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Stock Market News for July 07, 2017

Benchmarks finished in the red on Thursday with S&P 500 posting its biggest percentage fall since May 17. Technology shares suffered yet another setback on Thursday in the backdrop of valuation concerns, sending the broader markets lower. Investors remained concerned about the persistent tense relationship between U.S. and North Korea, following North Korea’s claim of successfully launching an intercontinental ballistic missile. Moreover, disappointing employment data released from ADP and rise in weekly initial claims also had an adverse impact on 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 0.7% to close at 21,320.04. The S&P 500 fell 0.9% to finish at 2,409.75, posting its biggest percentage decline since May 17. The tech-heavy Nasdaq Composite Index declined 1% to finish at 6,089.46. A total of around 6.66 billion shares were traded on Thursday, lower than the last 20-session average of 7.18 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded near 12.60, close to its peak since June 29. Decliners outnumbered advancing stocks on the NYSE by a 3.12 to 1 ratio.   

Technology Shares Drag Down Broader Markets

The broader tech sector suffered yet another decline on Thursday. Tech shares have suffered several setbacks in past few weeks in the backdrop of concerns about valuations of technology companies. Drop in shares of large-cap tech companies, including Facebook FB, Apple AAPL and Alphabet GOOGL led to the day’s losses.

Decline in technology shares had an adverse impact on the broader markets. The broader Technology Select Sector SPDR (XLK) declined 0.9%. Shares of Apple recorded a decline of 0.9% while shares of other large cap tech companies including Facebook and Alphabet were down by 1% and 0.5% respectively.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Geopolitical Concerns

Investors remained cautious following persistent geopolitical tensions emanating from North Korea’s declaration of the successful launch of an intercontinental ballistic missile. Speaking at a joint news conference with his Polish counterpart Andrzej Duda, President Donald Trump on Thursday commented that North Korean leaders were “behaving in a very, very dangerous matter and something will have to be done about it.”

However, Trump did not provide details about steps his administration might take in response to the ambitious nuclear program of North Korea.  Adding to these concerns, tensions between the U.S. and Russia increased as both countries clashed at the United Nations Security Council over the approach to North Korea’s nuclear program.

Economic Data

Disappointing employment data released by Automatic Data Processing ADP weighed on stocks. According to ADP, there was an addition of 158,000 new private-sector jobs in the month of June, some 22,000 lower than expectations of 180,000 and down from a revised 230,000 in May. As per ADP, trade and transportation led the way by creating 30,000 new jobs, followed by Healthcare which added another 28,000. Leisure/Hospitality added 11,000 jobs while manufacturing saw an increase of 6,000 jobs. However Natural Resources and Mining lost 4,000 jobs in the month. The ADP report preceded nonfarm payrolls data scheduled to be released on Friday, with projected additions of 174,000 new jobs in June.

Seasonally adjusted initial claims for the week ending Jul 1 were recorded at 248,000, an increase of 4,000 from the previous week's unrevised level of 244,000. The 4-week moving average came in at 243,000, compared to the earlier week's unrevised average of 242,250.

Meanwhile, the trade deficit recorded a decline of 2.3% and reached $46.5 billion in May from $47.6 billion in the previous month, largely attributable to decrease in imports of cell phones and other consumer goods.

Separately, the Institute for Supply Management’s services index increased to 57.4% in June from 56.9% in May. The figure came well above the consensus estimate of 56.6%.

Stocks that made Headlines

Buckle's Sluggish Comps Trend Continues to Hurt Stock

The Buckle, Inc. BKE has been continuing with sluggish comparable-store sales (comps) performance. (Read More)

Can Pacific Foods’ Takeover Drive Campbell’s Top line?

Food products behemoth, Campbell Soup Company CPB has been undertaking several steps to diversify its portfolio and expand in the fast-growing organic space. (Read More)

Will You Make a Fortune on the Shift to Electric Cars?  

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Facebook, Inc. (FB): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
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Campbell Soup Company (CPB): Free Stock Analysis Report
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Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report
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