Stock Market News For Jul 15, 2019
Zacks Investment Research | Jul 14, 2019 09:34PM ET
Wall Street closed sharply higher on Friday following dovish signals from the Fed chair Jerome Powell, hinting at a rate cut in July. Meanwhile, investors are cautiously waiting for second-quarter 2019 earnings, which will kick off from this week. All three major stock indexes closed in the green. For the week as a whole, these indexes recorded fresh all-time highs.
The Dow Jones Industrial Average (DJI) surged 0.9% or 244.02 points to close at 27.332.10. The S&P 500 climbed 0.5% to close at 3,013.75. Meanwhile, the Nasdaq Composite Index closed at 8,244.14, soaring 0.6%. The fear-gauge CBOE Volatility Index (VIX) decreased 4.2% to close at 12.39. A total of 5.68 billion shares were traded on Friday, lower than the last 20-session average of 6.71 billion. Advancers outnumbered decliners on the NYSE by a 2.02-to-1 ratio. On Nasdaq, a 1.43-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory for the third successive day with 26 components of the 30-stock blue-chip index closing in the green while four finished in the red. The S&P 500 also closed in positive territory for consecutive days. The Industrials Select Sector SPDR (XLI) gained 1.8% while the Health CareSelect Sector SPDR (XLV) lost 1.1%. Notably, eight out of 11 sectors of the benchmark index closed in the green while three ended in the red. The Nasdaq Composite ended in the green for the second straight-day due to strong performance by large-cap stocks.
Fed Signals an Impending Rate Cut
On Jul 10, in a testimony to the House Financial Services Committee, Powell said that the United States is suffering from a bout of uncertainty caused by trade tensions and weak global growth. He added “Crosscurrents have reemerged. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened.”
Powell reiterated Fed’s commitment to act as appropriate to sustain U.S. economic expansion, providing a clear message for a rate cut possibly after the upcoming FOMC meeting scheduled on Jul 30 - 31. At present, 100% respondents of CME FedWatch are expecting a 25 basis-point reduction in July.
Bleak Expectations From Second-Quarter Earnings
At present, the market is anticipating a relatively disappointing earnings session for the second quarter of 2019. As of Jul 12, total Q2 earnings for the S&P 500 Index are expected to be down 3.4% from the year-earlier period on 3.9% higher revenues. This would follow the 0.2% earnings decline on 4.5% higher revenues in Q1.
If the current consensus estimate for the second-quarter proves itself true, then it will be two consecutive quarters of earnings decline for the S&P 500. Technology, Aerospace, Basic Materials, Construction and Conglomerates sectors are likely to witness double-digit decline in second-quarter earnings. (Read More: Zacks Investment Research
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