Wall Street closed modestly higher on Thursday after a choppy session. All the three major stock indexes closed well below their intraday highs as hope for a fresh round of fiscal stimulus disappeared. A series of mixed economic data indicated that the pace of the U.S. economic recovery have waned. The Dow and the S&P 500 gained modestly while rebound of the technology sector lifted the Nasdaq Composite.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% to close at 27,816.90, maintaining 2-day winning streak. Notably, 24 components of the 30-stock index ended in the green while 16 finished in red. The blue-chip index is 2.6% below to become green year to date.
Moreover, the tech-laden Nasdaq Composite finished at 11,326.51, surging 1.4% or 159 points due to the strong performance by large-cap stocks, gaining for two successive days.
Shares of Netflix Inc.
NFLX
, Alphabet Inc.
GOOGL
, Facebook Inc.
FB
, Microsoft Corp.
MSFT
and Amazon.com Inc.
AMZN
popped 5.5%, 1.5%, 1.8%, 1% and 2.3%, respectively. Each of these stocks carries a acks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Meanwhile, the S&P 500 gained 0.5% to end at 3,380.80, continuing 2-day winning run. The Energy Select Sector SPDR (XLE) plunged 3.1% while the Real Estate Select Sector SPDR (XLRE) advanced 1.6%. Notably, seven out of eleven sectors of the benchmark index closed in positive zone and four in the red.
The fear-gauge CBOE Volatility Index (VIX) was up 1.3% to 26.70. A total of 9.55 billion shares were traded on Thursday, lower than the last 20-session average of 10.06 billion. Advancers outnumbered decliners on the NYSE by a 2.18-to-1 ratio. On Nasdaq, a 1.99-to-1 ratio favored advancing issues.
Uncertainty Over a Fresh Fiscal Stimulus
The second round of coronavirus stimulus negotiation between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin ended fruitless on Thursday, Though the sides will keep up discussions toward an agreement. Meanwhile, the Democrats have reduced the deal size to $2.2 trillion from $3.4 trillion demanded earlier while the Republicans have raised the deal size to $1.6 trillion from $1 trillion offered earlier.
Economic Data
The Department of Labor reported that weekly jobless claims declined by 36,000 to 837,000 for the week ended Sep 26. The consensus estimate was 847,000 and previous week’s data revised upward to 873,000 from 870,000 reported earlier. This was the fifthh straight week in which initial claims stayed below 1 million.
Continuing claims (people who are already receiving benefits) declined by 980,000 to 11.77 million for the week ended Sep 19 from the prior week. The four-week moving average for continuing claims dropped by 11,750 to 867,250.
The Department of Commerce reported that personal income declined by 2.7% in August compared with an upwardly revised 0.5% increase in July. The consensus estimate was for a decrease of 2%. Disposable personal income declined by 3.2% in August compared with an upwardly revised 0.3% increase in July.
Personal spending increased by 1% in August compared with an downwardly revised 1.5% increase in July. The consensus estimate was for an increase of 0.8%. Personal savings rate 14.1% in August compared with a downwardly revised increase 17.7% in July.
PCE (personal consumption expenditure) inflation in August increased by 0.7% compared with a downwardly revised increase of 1.1% in July. Year over years, PCE inflation increased 1.4%.
The core (excluding volatile food and energy items) PCE inflation – Fed’s favorite inflation gauge – increased by 0.3% in August compared with a upwardly revised increase of 0.4% in July. Year over years, core PCE inflation increased 1.6%, below the Fed’s target rate of 2%.
The ISM reported that the U.S. manufacturing purchasing managers’ index (PMI) for September came in at 55.4, reflecting four consecutive months of manufacturing expansions. The consensus estimate was 56.1 for September while Augusts’ PMI was 56. Notably, any reading above 50 indicates expansion in manufacturing activities.
Moreover, August was the fifth successive month of manufacturing uptrend after the index hit an 11-year low of 41.5% in April. Furthermore, 15 of the 18 industries tracked by ISM expanded in September.
The Department of Commerce reported that construction spending in August jumped 1.4% compared with an upwardly revised 0.7% increase in July. The consensus estimate was for an increase of 0.7%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
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