Wall Street closed higher on Monday recovering most of the losses of last Friday ahead an interim trade deal between the United States and China. The phase-one of the two-phased deal is scheduled to be signed on Jan 15. All three major stock indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) gained 0.3% to close at 28,907.05. The S&P 500 surged 0.7% to close at 3,288.13. Meanwhile, the Nasdaq Composite Index closed at 9,273.93, climbing 1%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.9% to close at 12.32. A total of 7 billion shares were traded Monday, in line with the last 20-session average of 7 billion. Advancers outnumbered advancers on the NYSE 2.4-to-1 ratio. On Nasdaq, a 1.73-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with 21 components of the 30-stock index closing in the green while 9 ended in red. This was the blue-chip index’s all time second highest closing. The Nasdaq Composite also ended in the positive territory due to strong performance by large-cap tech stocks. The tech-heavy index recorded a fresh all-time high closing.
The S&P 500 finished in the green. The Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB) and the Real Estate Select Sector SPDR (XLRE) gained 1.3%, 1.3% and 1.2%, respectively. Notably, ten out of 11 sectors of the benchmark index closed in the green while one finished in the red.
Investors Wait for Phase-One Trade Deal
U.S. Trade Representative Robert Lighthizer said the deal will address intellectual-property disputes and force technology transfer along with strong enforcement provisions in financial services and currency issues in addition to tariff rollback and higher agricultural purchase. The U.S. government has decided to delete China from its list of currency manipulators.
U.S. Treasury Secretary Steven Mnuchin saidChina has committed to buy $40 billion to $50 billion U.S. agricultural products annually and a total of $200 billion of U.S. goods over two years. The Trump administration may rollback some the tariffs already imposed on China.
On Dec 23, The Wall Street Journal reported that China’s cabinet has agreed to lower tariffs for all trading partners on more than 859 types of products including pharmaceuticals, frozen pork and some high-tech components to below the rates that the most-favored nations enjoy.
Fourth-Quarter 2019 Earnings Session
The fourth-quarter 2019 earnings session will start from this week. Expectations for fourth-quarter 2019 earnings are far from encouraging at present. Total earnings of the S&P 500 Index are anticipated to be down 3.6% from the same period last year on 3.2% higher revenues.
As of Jan 10, just 19 S&P 500 members reported fourth quarter earnings results. Total earnings of these companies are down 19.1% from the same period last year on 2.5% higher revenues. Of the total, 78.9% surpassed EPS estimates while 68.4% outpaced revenue estimates.
Major banks that will release earnings report include JPMorgan Chase & Co. (JPM - Free Report) , Citigroup Inc. (C - Free Report) , Wells Fargo & Co. (WFC - Free Report) , The Goldman Sachs Group Inc. (GS - Free Report) and Bank of America Corp. (BAC - Free Report) . Both JPMorgan Chase and Bank of America carry 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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