Stock Market News For Dec 29, 2017

Benchmarks eked out modest gains on Thursday, buoyed by gains in bank and tech stocks. In particular, tech players posted their second straight gain on the heels of a five-day losing streak. Even though the technology sector faced gyrations to close out the year, it still remains the best performing sector in 2017, up a staggering 37%. Marginal uptick in energy shares due to an increase in both crude oil and natural gas prices also helped the broader markets end in the green.

How the Benchmarks Fared?

The Dow Jones Industrial Average (DJIA) increased 65.52 points, or 0.3%, to 24,837.51. The blue-chip index notched its 71st record close in 2017. The 30-stock index is also inching closer to the 25,000 milestone after having crossed the 20,000, 21,000, 22,000, 23,000 and 24,000 levels this year.

The S&P 500 Index (INX) went up 4.87 points, or 0.2%, to 2,687.54, while the tech-laden Nasdaq Composite Index (IXIC) closed at 6,949.24, gaining 0.1%. Both the S&P 500 and the Nasdaq are just below their all-time highs. In fact, all the three major bourses are on track to end the year with double-digit gains. Meanwhile, the Russell 2000 index of smaller-cap companies went up 4.99 points, or 0.3%, to 1,548.93.

A total of 4.26 billion shares were traded on Thursday, lower than the last 20-session average of 6.6 billion shares. Advancers outnumbered decliners on the NYSE by a 1.92-to-1 ratio. On Nasdaq, a 1.51-to-1 ratio favored advancing issues.

Market volatility isn’t roaring back either, with 2017 being the calmest for stocks since 1964. The so-called “fear gauge”, CBOE Volatility Index traded at 9.98, substantially lower than its long-term average of 20.

What Drove Banks Higher?

Banks contributed towards much of the equity market’s gains. As bond yields perked up, bank stocks gained traction as it enables them to charge higher interest rates on loans. The yield on the 10-year Treasury rose to 2.43% from 2.41% late Wednesday.

Long-awaited tax cuts also provided a big boost to banks. Jubilant Republicans has passed the tax overhaul bill for the first time in 30 years. The bill slashes corporate tax rates from 35% to 21%. Such long awaited tax cuts boosted big banks as they have been paying heavy taxes.

Banks face a high tax burden, which makes them big gainers when tax rates go down. As per KBW estimates, JPMorgan Chase (NYSE:JPM) , Wells Fargo & Co (NYSE:WFC) and Bank of America Corp (NYSE:BAC) will enjoy a 20% or more hike in profits if the corporate tax rate is cut to 20%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

As widely expected, the Federal Reserve too raised short-term interest rates for the third time this year and projects three more hikes next year on a strengthening economy. Higher interest rates can boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.

Stocks That Made Headlines

J.B. Hunt Stock Falls on Soft Fourth-Quarter Guidance

Shares of J.B. Hunt Transport Services (NASDAQ:JBHT) were down significantly following tepid guidance for fourth-quarter 2017. (Read More)

ADTRAN Issues Q4 Earnings Outlook, Trims Revenue View

ADTRAN, Inc. (NASDAQ:ADTN) has issued earnings estimates for the fourth quarter of 2017. (Read More)

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