Wall Street closed mostly higher on Tuesday ahead of the FOMC policy update by the Federal Reserve. Solid economic data and a flourishing IPO market also bolstered investors’ sentiment. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 2.27 points to close at 27,995.60, marking its third positive session in a row for the first time since Aug 28. Notably, 17 components of the 30-stock index ended in the green while 13 finished in red. The blue-chip index is 1.9% below to become green year to date.
The S&P 500 rose 0.5% to end at 3,401.20, reflecting its third positive session in a row for the first time since Aug 28. The Real Estate Select Sector SPDR (XLRE) and the Communication Services Select Sector SPDR (XLC) surged 1.7% and 1.4%, respectively, while the Financials Select Sector SPDR (XLF) tanked 1.4%. Notably, eight out of eleven sectors of the benchmark index closed in positive territory and three in negative zone.
Meanwhile, the tech-laden Nasdaq Composite finished at 11,190.32, advancing 1.2% due to the strong showing by technology behemoths and semiconductor manufacturers. The tech-heavy index rallied for two consecutive days.
Major gainer of Nasdaq Composite was Tesla Inc. TSLA that jumped 7.2%. Tesla carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was down 1% to 25.59. A total of 8.99 billion shares were traded on Tuesday, lower than the last 20-session average of 9.33 billion. Advancers outnumbered decliners on the NYSE by a 1.38-to-1 ratio. On Nasdaq, a 1.19-to-1 ratio favored advancing issues.
Fed’s FOMC Meeting
The 2-day Federal Open Market Committee (FOMC) meeting of the Federal Reserve has started on Sep 15. This was the first FOMC meeting after the Fed Chairman Jerome Powell’s Jackson Hole Symposium lecture on Aug 27, in which the central bank announced a significant shift in its inflation control policy. At the same time, this FOMC meeting was the last one before the upcoming U.S. Presidential election.
Market Participants will closely watch the Fed’s quarterly update on GDP, inflation and unemployment rate forecast. Most importantly, investors will try to understand the central bank’s desired time frame to pursue zero or near zero percent interest rate and the current pace of bond-buying strategy.
U.S. IPO Market Flourishes
The U.S. initial public offering (IPO) market will witnesses the busiest week this week since May 2019. This week, 12 IPOs are expected to raise around $6.8 billion from the market.
These companies are looking to take advantage of the astonishing recovery of the U.S. capital market defying coronavirus-induced devastations. A massive surge in IPO is indicating ample investor appetite for new stocks and growing confidence for risky assets like equities.
Economic Data
The Fed reported that industrial production increased by 0.4% in August compared with the consensus estimate of 1%. July’s data was revised upward from a rise of 3% to 3.5%. August marked the fourth consecutive month of increase in industrial production. Manufacturing output grew 1% while mining production and utility fell 2.5% and 0.4%, respectively. The industrial production declined 7.7% year over year.
Capacity utilization for the industrial sector came in at 71.4% in August in line with the consensus estimate. Previous month’s data was revised upward from 70.6% to 71.1%.
The Department of Labor reported that import price index in August rose 0.9% compared with the consensus estimate of 0.5%. July’s import price index was revised upward from 0.7% to 1.2%. Higher import index indicates building up of inflationary pressure.
The National Bureau of Statistics of China reported that the country’s retail sales grew 0.5% in August compared with a decline of 1.1% in July. Notably, August marked the first month of positive retail sales growth in 2020. Moreover, industrial production rose 5.6% in August from 4.8% in July.
Stocks That Made Headline
FedEx’s Q1 Earnings Beat Massively, Shares Increase
FedEx Corp.’s FDX shares popped 8.3% in after-hours trading on Sep 15, following its robust first-quarter fiscal 2021 (ended Aug 31, 2020) performance. (Read More)
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