Stock Market News For April 5, 2018

U.S. stock markets closed higher on Wednesday for a second straight session. Markets opened sharply lower yesterday on trade war related concerns. However, they recovered subsequently to a great extent after the White House gave indication thats the U.S. government doesn’t want to enter into a trade war with China.

The Dow Jones Industrial Average (DJI) closed at 24,264.30, gaining 1% or 230.94 points. The S&P 500 Index (INX) increased 1.2% to close at 2,644.69. Meanwhile, the Nasdaq Composite Index (IXIC) closed 7,042.11, increasing 1.5%. Advancers outnumbered declining issues on the NYSE by 2.19-to-1 ratio. On the Nasdaq, advancing issues had an edge over decliners by 2.95-to-1 ratio. The CBOE VIX declined 4.93% and closed at 20.06. A total of 7.04 billion shares were traded on Wednesday, lower than the last 20-session average of 7.3 billion shares. Decliners outnumbered advancers on the NYSE by a 1.71-to-1 ratio.

How Did the Benchmarks Perform?

The Dow gained 1% with 27 of its 30 components closing in the green. The blue-chip index rebounded from 510 points or 2.1% plunge to finish the session up about 231 points. Consequently, Dow registered its best single-session comeback since, Feb 6, when the blue-chip slipped 2.3% to end up 2.3%.

The S&P 500 increased 1.2% led by 1.8% gain of the Consumer Discretionary Select Sector SPDR (XLY) and 1.6% gain of the Consumer Staple Select Sector SPDR (XLP). The benchmark index staged its biggest intraday turnaround since Feb 9, when it tumbled 1.9% but ended with a gain of 1.5%.

The S&P 500 index closed comfortably above its 200-day moving average for the second straight session, indicating a positive long-term momentum. Ten out of the total 11 sectors of S&P 500 ended in positive territory with 7 of them gaining more than 1%.

The tech-heavy Nasdaq Composite also gained 1.5% driven by a partial rebound in tech stocks in two successive trading days. The Nasdaq Composite was also recorded its biggest intraday turnaround since Feb 9, when it plunged 2.2% but closed with a gain of 1.4%.

Trade War Fear Initially Hurt Investors

On Apr 4, the Chinese government imposed 25% tariffs on 106 U.S, products such as soybeans, cars and airplanes etc. worth $50 billion. This was in retaliation to $50 billion worth of tariffs the U.S. imposed on 1,300 Chinese imports a day before.

Investors continue to measure the likelihood of a full blown trade war between United States and China and its potential impact on the U.S. and global economy. The choppy trading pattern in the last two sessions reflects this sentiment.

Auto and Tech Sectors Drives Market Recovery

Auto sector performed well as trade war fears abated. Also the sector was buoyed by strong sales data for March. Major auto stocks like General Motors Co. (NYSE:GM) , Ford Motor Co. (NYSE:F) and PACCAR Inc. (NASDAQ:PCAR) gained 3%, 1.6% and 2.7%, respectively.

The technology stocks which suffered the most in Monday’s stock market mayhem continued their turnaround in last two straight sessions. Major tech stocks such as Apple Inc. (NASDAQ:AAPL) , International Business Machine Corp. (NYSE:IBM) and Microsoft Corp. (NYSE:F) gained 1.9%, 2.9% and 2.6%, respectively.

Economic Data

On Apr 4, the Institute for Supply Management (ISM) reported that its index of national non-manufacturing activity fell to 58.8 in March from 59.5 in February. Consensus figure was at 58.9. Also, the ADP National Employment Report for March revealed that U.S. private companies added 241,000 jobs during last month.

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