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Stock Market News for July 03, 2017

Benchmarks mostly finished in the green on Friday, boosted primarily by gain in shares of Nike. Shares of Nike posted its biggest one-day percentage increase since September 2014 following the release of its robust fiscal fourth-quarter results. Additionally, Nike’s decision to execute a pilot online sales program with Amazon also had a positive impact on investor sentiments. Separately, energy shares moved north due to uptick in oil prices after a report showed that the number of active U.S. oil rigs fell. Meanwhile, investors digested a bag of economic data.

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) advanced 0.3% to close at 21,349.63. The S&P 500 rose 0.2% to finish at 2,423.41. The tech-heavy Nasdaq Composite Index declined 3.93 points to close at 6,140.42. The fear-gauge CBOE Volatility Index (VIX) traded near 11.1. Advancers outnumbered declining stocks on the NYSE by 1,596 to 1,125.

Gains in Nike Boost Dow & S&P 500

Shares of Nike, Inc. NKE surged 11% on Friday, following the report of its robust fiscal fourth-quarter 2017 results. The company’s earnings per share of $0.60 recorded an increase of 22% year over year, comfortably beating the Zacks Consensus Estimate of $0.49. Revenues of the company advanced 5% to $8,677 million, surpassing the Zacks Consensus Estimate of $8,613 million.

Moreover, the world’s largest footwear maker confirmed on Thursday that it would start selling a limited product assortment directly on AMZN. Impressive earnings results and the confirmation of a partnership with Amazon, led Nike’s shares to surge which ultimately had a positive impact on both the Dow and the S&P 500.

Energy Shares Continue to Gain

Oil prices continued to move north on Friday, marking its seventh consecutive session of gains. Data released by Baker Hughes on Friday revealed that the number of active U.S. oil rigs fell by two to 756 rigs this week. After increasing for 23 weeks in a row, oil-rig numbers declined for the second time this year.

Gain in oil prices had a positive impact on energy shares. WTI crude prices advanced by $1.11, or 2.4%, to $46.04 a barrel. The broader Energy Select Sector SPDR (XLE) gained 0.4%.Some of its key holdings, including EOG Resources EOG and Halliburton Co HAL rose 0.6% and 0.7% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Economic Data

As per Bureau of Economic Analysis, personal income recorded an increase of 0.4% in May against the consensus estimate of 0.3% increase. As per the Commerce Department, consumer spending increased 0.1% in May following 0.4% gains in previous two months. The figure came in line with the consensus estimate.

However, the PCE price index registered a decline of 0.1%, marking its second decline in three months. The PCE price index recorded an increase of 0.1% excluding food and energy. Separately, Chicago PMI for June was recorded at 65.7, which came above the consensus estimate of 58.

Monthly Roundup

For the month, the Dow and the S&P 500 registered gains of 1.6% and 0.5% respectively, while the Nasdaq declined 0.9%.Technology shares suffered several setbacks throughout the month on overvaluation concerns, dragging broader markets lower. The Fed hiked the key interest rate by 25 basis points on June 14, leading to gains for bank shares. Meanwhile, Senate released a new healthcare Bill on June 22 in an attempt to repeal key sections of Obama’s Affordable Care Act. Biotechnology stocks gained following the issuance of a draft of executive order which seeks to soften certain regulations for pharmaceutical companies.

Half-Yearly Roundup

Despite the Dow, the S&P 500 and the Nasdaq ended the week lower by 0.2%, 0.6% and 2% respectively, for the first half of the year, the Dow, the S&P 500 and the Nasdaq increased 8%, 8.2% and 14.1% respectively. The Dow and the S&P 500 posted their best first half performance since 2013, while the Nasdaq recorded its best performance for the same period since 2009.

During the first half of the year, stocks hit fresh highs on several occasions. This was attributable to a pickup in economic activity in many parts of the world, solid corporate earnings and hopes of Trump’s pro-growth policies. However, volatility and uncertainty due to geopolitical tensions, political instability in Europe, doubts over Trump’s administration, decline in oil price and overvaluation have weighed on the markets. Additionally, the technology turmoil added to the woes lately. 

The technology sector which has outperformed the broader markets thus far this year, suffered several setbacks in the later part of the year due to overvaluation concerns. Energy has underperformed throughout the first half with natural gas being the hardest hit. Supply and demand imbalances took a toll on prices. (Read More)

Stocks that made Headlines

Southern Company Suspends Kemper Project Coal Operations

Electric utility firm The Southern Company SO suspended all coal gasification operations at its Kemper plant on Jun 28. (Read More)

Abercrombie’s New Concept Store Goes to Hong Kong

Abercrombie & Fitch Co ANF continues to focus on improving its business. (Read More)

5 Trades Could Profit "Big-League" from Trump Policies                               

If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.

Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>

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Southern Company (The) (SO): Free Stock Analysis Report, Inc. (AMZN): Free Stock Analysis Report
Halliburton Company (HAL): Free Stock Analysis Report
EOG Resources, Inc. (EOG): Free Stock Analysis Report
Abercrombie & Fitch Company (ANF): Free Stock Analysis Report
Nike, Inc. (NKE): Free Stock Analysis Report
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