Stock Market News For Feb 26, 2018

Benchmarks ended in positive territory on Friday after investors switched from bonds to equities. The shift was triggered after Treasury bond yields, which have been hovering near four-year highs recently, declined. Additionally, the Fed released its semi-annual monetary policy report on Friday ahead of the new Fed Chairman Jerome Powell’s first testimony on monetary policy in the Congress. All the three key indexes closed in the green for the week and registered record gains for two straight weeks.

How the Benchmarks Fared?

The Dow Jones Industrial Average (DJI) increased 1.4%, or 349.44 points, to close at 25,309.99. The S&P 500 rose 1.6% to close at 2,747.30. The tech-laden Nasdaq Composite Index closed at 7,337.39, gaining 1.8%. The fear-gauge CBOE Volatility Index (VIX) decreased 11.9% to close at 16.49.

A total of 6.05 billion shares were traded on Friday, considerably lower than the last 20-session average of 8.38 billion shares. Advancers outnumbered decliners on the NYSE by a 4.54-to-1 ratio. On Nasdaq, a 2.82-to-1 ratio favored advancing issues.

Markets Recover after Days of Turbulence

On Friday, the Federal Reserve in its policy report said the Federal Open Market Committee (FOMC) expects “that, with further gradual adjustments in the stance of monetary policy,” labor market conditions will continue to strengthen and economic activity will witness moderate growth. Additionally, the central bank sees the labor market is “little beyond full employment,” but wage gains will grow moderately.

Moreover, the report indicated that inflation will remain near or lower than Fed’s target rate of 2% this year. However, the semi-annual report did not throw any light on the number of rate hikes this year.

The 10-year U.S. Treasury yield decreased from 2.917% on Thursday to 2.871% on Friday, after it hit a four-year high earlier during the week. Fall in bond yields facilitated gains in dividend-paying sectors like utilities and real estate which are traditional bond substitutes.

The Utilities Select Sector SPDR (XLU) advanced 2.6%, becoming the best performing sector among the S&P 500. Some of its holdings, including NRG Energy, Inc. (NYSE:NRG) and Pinnacle West Capital Corporation (NYSE:PNW) rose 4.6% and 4.4%, respectively.

Moreover, the Real Estate Select Sector SPDR (XLRE) increased 1.8%. One of its key components, American Tower Corporation (REIT) (NYSE:AMT) climbed 2.1%. American Tower hasa Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On the earnings front, shares of Hewlett Packard Enterprise Company (NYSE:HPE) jumped 10.5% after the company’s fiscal first-quarter results surpassed the Zacks Consensus Estimate. The upswing is also attributable to the encouraging outlook and hefty dividends. (Read More)

Also, HP Inc.’s (NYSE:HPQ) shares rose 3.5% after the company reported better-than-expected results for fiscal first-quarter. Gains in both these companies boosted the Technology Select Sector SPDR (XLK), which rose 2.1%.

Inventory Decline Spikes Oil Price Rise

Additionally, the U.S. Energy Information Administration reported that crude inventories decreased by 1.6 million barrels for the week ended Feb 16 on Thursday after reporting an increase the preceding week. Decline in crude inventories continued to boost oil prices even on Friday.

WTI crude price advanced 1.2% to $63.55 per barrel. Brent crude price advanced 1.4% to $67.31 a barrel, settling at its best level in two weeks. Increase in oil prices had a positive impact on the Energy Select Sector SPDR (XLE (NYSE:XLE)), which climbed 2.2%, becoming the second biggest gainer among the S&P 500 sectors. Dow components, Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) rose 2.5% and 2.2%, respectively.

Indexes Post Best Week In 2 Years

For the week, the Dow, the S&P 500 and the Nasdaq gained 0.4%, 0.6% and 1.4%, respectively. The Dow posted a two-week increase of 4.6%, its best such feat since Nov. 18, 2016. Additionally, the S&P 500 climbed 2.9% for the past two weeks, registering its biggest such rise since Feb. 13, 2015. Further, the Nasdaq moved up 6.7% during the same period, posting its largest two-week rally since Oct. 31, 2014.

Week’s gains were mostly driven by Friday’s staggering performance. However, initial jobless claims came in at 222,000 for the week ended Feb 17, its second-lowest level since the Great Recession. This also marks a near 45-year low for the metric, which somehow pushed sentiment further.

Stocks That Made Headline

Boston Beer Misses Q4 Earnings Estimates, Updates View

The Boston Beer Company, Inc. (NYSE:SAM) reported lower-than-expected results in the fourth quarter of 2017 with the top and bottom lines missing the Zacks Consensus Estimate. (Read More)

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