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Stock Market News for Jan 7, 2020

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U.S. stocks rebounded from Friday’s losses on Monday, as investors shrugged off geopolitical tensions arising in the Middle East. Internet biggies Amazon.com, Inc. (AMZN - Free Report) and Alphabet Inc.’s (GOOGL - Free Report) gains during Monday’s trading session, a result of positive analyst ratings, also boosted major indexes.

Other technology stocks and the basic materials sector upped their game as well, primarily because of strength in issues related to energy. In addition, lack of any substantial economic news had investors looking ahead at the preliminary U.S.-China trade deal.

The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — closed in the green on Monday. Dow hit 28,703.38 after gaining 0.2%, the broader S&P 500 finished at 3,246.28 after rising 0.4% and the Nasdaq Composite closed at 9,071.46 after increasing 0.6%.

The fear-gauge CBOE Volatility Index (VIX) declined 1.2% to close at 13.85 on Jan 6. Finally, advancers outnumbered decliners on the NYSE by a 1.09-to-1 ratio.

Investors Look Beyond Middle East Tension

Investors fixed their attention on the stock market on Monday, seemingly unaffected by the rising geopolitical tensions in the Middle East because of the assassination of Iranian military chief Qassem Soleimani in a U.S. airstrike last week.

Soleimani, chief of Iranian military operations in Syria and Iraq, was killed in the airstrike authorized by President Donald Trump early on Jan 3 in Baghdad. Over the weekend, Tehran said that Iran would no longer abide by its 2015 nuclear agreement with global powers. Trump had pulled U.S. out of the agreement in 2018.

In addition, after Iraqi lawmakers voted in favor to expel about 5,200 U.S. troops stationed in the country to help fight Islamic State extremists, Trump reportedly threatened Iraq with harsh sanctions should the country follow through the resolution.

Chinese Trade Delegation to Arrive in U.S.

Per the South China Morning Post, China’s trade delegation plans to travel to Washington for four days from Jan 13. The delegation, led by Vice-Premier Liu He, is arriving for the signing of the preliminary trade agreement between the two countries that would finally halt the long-fought trade war.

After President Trump sent a tweet on New Year’s Eve claiming that he would sign the phase one trade agreement with “high representatives” from Beijing on Jan 15 in the White House, the Chinese trade delegation had to reschedule their travel plans. The group had originally planned to arrive earlier in January.

Boeing to Raise More Debt to Improve Finances

The Boeing Company (BA - Free Report) informed its employees on Monday that the company plans to reassign about 3,000 workers who are engaged in production of the 737 Max in the Seattle area. According to The Wall Street Journal, the company is looking into plans that will raise more debt to boost finances strained by the increasing fallout from the grounding and halted production of the 737 Max, which is now in its tenth month.

In December, Boeing had said it would shut down production of the 737 Max in mid-January, an extreme move as regulators repeated, they have no timeline to lift the flight ban on the planes. The ban was issued after the planes crashed twice in a span of five months, killing 346 people.

On Jan 6, American Airlines Group Inc. (AAL - Free Report) said that it had entered an agreement with Boeing to reimburse the airline for financial damages suffered in 2019 from the 737 Max grounding. According to a CNBC report, American Airlines plans to share a part of the compensation with employees. Boeing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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