Markets closed in the green for the second consecutive session on Tuesday. Positive comments by President Trump and his economic advisor Larry Kudlow about the fate of the U.S. economy buoyed gains for the markets. Further, the U.S. Commerce Department provided a 90-day reprieve to Huawei Technologies to continue doing business with U.S. companies. The three major benchmarks ended in the green.
The Dow Jones Industrial Average increased 1%, to close at 26,135.79. The S&P 500 increased 1.2% to close at 2,923.65. The tech-laden Nasdaq Composite Index closed at 8,002.81, gaining 1.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 8.8% to close at 16.85. Advancers outnumbered decliners on the NYSE by a 3.68-to-1 ratio. On Nasdaq, a 3.24-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow amassed 249.8 points to close in the green. Shares of Apple AAPL gained 1.9% and supported gains for the 30-stock index. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 rose 35 points to end in positive territory. All of the 11 major sectors of the S&P 500 ended in the green, with energy and technology stocks leading the advancers. The Technology Select Sector SPDR Fund (XLK) and Energy Select Sector SPDR Fund (XLE) increased 1.5% and 2.2%, respectively on Monday.
Meanwhile, the Nasdaq gained 106.8 points to also close in the green. Shares of NVIDIA Corporation NVDA jumped 7% and supported gains for the Nasdaq.
Also, investors had keenly awaited the release of the minutes from Fed’s last policy meeting in July which is due on Aug 21. Further, market watchers are also awaiting Fed Cahir Jerome Powell’s speech at central bank’s economic policy symposium in Jackson Hole on Aug 23.
Huawei gets a 90-day Reprieve
The U.S. Department of Commerce announced on Aug 19 that it had allowed Chinese telecom giant Huawei Technologies Co. an extension of 90 days to continue doing business with U.S. companies. However, the case-by-case licenses were not granted to the company.
Further, Commerce Department Secretary Wilbur Ross commented that the department still “urge consumers to transition away from Huawei’s products”, he believed that providing some more time was necessary to “prevent any disruption.” However, a total 46 Huawei subsidiaries were added to the Entity List.
Trump & Kudlow Play Down Fears of Recession
President Donald Trump allayed fears related to a potential slowdown in the U.S. economy. Trump also provided an optimistic outlook for the country’s economy and said that he doesn’t think that the economy was “having a recession.” After returning from his New Jersey golf club, Trump told reporters that the economy was doing “tremendously well” and that tax cuts paved way for such performance.
Echoing Trump’s comments, White House economic adviser Larry Kudlow stated on Aug 18 that he didn’t “see a recession at all.” Such comments from Trump and Kudlow boosted investor sentiment.
PBOC’s Interest Rate Reform
On Aug 17, the People’s Bank of China (PBOC) unveiled interest rate reforms by lowering interest rates for companies even as the country’s economy is slowing down. Such developments were cheered by investors across the globe and led to broad based gains for the markets.
Germany Announces plans for a Fiscal Stimulus
Germany’s Finance Minister Olaf Scholz announced on Aug 18 that the country’s government might spend $55 billion (50 billion euros) extra should an economic crisis arises.
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