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Stock Market News for July 26, 2017

Benchmarks ended in the green on Tuesday following strong earnings performances from bellwether stocks.   Stellar earning results from McDonald’s and Caterpillar enabled the Dow to finish in the green. The S&P 500 has shown a good run so far this year and hit a record high on Tuesday led by over 1% increase in each of energy, materials and financial shares. Oil price rose following Saudi’s decision to curb oil exports to the US. The Nasdaq gained on Tuesday owing to bullish sentiments ahead of key tech earnings releases expected later this week. These gains occurred despite a decline in the shares of Alphabet which has been plagued by a rise in acquisition costs.

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 (DJIA) rose 0.5% or 100.46 points, closing at 21,613.43. The S&P 500 Index (INX) rose 0.3%, increasing 7.17 points to close at 2,477.08. This apart, the Nasdaq Composite Index (IXIC) closed 6,412.17, adding 1.37 and rising by a meager 0.02%. A total of around 6.9 billion shares were traded on Monday, above the last 20-session average of 6.1 billion shares. Advancing issues outnumbered decliners on the NYSE by a 1.62-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancing issues.

Caterpillar and McDonalds Post Upbeat Earnings in Q2

Shares of Caterpillar Inc. CAT hit a five-year high after it went up 5.1% due to strong results in Q2. The machinery heavyweight outdid expectations and raised its full-year guidance to $5.00 per share from its previous guidance of $3.75 per share. Revenues improved 9.6% year over year to $11.3 billion in the quarter, surpassing the Zacks Consensus Estimate of $10.9 billion. The EPS  $1.49 in second-quarter 2017, logging a 37% improvement year over year and also ahead of the Zacks Consensus Estimate of $1.26. The success in EPS can be attributed to the behemoth’s performance in Chinese construction and North American gas markets. Jim Umpleby, the CEO, stated that the company is slated to benefit from improving demands for construction around the world. (Read More: Caterpillar (CAT) Tops Q2 Earnings & Revenues, Raises View)

McDonalds MCD also reported a surge in its share prices after posting the earnings for the second quarter. Shares were up 4.8% to $159.64 due to strong global sales for the quarter. Adjusted earnings per share (EPS) of $1.73 surpassed the Zacks Consensus Estimate of $1.62 by 6.8% and improved 19% from the year-ago quarter. This has been attributed to the food giant’s national cold beverage value promotion, which offers soft drinks for $1 and the launch of Signature Crafted sandwiches which have been strategically priced between $5 and $7 each. Revenues of $6.05 billion declined 3% year over year, mainly due to the impact of the company’s strategic refranchising initiative. At constant currency, the figure declined 2%. However, the same surpassed the Zacks Consensus Estimate of nearly $6 billion by nearly 1%. (Read More:  McDonald's (MCD) Tops Q2 Earnings on Solid Comps Growth)

Economic Gains For Bank Shares

The Fed has hinted at plans to trim its humungous $4.5 trillion balance sheet, indicating an upcoming monetary tightening. This will boost the overall economy and will lead to increased demand for commercial and retail loans in the days to come. The Fed’s hawkish stance has gone down well with investors and has boosted sentiment. The Fed has reiterated that in intends to increase the interest rates one more time this year and this bodes well for banks in general.

Energy Shares Rally as Oil price raises

The Energy Select Sector SPDR (XLE) increased by 1.3% riding on the rise in oil price. Prices increased after Saudi Arabia stated that it would curtail exports of oil barrels to US to 6.6 million barrels a day, representing a reduction of a million barrels a day. Prospects of a supply shortage added to the bullish sentiment and the price of oil rose to $47.89 a barrel.

Tech rally continues

There were broad gains for technology stocks as the tech rally continued., Positive expectations regarding earnings of tech behemoths like Amazon AMZN and Facebook FB which are scheduled to report later this week powered this increase. This was the reason why the Nasdaq gained despite the shares of Alphabet Inc., GOOGL declining 3%. The drop in shares for the search engine giant has been attributed to rising acquisition costs that the company has incurred of late. Meanwhile, shares of Netflix NFLX jumped 13.5% after it added 52 million subscribers on July 17, 2017.

Stocks that made headlines

FEMSA Stock Dips 2% on Q2 Earnings & Revenue Miss

FEMSA FMX posted second-quarter 2017 net majority income per ADS substantially below the Zacks Consensus Estimate. (Read More)

Canadian National Q2 Earnings in Line, Revenues Beat

Canadian National Railway’s CNI second-quarter 2017 earnings per share (on an adjusted basis) were in line with the Zacks Consensus Estimate. (Read More)

AT&T Tops Q2 Earnings & Revenues, Gains Subscribers

U.S. telecom major AT&T Inc. T reported impressive financial results in the second quarter of 2017. (Read More)

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaries," but that should still leave plenty of money for regular investors who make the right trades early.  See Zacks' 3 Best Stocks to Play This Trend >>


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Canadian National Railway Company (CNI): Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Netflix, Inc. (NFLX): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Fomento Economico Mexicano S.A.B. de C.V. (FMX): Free Stock Analysis Report
 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
 
McDonald's Corporation (MCD): Free Stock Analysis Report
 
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