U.S. markets closed largely in the red on Thursday. The S&P 500 and Nasdaq Composite closed in negative territory primarily due to decline in the technology sector dragged lower by Facebook. However, the Dow ended in the green buoyed by strong performance of industrial stocks as trade war concerns eased.
The Dow Jones Industrial Average (DJI) closed at 25,527.07, gaining 0.4% or 112.97 points. However, the S&P 500 Index (INX) declined 0.3% to close at 2,837.44. The Nasdaq Composite Index (IXIC) closed at 7,852.19, shedding 1%. A total of 7.05 billion shares were traded on Thursday, higher than the last 20-session average of 6.06 billion shares. Advancers outnumbered decliners on the NYSE by 1.33-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.21-to-1 ratio. The CBOE VIX decreased 1.2% to close at 12.14.
How Did the Benchmarks Perform?
The Dow advanced 0.7%, continuing its winning streak for the third straight trading days. Notably, 21 components of the 30-stock blue-chip index closed in the green, while only 9 traded in the red.
The S&P 500 fell 0.3% led by 3.8% decline in Communication Services Select Sector SPDR (XLC) and 1.5% drop in Technology Select Sector SPDR (XLK). However, both Utilities Select Sector SPDR (XLU) and Energy Select Sector SPDR (XLE) increased 1.1%. Notably, 6 out of 11 sectors of the benchmark index closed in the green while 5 ended in the red.
The tech-heavy Nasdaq Composite decreased 1% as Facebook pulled down the entire technology sector. This was the tech-laden index's worst one-day loss since Jun 27.
Facebook Leads Tech Sector Decline
Facebook Inc. FB reported second-quarter 2018 earnings of $1.74 per share that missed the Zacks Consensus Estimate by a penny. Revenues of $13.23 billion also lagged the Zacks Consensus Estimate of $13.40 billion.
Monthly active users reached 2.23 billion missing Zacks Consensus Estimate of 2.25 billion. Daily Active Users were 1.47 billion, lagging the Zacks Consensus Estimate of 1.48 billion. Moreover, for the second half of 2018, Facebook expects revenue growth rates to decline by high-single digit percentages. ( Read More )
Consequently, the share price of Facebook plunged 19%, its biggest single day loss in history. The social media giant also lost more than $119.4 billion of its market value, marking the largest one-day loss in market value by any company in U.S. stock market history. Facebook carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Facebook dragged the entre tech sector into negative territory. Large-cap tech stocks like Amazon.com Inc. AMZN and Twitter Inc. TWTR shed 3% and 2.9%, respectively.
Trade War Fear Reduces
The ongoing trade conflict between the United States and the European Union has showed signs of easing following a Jul 25 meeting between President Donald Trump and the European Commission President Jean-Claude Juncker. Notably, some of the EU members are major trading partners and closest political allies of the United States.
As per CNBC, on Jul 26, Treasury Secretary Steven Mnuchin stated that the Trump administration is hoping to have an agreement in principle on NAFTA in the near future.
Following these developments, major industrial stocks such as 3M Co. MMM , The Boeing Co. BA and Caterpillar Inc. CAT increased 1.8%, 1% and 1.5%, receptively, enabling the Dow to comfortably close in the positive territory.
The Commerce Department reported that durable-goods orders rose 1% in June, the first increase in three months. However, the figure lagged the consensus estimate of 2.9%. Core capital goods order (excluding aircraft) - a closely watched proxy for business spending plans - increased 0.6% while shipments of core capital goods rose 1% in June.
The Labor Department reported that U.S. jobless claims for state unemployment benefits increased 9,000 to a seasonally adjusted 217,000 for the week ended Jul 21. The reading was in line with the consensus estimate. However, the four-week moving average of initial claims, a more stable parameter, fell 2,750 to 218,000. The four-week moving average of the so-called continuing claims rose 9,500 to 1.75 million.
Stocks That Made Headlines
Spirit Q2 Earnings Beat, Decline Y/Y on High Costs
Spirit Airlines Inc.'s SAVE second-quarter adjusted earnings per share came in at $1.11, ahead of the Zacks Consensus Estimate of $1.09. ( Read More )
Old Dominion Q2 Earnings & Revenues Beat, Rise Y/Y
Old Dominion Freight Line Inc. ODFL reported second-quarter 2018 earnings per share of $1.99, which surpassed the Zacks Consensus Estimate of $1.82. ( Read More )
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportSpirit Airlines, Inc. (SAVE): Free Stock Analysis ReportOld Dominion Freight Line, Inc. (ODFL): Free Stock Analysis ReportAmazon.com, Inc. (AMZN): Free Stock Analysis ReportFacebook, Inc. (FB): Free Stock Analysis ReportTwitter, Inc. (TWTR): Free Stock Analysis ReportThe Boeing Company (BA): Free Stock Analysis Report3M Company (MMM): Free Stock Analysis ReportCaterpillar Inc. (CAT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research