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Stock Market News For Oct 2, 2017

Markets closed higher on Friday after the S&P 500 hit another record close following a rally in shares of Facebook. The Russell 2000 also notched up a record close. Meanwhile, President Trump interviewed former and current Federal Reserve Governors Kevin Warsh and Jay Powell to discuss a potential appointment as Fed Chairwoman Janet Yellen’s successors as the latter nears the end of her term in February.

The Dow Jones Industrial Average (DJIA) closed at 22,405.09, gaining 0.1%. The S&P 500 Index (INX) increased 0.4% to close at 2,519.36. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,495.96, increasing 0.7%. A total of 6.01 billion shares were traded on Friday, lower than the last 20-session average of 6.25 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.50-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by 1.35-to-1 ratio. The CBOE VIX traded lower and closed at 9.5.

S&P 500, Russell 2000 Index Hit Record Close

The S&P 500 notched up its 39th record close for 2017 after it gained 9.30 points on Friday. Of the 11 major sectors of the S&P 500, eight ended in the green, with technology stocks leading the advancers. The Technology Select Sector SPDR ETF (XLK) gained 0.7%. Such gains were buoyed by a surge in the shares of Facebook FB, which gained 1.3%. The company possesses a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the financial shares were also boosted following reports that former Federal Reserve Governor Kevin Warsh met with President Trump regarding the former’s nomination for the post as the Fed Chairman. The Financial Select Sector SPDR ETF (XLF) increased 0.4%.

Russell 2000 index gained 2.1 points to close at a record 1,490.86, increasing 0.1%. With this, the small-cap index notched up its 21st record close for 2017.

Yellen’s Comments, Trump’s New Tax Code Propel the Broader Markets

While addressing the National Association for Business Economics meeting at Cleveland last week, Fed Chairwoman Janet Yellen cautioned against raising the interest rate gradually. She said that it would rather be ‘imprudent’ to wait till the inflation levels reach 2% to increase interest rates gradually as this might lead to labor market becoming overheated. (Read More)

Moreover, in an announcement last week, Trump and his aides unveiled new reforms in tax policies which effectively lower taxes on businesses and individuals. The proposal seeks to decrease the corporate tax rate from 35% to 20%. (Read More)

Such positive statements from the top Republican and Fed Chairwoman Janet Yellen boosted broad based gains for the markets.

Trump Interviews Jay Powell

President Trump and his team also interviewed Federal Reserve Governor Jay Powell over his nomination for the post of Federal Reserve chairman. With Chairwoman Janet Yellen’s term at the helm set to culminate in February, Trump and his aides look for her successor. Powell served as a partner at the Carlyle Group from 1997 to 2005. He was appointed as a Federal Governor in 2012 to occupy an unexpired term. However in 2012, Powell was appointed to serve full time as the Federal Reserve Governor, with his term culminating in 2028.

Economic Data

Personal Income for the month of August increased 0.2% — in line with the consensus estimate. However, it came in below the previous month’s figure of a 0.3% increase. Meanwhile, personal spending increased 0.1%, in line with the consensus estimate.

PCE Inflation increased 0.2% in the month of August, higher than the previous month’s figure of an increase of 0.1%. The Core PCE Inflation increased 0.1% for August, whereas the consensus estimate for the period was 0.2%.

Weekly, Monthly & Quarterly Roundup

For the week, the Dow, the S&P 500, the Nasdaq and the Russell 2000 index gained 0.3%, 0.7%, 1.1% and 2.8% respectively. In retaliation to President Trump’s tweet, North Korean foreign minister, Ri Yong Ho threatened that his country reserved the rights to shoot down any U.S. bombers even if they are not within the Asian country’s borders. He reasoned that comments from Trump actually amounted to war on North Korea. Meanwhile, in a speech at Cleveland, Fed Chairwoman Janet Yellen cautioned against raising the interest rates gradually. She reasoned that this might lead to overheating of the economy and also financial instability. However, St. Louis Fed President James Bullard stated that the Fed should not be hasty about increasing interest rates.

For the month, the Dow, the S&P 500, the Nasdaq and the Russell 2000 index gained 2.1%, 1.9%, 1% and 6.1%. Trump made his debut speech at the United Nations General Assembly and urged member states to combat ‘rogue’ nations. North Korea threatened to raze both Japan and the United States with nuclear weapons after the U.N. issued fresh sanctions against the country. The Asian country had earlier test fired a ballistic missile over Japan, increasing geopolitical instability in the Korean Peninsula. Meanwhile, Fed announced the much anticipated unwinding of its $4.5 trillion balance sheet at the Federal Reserve Open Market Committee meeting, deciding to keep the benchmark interest rates unchanged. However, it indicated a rate hike was likely in December. Trump also reached an agreement with key members of Congress to extend the debt ceiling deadline to aid the relief funding for victims of Hurricane Harvey.

For the quarter, Dow, the S&P 500, the Nasdaq and the Russell 2000 index gained 4.9%, 3.9%, 5.8% and 5.4% respectively. Geopolitical tensions between North Korea and U.S. heightened when the former threatened to attack the Guam naval and air base. President Trump responded to such statements by stating that any attacks by North Korea would be met with ’fire and fury’. Trump also disbanded two advisory panels following a backlash from top CEOs in the country following his comments on the Charlottesville incident. Further, Trump also threatened to shut down the government if he did not receive funding for his proposed physical wall along the US-Mexico border.

The much awaited Jackson Hole Symposium also failed to throw light on the future of monetary policies in the U.S. The fallout of Hurricane Harvey disrupted the oil industry in Houston, which houses 16% of the total refining capacity of U.S. Meanwhile, Hurricane Irma pummeled the coast of Florida in September.

Stocks That Made Headlines

Can Chevron Flourish With Michael Wirth at the Helm?

U.S. energy giant Chevron Corporation CVX recently announced plans to appoint Michael K. Wirth as the CEO and chairman as the company seeks managerial changes to deal with the volatile dynamics of the oil industry.  (Read More)

BlackBerry Up on Q2 Earnings Beat, Software Sales Rise

Shares of BlackBerry Limited BBRY have rallied more than 21% since the release of strong second-quarter fiscal 2018 results last week. (Read More)

Walmart to Roll Out Private-Label Brand to Take on Amazon

The competition between retail giant Wal-Mart Stores Inc. WMT and online king, Inc. AMZN seems to be intensifying with the former trying every means to take on the latter in the e-commerce segment. (Read More)

Rite Aid (RAD) Slumps 14% Since Q2 Loss: What Lies Ahead?

Rite Aid Corporation RAD, which had quite an eventful journey of late, reported dismal second-quarter fiscal 2018 results last week. (Read More)

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