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Stock Market News for June 30, 2017

Technology shares suffered another setback on Thursday, sending the broader markets lower. Technology sector dropped as investors resumed selloff of tech shares in the backdrop of overvaluation concerns. However, financials gained following the release of positive stress test results by Federal Reserve on Thursday. Gain in financials helped to pare some losses in the broader markets.

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) declined 0.8% to close at 21,287.03, posting its biggest percentage fall since May 17. The S&P 500 fell 0.9% to finish at 2,419.70, moving below its 50-day moving average for the first time since May 18. The tech-heavy Nasdaq Composite Index declined 1.4% to finish at 6,144.35, ending below its 50-day moving average for the first time since April 13. A total of around 7.9 billion shares were traded on Thursday, higher than the last 20-session average of 7.3 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded near 11.4. Decliners outnumbered advancing stocks on the NYSE by a 2.38 to 1 ratio.

Technology Shares Slump

The broader tech sector suffered yet another decline on Thursday. Tech shares have gone down over the past few weeks, after the release of a report from Goldman Sachs GS that issued warnings on valuations of major tech stalwarts. The technology sector which has steered the S&P 500’s 8% gain so far this year has declined 2.5% so far in June.

Decline in technology shares had an adverse impact on the broader markets. The broader Technology Select Sector SPDR (XLK) declined 1.8%, emerging as the worst performing sector of the S&P 500. Shares of Apple AAPL recorded a decline of 1.5% and were the largest drag on three major indexes. Shares of other large cap tech companies including Alphabet GOOGL and Microsoft MSFT were also down by 2.4% and 1.9% respectively.

Financials Continue to Gain

Financials continued to rise on Thursday led by gain in bank shares, after the release of the second round of stress test results by Federal Reserve on Thursday. Notably, in seven years of annual ‘stress tests’, this is the first time that all participating banks have received the Fed’s approval for capital plans.  All 34 major banks got the approval of their capital plans from the central bank. All the participating banks got the freedom to raise dividend payouts and share buybacks.

The results of the second round of tests have eliminated all doubts about the health of the banking sector. All the major banks which were scrutinized together hold in excess of 75% of the sector’s total assets. As of the fourth quarter of 2016, banks held capital reserves amounting to $1.2 trillion. Additionally, banks are expected to return 100% of their net revenue to shareholders over the four upcoming quarters. This represents a significant improvement when compared to the level of 65% witnessed during the same quarter last year. (Read More)

Almost all major banks ended in the green, helping to trim some losses in the broader markets. Shares of major banks including JP Morgan Chase JPM, Goldman Sachs Group and Citigroup Inc C recorded a gain of 1.5%, 0.5% and 2.8% respectively. The broader Financials Select Sector SPDR (XLF) advanced 0.7%, emerging as one of the only two advancing sectors of the S&P 500. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

As per the third estimate released by the Bureau of Economic Analysis on Thursday, the real gross domestic product (GDP) increased at a 1.4% annual rate in the first quarter of 2017. The second estimate showed an increase of 1.2% in real GDP, while the initial estimate revealed an increase of 0.7%. The third estimate also showed that the first quarter personal consumption expenditures and exports rose more than previous estimation.

Additionally, as per the Labor Department, for the week ending June 24, seasonally adjusted initial claims were recorded at 244,000 against the consensus estimate of 240,000. The figure rose by 2,000 from the earlier week's revised level. The four week moving average was recorded at 242,250, lower than the previous week's revised average figure.  

Stocks that made Headlines

BP Announces Exploration Plans for 2Q17, Reviews Portfolio

BP plc BP continues to make progress in shifting its exploration portfolio toward natural gas and advantaged oil. (Read More)

NIKE Gains on Q4 Earnings & Sales Beat, Guides FY18

Shares of NIKE Inc. NKE advanced 7.8% in the after-hours session yesterday following the company’s robust fourth-quarter fiscal 2017 results. (Read More)

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J P Morgan Chase & Co (JPM): Free Stock Analysis Report
 
Citigroup Inc. (C): Free Stock Analysis Report
 
Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Goldman Sachs Group, Inc. (The) (GS): Free Stock Analysis Report
 
BP p.l.c. (BP): Free Stock Analysis Report
 
Nike, Inc. (NKE): Free Stock Analysis Report
 
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