Stock Market News For Jun 21, 2019

The S&P 500 hit a new record-high on Thursday as investors’ appetite for risky assets like equities were bolstered by the Fed’s indication that a rate cut was likely this year. Moreover, geopolitical conflict in Iran resulted in a rally in energy stocks. All three major stock indexes ended in the green.

The Dow Jones Industrial Average (DJI) surged 0.9% or 249.17 points to close at 26,753.17 The S&P 500 climbed 1% to close at 2,954.18. Meanwhile, the Nasdaq Composite Index closed at 8,051.34, soaring 0.8%. The fear-gauge CBOE Volatility Index (VIX) increased 2.9% to close at 14.75. A total of 7.5 billion shares were traded on Thursday, higher than the last 20-session average of 6.9 billion. Advancers outnumbered decliners on the NYSE by a 3.14-to-1 ratio. On Nasdaq, a 1.44-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The Dow closed in positive territory with 26 components of the 30-stock blue-chip index closing in the green while four finished in the red. The index is just 75 points away from the all-time high recorded on Oct 3. Meanwhile, tech-heavy Nasdaq Composite ended in the green due to strong performance by large-cap stocks. The tech-laden index crossed 8,000 marks for the first time since May 6.

The S&P 500 also closed in positive territory overtaking its previous all-time high recorded on Apr 23. The Energy Care Select Sector SPDR (XLE (NYSE:XLE)), Industrials Select Sector SPDR (XLI) and Technology Select Sector SPDR (XLK) gained 2.2%, 1.7% and 1.5%, respectively. Notably, all 11 sectors of the benchmark index closed in the green.

S&P 500 Soars on Fed’s Rate Cut Hints

On Jun 19, in his speech following the FOMC meeting, Fed Chair Jerome Powell said that the benchmark lending rate was kept intact at 2.25-2.5%. However, the central bank said that adoption of more accommodative policy is gaining ground as recent economic data has raised concerns about domestic and global growth. Out of 17 voting members of the Fed, a strong bunch of eight thinks a rate cut should take place this year.

Fed’s statement boosted investors’ confidence. Per CME FedWatch, traders are assigning 100% probability for a rate cut of at least 25 basis points in July. Consequently, on Jun 20, the S&P 500 Index closed at 2,954.18 after touching an intraday high of 2,958.06. The previous highest close of the broad-market index was 2,933.68 recorded on Apr 23. Year to date, the S&P 500 is up 17.8% after finishing in negative territory in 2018. In June so far, the index is up 7.6%, witnessing a complete turnaround after plunging 6.6% in May.

Geopolitical Conflict In Iran

On Jun 20, geopolitical conflict in the Middle East escalated after Iran shot down a U.S. military drone. The incident prompted President Donald Trump to threaten the oil-rich Islamic state with severe punitive measures. Notably, Iran is already facing U.S. sanctions regarding crude oil exports after Trump administration withdrew from Iran Nuclear Agreement of 2015.

Following the news U.S. benchmark West Texas Intermediate crude (WTI) soared $2.89 or 5.4% to close at $56.65 a barrel. Global benchmark Brent Crude was up $2.79 or 4.5% to close at $64.61 a barrel.

Consequently, shares of oil giants such as Exxon Mobil Corp. (NYSE:XOM) , Chevron Corp. (NYSE:CVX) and BP plc (NYSE:BP) gained, 1.7%, 1.1% and 1.8%, respectively. Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Labor reported that initial claims for state unemployment benefits decreased 6,000 to a seasonally adjusted 216,000 for the week ended June 15. The consensus estimate was 220,000 and previous week’s jobless claim was 222,000. The number of people receiving benefits after an initial week of aid – popularly known as continuing claims -- declined 37,000 to 1.66 million for the week ended Jun 8.

U.S. current account deficit for the first quarter of 2019 fell to $130.4 billion from $143.9 billion in the fourth quarter of 2019. However, the consensus estimate was for a deficit of $123.4 billion.

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