Benchmarks closed in the green on Friday, and ended the week at record highs banking on strong economic data and solid fourth-quarter earnings results.
The Dow Jones Industrial Average (DJI) gained 50.50 points or 0.2%, to close at 29,348.10 and the S&P 500 rose 12.81 points or 0.4% to close at of 3,329.62. While, the Nasdaq Composite Index closed at 9,388.94, adding 31.81 points or 0.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.8% to close at 12.10. Advancing issues outnumbered declining one for a 1.37-to-1 ratio on the NYSE and a 1.26-to-1 ratio on the Nasdaq favored advancers.
How Did the Benchmarks Perform?
Major benchmarks hit intra-day record highs on Friday. Investors sentiments were lifted by news from China. The economic giant reported that industrial data for December topped expectations, with production rising 6.9% on a year-over-year basis. Additionally, the Chinese economy grew by 6.1% in 2019, matching expectations. However, it is the slowest growth rate for the Chinese economy since 1990.
Overall, the S&P index recorded 104 new 52-week highs whereas no new lows. And the Nasdaq recorded 156 new highs and six new lows.
December’s New-Home Construction 13-year High
On Jan 17, the Commerce Department reported that construction of new homes grew by 16.9% at an annual rate of 1.608 million in December, beating the consensus estimate of 1.374 million. The figure is a 13-year high and 40.8% more than the December 2018 rate of 1.142 million and 2.6% above the November’s revised figure of 1.375 million.
In fact, low mortgage rates, a 50-year low unemployment rate and robust American consumers have helped the housing space to boom. Major cities in the United States like Raleigh, Nashville, Charlotte, Denver and Austin experienced stronger inbound moves compared to the previous year due to lower housing costs and increased job opportunities.
Single-family home construction increased by 11.2%, hitting its highest level since 2007 and rose substantially in the Midwest and South. While multifamily homes like condos and complexes jumped 29.8%, the highest since 1986.
However, building permits for privately-owned homes were authorized at a rate of 1,416,000 below the consensus estimate of 1,469,000. The headwind obstructing the increase in building permits was largely driven by a 11% decrease in authorizations for multifamily housing developments. (Read More)
Solid Q4 Earnings Report
Better-than-expected earnings from major banks kicked off the fourth quarter earnings and lifted investors’ sentiment. Overall, 8% of the S&P 500 companies have reported quarterly results so far and nearly 72% of those companies have reported solid earnings.
On Friday, Schlumberger Limited (SLB - Free Report) posted fourth-quarter 2019 earnings of $0.39 per share that surpassed the Zacks Consensus Estimate of $0.37. Increase in Surface Systems, Drilling Systems, OneSubsea revenues in the international markets along with strong SIS digital software sales backed the company’s strong quarterly results. The company’s revenues totalled $8,228 million, surpassing the Zacks Consensus Estimate of $8,188 million. (Read More)
CSX Corporation (CSX - Free Report) reported fourth-quarter 2019 earnings of 99 cents per share, beating the Zacks Consensus Estimate of 97 cents. However, the company’s bottom line lagged by 2% year over year due to lower revenues. Earnings were affected by lower volumes and coal market adversities. This Zacks Rank #3 (Hold) company’s share dropped 0.4% on Friday. (Read More)
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Weekly Round Up
Major benchmarks rally last week was supported by a partial U.S.-China trade as both the economic giants signed the phase 1 trade deal. And a further boost came in from the passage of the U.S., Mexico, Canada trade deal by Congress.
In fact, last week all the three benchmarks posted their largest weekly percentage gain since the last week of August 2019. The S&P 500, the Dow and the Nasdaq finished 2%, 1.8% and 2.3% respectively, higher last week. Additionally, the S&P 500 and Dow are up 3.1% and 2.8%, respectively, on a year to date basis, while the Nasdaq increased more than 4.5% higher so far this year.
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