Market closed sharply higher on Thursday, as strong corporate earnings from Walmart and Cisco gave a boost to investors’ confidence. Also, trade war fears somewhat eased on news of the United States and China preparing to resume trade talks next week. This saw a rally in stocks, with Dow registering its best day in four months. All three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) advanced 1.6%, to close at 25,558.73. The S&P 500 gained 0.8% to close at 2,840.69. The Nasdaq Composite Index closed at 7,806.52, increasing 0.4%. A total of 6.39 billion shares were traded on Thursday, lower than the last 20-session average of 6.53 billion shares. Advancers outnumbered decliners on the NYSE by a 2.97-to-1 ratio. On Nasdaq, a 2.40-to-1 ratio favored advancing issues.
How did the Benchmark Perform?
The Dow gained 396.32 points, registering its biggest single day gain since April 10, when it jumped 429 points. The rally was led by strong gains in shares of Walmart Inc. (WMT – Free Report) and Cisco Systems, Inc. (CSCO – Free Report) . Shares of Walmart and Cisco gained 9.3% and 3%, respectively. Also industrial stocks such as The Boeing Company (BA – Free Report) and Caterpillar, Inc. (CAT – Free Report) gained 4.3% and 3.2%, respectively. Caterpillar has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 added 22.32 points, led by a rally in consumer staples, financial and industrial stocks. The Consumers Staples Select Sector SPDR (XLP) jumped 1.5%, while the Financial Select Sector SPDR (XLF) and The Industrial Select Sector SPDR (XLI) gained 1.3% each. All the 11 major S&P 500 sectors ended in positive territory. The tech heavy Nasdaq gained 32.41 points.
Strong Earnings Lift Investors’ Sentiment
The earnings season is winding down with only a few companies left to report their quarterly numbers. This has so far been an impressive earnings season. However, markets had been suffering or the last few days owing to trade war trade war fears and global tensions arising out of Turkey’s financial crisis that saw the lira hitting a record low.
On Thursday, investors’ confidence got a boost from strong corporate earnings led by Walmart and Cisco Systems. Walmart reported its best same-store sales in a decade. Walmart reported quarterly earnings of $1.29 per share, beating the Zacks Consensus Estimate of $1.21 per share. The company posted revenues of $128.03 billion for the quarter ended July 2018, surpassing the Zacks Consensus Estimate by 1.90% (read more: Walmart Q2 Earnings and Revenues Surpass Estimates).
Also, Cisco Systems reported impressive quarterly numbers. Cisco reported fourth-quarter fiscal 2018 non-GAAP earnings of $0.70 per share coming ahead of the Zacks Consensus Estimate by a penny. Also, revenues increased 6% year over year to $12.844 billion, beating the Zacks Consensus Estimate of $12.763 billion (read more: Cisco Surpasses Q4 Earnings & Revenues Estimates).
Moreover, the Turkish lira also continued to recover, gaining against the dollar. The lira gained around 3% on the dollar. The saw investors fend of fears of growing instability in emerging markets’ economy, thus leading to a rally in stocks.
Trade War Fears Ease
Trade war fears have been taking a toll on stocks for the last few months. On Thursday, investors’ confidence got a boost on news of the United States and China preparing to resume trade talks next week. Tariffs have already started hurting a number of sectors, which has seen shares of companies with substantial exposure to China taking a hit.
Industrials stand to lose the most owing to higher tariffs. Thursday’s news somewhat helped in lifting investors’ confidence, with shares of industrial companies like Boeing and Caterpillar rallying.
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