Stock Market News For May 23, 2017

Benchmarks closed in the green on Monday, boosted by gains in industrials and technology shares. Industrials shares moved north following the closure of a multi-billion dollar arms deal between the US and Saudi Arabia over the weekend. Meanwhile, technology shares gained on anticipation about changes to the US tax code that would allow companies to repatriate their overseas funds to the US.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) gained 0.4% or 89.99 points to close at 20,894.83. The S&P 500 rose 0.5% to close at 2,394.02. The tech-laden Nasdaq Composite Index advanced 0.8% to close at 6,133.62. A total of around 5.9 billion shares were traded on Monday, lower than the last 20-session average of 6.9 billion shares. The fear-gauge CBOE Volatility Index (VIX) closed at 10.93. Advancers outnumbered declining stocks on the NYSE by a 2.17 to 1 ratio.

Multi-Billion Dollar Defense Deal

Industrials stocks advanced on Monday helped by a surge in defense stocks after the U.S. entered into a multi-billion dollar arms deal with Saudi Arabia. President Trump made his first foreign trip visit to Saudi Arabia over the weekend where the $110-billion weapons deal was signed between the two countries. Administration officials claim the deal is the single largest arms deal in U.S. history.

Per the terms of the deal, Saudi Arabia will purchase U.S. arms to counter Iran. This deal may also lead other Persian Gulf countries to purchase U.S. arms as these countries are worried about Iran's ambitious foreign policy and its support towards extremist groups. Moreover, the deal is expected to be amount to as much as $350 billion over 10 years.

Lockheed Martin (NYSE:LMT) has come out as one of the biggest winners from the deal, since Saudi Arabia "expressed its intent" to buy 150 Sikorsky helicopters, the THAAD missile defense system and four littoral combat ships from the company. Meanwhile, Boeing (NYSE:BA) also entered into deals with Saudi Arabia, per which the jet maker will sale military and passenger aircraft.

The broader Industrials Select Sector SPDR (XLI) advanced 0.8% on Monday, emerging as one of the best performing sectors of S&P 500. Some of the key holdings of the industrials sector in the S&P 500 including General Dynamics (NYSE:GD) , Boeing and Lockheed advanced 1%, 1.6% and 1.6% respectively.

Technology Shares Gain

Technology stocks gained on Monday following expectations regarding changes to the US tax code. These changes in the tax code will allow companies to repatriate overseas funds to the US at a lower rate. Earlier, the Trump administration had released a short tax-reform plan which included provisions for "one-time tax on trillions of dollars held overseas." US companies are speculated to hold more than $2 trillion profits overseas.

The broader Technology Select Sector SPDR (XLK) advanced 0.8%, and emerged as one of the best performing sector of S&P 500. Some of the key holdings of the technology sector in the S&P 500 including Microsoft (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) gained 1.1% and 0.6% respectively. Additionally, shares of Amazon (NASDAQ:AMZN) registered an increase of 1.1%. The rise in technology stocks had a positive impact on the broader markets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks that made Headlines

BP (LON:BP) Reinitiates $5.7 Billion Quad 204 Project at Offshore UK

BP plc (NYSE:BP) on behalf of its co-venturers – Royal Dutch Shell (LON:RDSa) plc RDS.A and Siccar Point Energy – announced the restart of operations of the Quad 204 project in the redeveloped Schiehallion Area, west of Shetland region, offshore U.K. (Read More)

National Oilwell, Saudi Aramco Team up to form Joint Venture

Houston-based energy equipment supplier National Oilwell Varco (NYSE:NOV) recently entered into a memorandum of understanding with Saudi Arabian Oil Co. or Saudi Aramco to form a joint venture (JV) in Saudi Arabia. (Read More)

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