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U.S. stock markets closed higher on Wednesday as market participants weigh better-than-expected second-quarter 2023 earnings results so far. Investors are also keenly waiting for the Fed’s July FOMC meeting scheduled next week. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 109.28 points to close at 35,061.21, marking its highest closing since April 2022. Notably, 20 components of the 30-stock index ended in positive territory, while nine in negative zone and one remained unchanged. The blue-chip index posted eighth consecutive winning days for the first time since September 2019.
The tech-heavy Nasdaq Composite finished at 14,358.02, gaining marginally 4.4 points due to good performance of large-cap technology stocks. The tech-laden index recorded its highest closing since April 2022.
The S&P 500 advanced 0.2% to end at 4,565.72. The broad-market index registered its highest closing since April 2022. Eight out of 11 broad sectors of the benchmark ended in positive zone while three finished in negative territory. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU) and the Consumer Staples Select Sector SPDR (XLP) advanced 1.1%, 1% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 3.5% to 13.76. A total of 10.98 billion shares were traded on Wednesday, higher than the last 20-session average of 10.57 billion. Advancers outnumbered decliners on the NYSE by a 2.05-to-1 ratio. On Nasdaq, a 1.32-to-1 ratio favored advancing issues.
Q2 Earnings Results at Initial Stage
As of Jul 19, 50 S&P 500 companies reported earnings results. Total earnings of these companies are up 4.4% year-over-year on 8.6% higher revenues. Of these 30 companies, 82% surpassed EPS estimates while 66% outpaced revenue estimates.
At present, our estimate has shown that total earnings of the S&P 500 Index will likely drop 9.3% year-over-year on 0.5% lower revenues. The second-quarter earnings decline would follow the 3.4% decline in the first quarter and a 5.4% drop in fourth-quarter 2022.
Fed’s July FOMC in Focus
The Fed paused the current interest rate hike cycle in its June FOMC meeting after 10 consecutive increases. However, the Fed Chairman Jerome Powell warned that more rate hikes are expected in this year. The “dot plot” of June FOMC showed that majority of Fed officials expected two more rate hike of 25 basis points each this year.
At present, the Fed fund rate is 5-5.25%. Currently, the CME FedWatch has assigned 97% probability that the Fed will raise the benchmark interest rate by 25 basis points in July FOMC while a mere 3% respondents are expecting the central bank to maintain status quo. A section of economists and financial experts remained concerned that higher interest rate may lead to a near-term recession.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development j reported that housing starts in June came in at 1.434 million units, missing the consensus estimate of 1.478 million units. May’s data was revised downward to 1.559 million units from 1.631 million units reported earlier. Building Permits in June came in at 1.44 million units, missing the consensus estimate of 1.48 million units. May’s data was revised upward to 1.496 million units from 1.491 million units reported earlier.
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Stock Market News for Jul 20, 2023
U.S. stock markets closed higher on Wednesday as market participants weigh better-than-expected second-quarter 2023 earnings results so far. Investors are also keenly waiting for the Fed’s July FOMC meeting scheduled next week. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 109.28 points to close at 35,061.21, marking its highest closing since April 2022. Notably, 20 components of the 30-stock index ended in positive territory, while nine in negative zone and one remained unchanged. The blue-chip index posted eighth consecutive winning days for the first time since September 2019.
The tech-heavy Nasdaq Composite finished at 14,358.02, gaining marginally 4.4 points due to good performance of large-cap technology stocks. The tech-laden index recorded its highest closing since April 2022.
The major gainer of the tech-laden index was Zscaler Inc. (ZS - Free Report) . The stock price of the company climbed 4%. Zscaler currently 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 advanced 0.2% to end at 4,565.72. The broad-market index registered its highest closing since April 2022. Eight out of 11 broad sectors of the benchmark ended in positive zone while three finished in negative territory. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU) and the Consumer Staples Select Sector SPDR (XLP) advanced 1.1%, 1% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 3.5% to 13.76. A total of 10.98 billion shares were traded on Wednesday, higher than the last 20-session average of 10.57 billion. Advancers outnumbered decliners on the NYSE by a 2.05-to-1 ratio. On Nasdaq, a 1.32-to-1 ratio favored advancing issues.
Q2 Earnings Results at Initial Stage
As of Jul 19, 50 S&P 500 companies reported earnings results. Total earnings of these companies are up 4.4% year-over-year on 8.6% higher revenues. Of these 30 companies, 82% surpassed EPS estimates while 66% outpaced revenue estimates.
At present, our estimate has shown that total earnings of the S&P 500 Index will likely drop 9.3% year-over-year on 0.5% lower revenues. The second-quarter earnings decline would follow the 3.4% decline in the first quarter and a 5.4% drop in fourth-quarter 2022.
Fed’s July FOMC in Focus
The Fed paused the current interest rate hike cycle in its June FOMC meeting after 10 consecutive increases. However, the Fed Chairman Jerome Powell warned that more rate hikes are expected in this year. The “dot plot” of June FOMC showed that majority of Fed officials expected two more rate hike of 25 basis points each this year.
At present, the Fed fund rate is 5-5.25%. Currently, the CME FedWatch has assigned 97% probability that the Fed will raise the benchmark interest rate by 25 basis points in July FOMC while a mere 3% respondents are expecting the central bank to maintain status quo. A section of economists and financial experts remained concerned that higher interest rate may lead to a near-term recession.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development j reported that housing starts in June came in at 1.434 million units, missing the consensus estimate of 1.478 million units. May’s data was revised downward to 1.559 million units from 1.631 million units reported earlier. Building Permits in June came in at 1.44 million units, missing the consensus estimate of 1.48 million units. May’s data was revised upward to 1.496 million units from 1.491 million units reported earlier.