Stock Market News For Nov 16, 2018

Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes. Additionally, strong retail sales data for October also negated investor concerns regarding weak earnings results of retail giant Walmart. All three major stock indexes closed in the green.

The Dow Jones Industrial Average (DJI) closed at 25,289.27, climbing 0.8% or 208.77 points. The S&P 500 Index (INX) increased 1.1% to close at 2,730.20. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,259.03, advancing 1.7% or 122.67 points. A total of 8.67 billion shares were traded on Thursday, higher than the last 20-session average of 8.58 billion shares. Advancers outnumbered decliners on the NYSE by 1.35-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 2.05-to-1 ratio.  The CBOE VIX decreased 5.2% to close at 20.14.

How Did the Benchmarks Perform?

The Dow ended in positive territory reversing its four-day losing streak. Notably, 22 components of the 30-stock blue-chip index closed in the green while 8 finished in the red. The tech-laden Nasdaq Composite finished in the green after five straight day buoyed by good performance of tech giants.

Meanwhile, the S&P 500 also closed in positive territory after declining for fifth consecutive days. Technology Select Sector SPDR (XLK), Energy Select Sector SPDR (XLE), Financials Select Sector SPDR (XLF), MaterialsSelect Sector SPDR (XLB) and Industrials Select Sector SPDR (XLI) are major gainers with 2.5%, 1.5%, 1.5%, 1.4% and 1.3%, respectively. Notably, seven out of total 11 sectors of the benchmark index closed in the green while four finished in the red.

Cautious Optimism on Trade War News

Investor were cautiously optimistic following a report by Financial Times that both the United States and China has doubled their efforts to find an amicable solution to the eight months old trade dispute between two largest economies of the world. Notably, President Donald Trump and his Chinese counterpart Xi Jinping are expected to meet in the G-20 summit later this month.

The report stated that China has agreed to do away with several grievances that the U.S. government has raised related to Chinses trade practices, especially theft of high-tech intellectual property. China has also agreed for possible concessions to these issues. On the other hand, the United States has decided to put upcoming tariffs on Chinese goods on hold. The Trump administration has threatened to impose such duties if the meeting between the two presidents fails to arrive any negotiations.

Citing a unanimous source, the Financial Times reported that U.S. Trade Representative Robert Lighthizer has already informed some industry executives about the postponement of new round of tariffs. However, Lighthizer later denied the report and one of his spokespersons stated that no change has been made regarding upcoming tariffs on China.

Strong Retail Sales Data  

On Nov 15, the Department of Commerce reported that the U.S. retail sales for the month of October rose 0.8% betting the consensus estimate of 0.5%. The September reading was revised downward to a fall of 0.1% instead of a rise of 0.1% reported earlier. Retail sales in October grew 4.6% year over year. Retail sales rebounded in October buoyed by strong showing by motor vehicles and building materials. Electronics and appliances also witnessed impressive growth.

The core retail sales (excluding automobiles, gasoline, building materials and food services) in October grew 0.3%. October data showed growing momentum for consumer spending which constitutes over 70% of U.S. GDP. This could be a signal for strong fourth quarter GDP data. Notably, the U.S. economy grew 3.3% on an average in the first nine months of 2018.

Strong retail sales data negated disappointing results of Walmart Inc. WMT (Read More). Consequently, shares of the retail behemoth tanked 2%. Walmart has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Geopolitical Concerns

The Brexit drama in the U.K. continues following the resignation of Brexit Secretary Dominic Raab, the second after cabinet minister Esther McVey to resign after Prime Minister Theresa May reiterated her commitment to an organized exit from the European Union.

Meanwhile, Germany declared that its third quarter GDP declined for the first time in three years. Japan also confirmed about the contraction of its economy in the third quarter. Moreover, Italy is on a collision with the European Union regarding its fiscal discipline. All these negative developments have intensified the possibility of a global economic slowdown which will sure to create stock market turmoil in the United States.

Economic Data

On Nov 15, the Department of Labor reported that weekly initial jobless claims rose 2,000 to a seasonally adjusted 216,000 for the week ended Nov. 10, higher than the consensus estimate of 214,000. Moreover, continuing jobless claims figure dropped 8,750 to 1.64 million for the week ended Nov 3.

Stocks That Made Headline

Nordstrom Down Despite Q3 Earnings Beat, Revises View

Shares of Nordstrom Inc. JWN declined nearly 9.1% despite the company’s solid top- and bottom-line performance in third-quarter fiscal 2018. (Read More)

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