Benchmarks closed mixed on Friday as sentiments around trade war improved and August retail sales grew faster than expected. But, losses among tech giants especially FAANG stocks made tech-laden Nasdaq and the broader S&P 500 index end in the red. Dow was the only index to end in the green.
The Dow Jones Industrial Average (DJI) gained 0.1% to close at 27,219.52. The S&P 500 dropped 2.18 points or 0.1% to close at 3,007.39. The Nasdaq Composite Index closed at 8,176.71, declining 0.2%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.5% to close at 13.74. Advancers outnumbered decliners on the NYSE by a 1.04-to-1 ratio. On Nasdaq, a 1.44-to-1 ratio favored advancing issues.
August Retail Sales Beat Expectations
On Sep 13, the U.S. Commerce Department announced that retail sales grew 0.4% in August and was up 4.1% year-on-year. The growth surpassed the consensus estimate of 0.2%. Purchases of new cars, building materials, healthcare and hobbies drove the rise in retail sales.
This “faster-than-expected” retail sales data also boosted the U.S. Treasury yields higher; the yield of the 10-year U.S. Treasury note added 11 basis points to 1.894%. Higher rates drove the bank stocks upwards. Shares of Bank of America Corporation BAC, Citigroup Inc. C and JPMorgan Chase & Co. JPM jumped by 1.7%, 1.6% and nearly 2%, on the same day.
Bank of America, Citigroup and JPMorgan caries Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trade Tension Eases
China had earlier exempted 16 U.S. goods and promised to buy more agricultural products from the United States. Further on Sep 13 a report from the New York Times boosted the sentiments on trade front as China agreed to exempt some U.S. agricultural products from additional tariffs.
The farmers have been suffering from the halt in soybean import by China and the news brought signs of improvement in the U.S.-China trade front. This news came in after President Donald Trump said on Sep 12 that China was expected to purchase a “large amount” of agricultural products and has also mentioned that he would consider an interim trade deal with China.
FAANG Stocks Under Pressure
On Sep 13, the U.S. House of Representatives demanded internal e-mails, detailed financial information and other company records from Amazon.com, Inc. AMZN, Facebook, Inc. FB, Apple Inc. AAPL, and Google’s parent Alphabet Inc. GOOG as a part of the antitrust probe.
The panel has demanded for the letters over the last 10 years related to acquisition by Oct 14 from Apple’s CEO Tim Cook, Amazon.com’s CEO Jeff Bezos, Facebook’s CEO Mark Zuckerberg and Alphabet’s CEO Larry Page. All the FAANG stocks except Netflix Inc. NFLX came under pressure and dropped. Apple’s shares fell 1.9%.
All three major indexes ended in the positive territory for the week. The Dow, the S&P 500 and the Nasdaq Composite gained 1.6%, 1% and 0.9%, respectively. An upbeat consumer sentiment influenced by the ease in trade tension pushed the major indexes to their third straight weekly gain.
The market got positive vibes as both the United States and China took steps to ease trade tension. Along with high expectation that Fed will reduce the benchmark interest rate in September the way ECB cut its main deposit rate by 10 basis points to -0.50%.
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JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
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