Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Stock Market News For August 1, 2017

The Dow finished at an all time high on Monday buoyed by the rally in shares of Goldman Sachs, Home Depot and Boeing. However, the technology sector slumped due to familiar overvaluation concerns, pulling the Nasdaq and S&P 500 to end in the negative territory. Although seven out of eleven major sectors of the S&P ended in the green, led by financials, a selling in major tech stocks such as Facebook and Google owner Alphabet negated such gains.

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) touched an all-time intraday high of 21,929.80, earlier in the session. However, the blue-chip index pulled back to close at 21,891.12, also an all-time high, rising by 0.3% or 60.81 points in the process. The S&P 500 Index (INX) declined 0.1%, dwindling 1.80 points to close at 2,470.30. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,348.12, declining by 26.55 points or 0.4%. A total of around 6.3 billion shares were traded on Monday, above the last 20-session average of 6.0 billion shares. Advancing issues outnumbered decliners on the NYSE by 1,495 to 1,017. On the Nasdaq, advancing issues outnumbered decliners by 1,278 to 971.

Boeing Lifts Dow to Fresh Record

The Dow’s stellar showing was powered by excellent earnings from Goldman Sachs GS and Home Depot HD. A rally in the shares of Boeing BA also helped Dow’s excellent performance. Moreover, low sovereign bond yields along with these results have essentially helped the Dow notch a record high on Monday.

Technology Stocks Suffer, Drag S&P 500 and Nasdaq Lower

Ongoing tech overvaluation concerns led the investors to indulge in portfolio reshuffling toward the end of the month. A sell off in stocks of tech giants dragged the Nasdaq lower. During the session, Facebook FB, Alphabet GOOGL, Amazon AMZN and Netflix NFLX declined 1.9%, 1.2%, 3.2% and 1.3% respectively. Apple Inc is due to report on Tuesday and investors are hopeful of a good show from Apple.  The analysts expect Apple to control much of the tech sector over the coming week.

Upbeat earnings from Chevron CVX and the growth in housing market boosted energy and bank shares. Broad based gains for the S&P 500 came from what has been an amazing earnings season all around. Further, there was a hike in oil prices as a result of production-curb commitments from OPEC and Saudi Arabia’s decision to curtail oil export to the States. However, the S&P 500 declined 1.8% to finish at 2,470.30. This fall was a result of the slump in tech stocks.

Materials also contributed to the decline in S&P 500. The Materials Select Sector SPDR declined 0.8%. Seven of the eleven sectors of the S&P 500 were high, with the financial sector turning up in good numbers. The Financials Select SPDR was up 0.6%. However, this was negated by the losses incurred in the technology sector which turned out to be one of the worst performers. The Technology Select SPDR was down 0.5%.

White House Drama Keeps Markets on the Edge

The latest White House upheaval was marked by Anthony Scaramucci’s resignation from the post of White House communications director. Scaramcci stepped down just ten days after being nominated to the post. Moreover, the Trump administration’s failure to push through a bill to repeal the Obamacare has hurt the investor sentiment. Market watchers are increasingly losing faith in the promises made by President Trump in the run up to presidential elections. Trump's failure to keep his campaign trail promises has made investors doubtful about his ability to further his wider pro-growth agenda.

Economic Data

The National Association of Realtors announced that its Pending Home Sales Index, increased 1.5% in June based on contracts signed last month. This was more than what the economists’ expectation of a 0.7% increase. For the record, the Chicago Purchasing Managers Index declined to 58.9 in July from 65.7 in June.

Monthly Roundup

For the month, the Dow increased 2.5% and the S&P 500 rose 1.9% whereas the Nasdaq increased 3.4%. The Dow’s great run has been supported by excellent earnings for the month. Leading companies which posted better-than-expected earnings include the likes of AT&T T, McDonalds MCD, Boeing, Verizon VZ, Facebook and Caterpillar CAT.

However, the Nasdaq and the S&P 500 lost out on some of the gains made earlier in the month. The tech rally initially gained on strong tech earnings expectations which were expected to justify high valuations of the tech stocks.  Gradually, investors took profits off the table by selling off tech stocks and this weighed on the broader markets, curbing gains for the S&P 500 and the Nasdaq.

Also, Trump administration’s inability to repeal Obamacare hurt investor sentiment. Market watchers lost their faith in Trump’s ability to bring about tax reforms and increasing spending on infrastructural growth among other items on his pro-growth agenda. Moreover, the Fed’s call to leave rates unchanged aided rate-sensitive industries and helped in broad based gains. Pegged at 1.4%, inflation still remains well below the targeted 2.0%, hurting investor sentiment.

Stocks That Made Headlines:

Discovery Lags Q2 Earnings, To Buy Scripps Networks

Silver Spring, MD-based Discovery Communications, Inc. DISCA posted a disappointing performance in the second quarter of 2017, missing earnings and revenue estimates. (Read More)

Energy Transfer to Sell Rover Project Stake to Blackstone

Oil and natural gas transporter, Energy Transfer Partners, L.P. ETP recently announced that it will divest substantial stake in its controversial Rover pipeline project’s operating entity, ET Rover Pipeline LLC aka HoldCo to private equity group, The Blackstone Group L.P. BX (Read More)

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

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free 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
 
Sunoco Logistics Partners LP (ETP): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Verizon Communications Inc. (VZ): Free Stock Analysis Report
 
Boeing Company (The) (BA): Free Stock Analysis Report
 
Home Depot, Inc. (The) (HD): Free Stock Analysis Report
 
Goldman Sachs Group, Inc. (The) (GS): Free Stock Analysis Report
 
The Blackstone Group L.P. (BX): Free Stock Analysis Report
 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
 
Discovery Communications, Inc. (DISCA): Free Stock Analysis Report
 
Chevron Corporation (CVX): Free Stock Analysis Report
 
McDonald's Corporation (MCD): Free Stock Analysis Report
 
To read this article on Zacks.com click here.