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Stock Market News for Feb 5, 2020

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Wall Street closed sharply higher following news that the government of China is initiating several stimulus to protect its economy from coronavirus-led impacts. Solid U.S. economic data also boosted investors’ confidence. All three major stock indexes finished in positive territory.

The Dow Jones Industrial Average (DJI) surged 1.4% or 407.82 points to close at 28,807.63. The S&P 500 jumped 1.5% to close at 3,297.59. Meanwhile, the Nasdaq Composite Index closed at 9,467.97, climbing 2.1% or 194.57 points. The fear-gauge CBOE Volatility Index (VIX) plunged 10.7% to close at 16.05. A total of 8 billion shares were traded Tuesday, higher than the last 20-session average of 7.6 billion. Advancers outnumbered decliners on the NYSE 2.45-to-1 ratio. On Nasdaq, a 2.34-to-1 ratio favored advancing issues.  

How Did The Benchmarks Perform?

The Dow closed in Positive territory with 27 components of the 30-stock index closing in the green while 3 ended in red, marking the blue-chip index’s highest daily percentage gain in more than five months. The Nasdaq Composite also ended in the positive territory due to strong performance by large-cap stocks. The tech-heavy index recoded a fresh closing high after closing above 9,400 for the first time.

The S&P 500 finished in the green, reflecting the benchmark index’s best daily percentage gain in ix months. The Technology Select Sector SPDR (XLK) and the Industrials Select Sector SPDR (XLI) surged 2.6% and 1.9%, respectively.  Notably, ten out of a total 11 sectors of the benchmark index closed in the green.

China to Initiate Economic Stimulus

Reuters reported that The People’s Bank of China – the central bank of that country -- is expected to lower its key lending rate - the loan prime rate (LPR) - on Feb 20. In the coming weeks, banks’ reserve requirement ratios likely to be reduced. Notably, in the past two days, the central bank has injected 1.7 trillion yuan through open market operations.

Moreover, the government will increase spending in order to push up the annual budget deficit relative ratio to 3% in 2020 from 2.8% in 2019. Additionally, local governments are likely to get permission to issue more debt to fund infrastructure projects.

Fourth-Quarter Earnings Results

Alphabet Inc.’s GOOGL non-GAAP earnings of $15.35 per share in fourth-quarter 2019 surpassed the Zacks Consensus Estimate of $12.76. Net revenues — excluding total traffic acquisition cost or TAC — came in at $37.57 billion, missing the Zacks Consensus Estimate by 2.3%. (Read More)

The Clorox Co. (CLX - Free Report) reported second-quarter fiscal 2020 results, wherein both earnings and sales beat estimates.Quarterly earnings from continuing operations of $1.46 per share surpassed the Zacks Consensus Estimate of $1.31. Net sales of $1,449 million, outpaced the Zacks Consensus Estimate of $1,429 million. (Read More)

BP plc BP reported fourth-quarter 2019 adjusted earnings of $0.76 per American Depositary Share (ADS) beating the Zacks Consensus Estimate of $0.65. Total revenues of $72,170 million missed the Zacks Consensus Estimate of $80,172 million. (Read More)

Consequently, shares of Alphabet tanked 2.5% while Clorox and BP gained 5% and 3.6%, respectively. BP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Commerce reported that factory orders for the month of December rebounded with a gain of 1.8% after declining 1.2% in the previous month.

Stock That Made Headline

SkyWest Rewards Shareholders With 16.7% Dividend Hike

In a shareholder-friendly measure, SkyWest Inc. SKYW announced a 16.7% raise in its dividend pay-out. (Read More)

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