuters, the index was expected to come in below 55. The index stood at 56.4 in August.
Though readings above 50 signals growth, but the figures are the lowest since August 2016 and this has raised tensions of an economic slowdown and clouded investors sentiments. Topping it up the employment index fell to 50.4 in September from 53.1 in August, which is the lowest recorded since February 2014. While the business activity index fell to 55.2 from 61.5 in August.
The service sector accounts to more than two-thirds of U.S. economic activity, but a persistent U.S.-China trade war is gradually impacting this sector after causing substantial damage to the manufacturing sector.
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