Markets closed mostly in the green on Friday after the release of stellar economic data boosted investor sentiment. This also signified that the 35-day partial government shutdown has failed to have much of an impact on the U.S. economy.
A series of strong earnings results from oil majors boosted the Dow and the S&P 500. However, the Nasdaq ended in the red after shares of Amazon slumped on weak earnings guidance. The three major benchmarks ended in the green for the week.
The Dow Jones Industrial Average (DJI) increased 0.3%, to close at 25,063.89. The S&P 500 increased 0.1% to close at 2,706.53. The tech-laden Nasdaq Composite Index closed at 7,263.87, losing 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 0.1% to close at 16.55. Advancers outnumbered decliners on the NYSE by a 1.18-to-1 ratio. On Nasdaq, a 1.19-to-1 ratio favored advancing issues.
Meanwhile, the S&P 500 gained 2.4 points to also finish in the green. Of the 11 major segments of the S&P 500, six ended in positive territory. Advancers were led by energy shares which more than made up for the decline in consumer discretionary shares. While, the Energy Select Sector SPDR ETF (XLE) gained 1.7%, the Consumer Discret Sel Sect SPDR ETF (XLY) dipped 1.5%.
The Nasdaq declined 17.9 points to end in the red. Losses for the tech-heavy index were buoyed by a sharp decline in the shares of Amazon AMZN . Shares of the tech-heavyweight 5.4% even after reporting fourth-quarter 2018 earnings of $6.04 per share, beating the Zacks Consensus Estimate by 49 cents. The figure surged 61.5% year over year.
However, the company provided disappointing revenue guidance. Amazon expects first-quarter 2019 net sales between $56 billion and $60 billion, lower than the current Zacks Consensus Estimate of $61.19 billion. This weighed on its shares and the overall tech-heavy benchmark.
Stellar Economic Data Boosts Markets
Per the latest data from the Institute of Supply Management (ISM), its manufacturing index surged to 56.6% in January, surpassing the consensus estimate of 54.3%. Any reading above 50 indicates that the economy is expanding. Meanwhile, the U.S. Census Bureau reported that U.S. construction spending for November increased 0.8%, beating the consensus estimate of 0.2%.
Coming to job additions, the Bureau of Labor Statistics reported that the U.S. economy added a total of 304,000 jobs in the month of December. The Department of Labor also reduced job additions for December from 312,0000 to 222,000. This marked the largest monthly revision since 2010. Moreover, job additions marked 100 straight months of growth in January.
This marked the best stretch of job gains during the decade-long economic expansion. Also, job gains in 2018 were the best in the last 3 years. Meanwhile, the unemployment rate nudged higher to 4% in January from 3.9% in December.
This was largely due to the partial government shutdown. Meanwhile, the average hourly earnings increased 0.1%, below the consensus estimate of 0.2%.
For the week, the Dow, the S&P 500 and the Nasdaq gained 1.3%, 1.6% and 1.4%, respectively. The Dow advanced for the sixth straight week, its longest such streak since November 2017 when it gained for eight straight weeks.
Strong fourth quarter earnings results boosted investors’ confidence in risky assets like equities. Also, the Fed kept the federal funds target rate unchanged and adopted a dovish monetary stance. Meanwhile, Caterpillar CAT posted dismal earnings in the fourth quarter of 2018.
Also, Nvidia NVDA lowered its quarterly guidance citing China’s economic slowdown which weighed on the broader markets. Further, Trump stated that he was doubtful that a border-wall funding deal would be reached and shutdown fears reemerged.
Today’s Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Go to Appearance > Customize > Subscribe Pop-up to set this up.
Wealth Empire Newsletter
Register now for free updates and alerts
Note: I have the ability to revoke this permission at any time and ask for the removal of my personal data collected by contacting us or simply clicking Unsubscribe.