U.S. stock markets continued their winning streak for third-straight trading day buoyed by strong economy, booming corporate profits and relative calm in tariff-related conflicts. All three major indexes closed in the green. Notably, the S&P 500 touched its all-time high as the U.S. stock market's bull-run has entered into historically longest period.
The Dow Jones Industrial Average (DJI) closed at 25,822.29, gaining 0.3%. The S&P 500 Index (INX) was up 0.2% to close at 2,862.96. The Nasdaq Composite Index (IXIC) closed at 7,859.17, increasing 0.5%. A total of 5.86 billion shares were traded on Tuesday, lower than the last 20-session average of 6.49 billion shares. Advancers outnumbered decliners on the NYSE by 1.88-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 2.32-to-1 ratio. The CBOE VIX increased 3% to close at 12.86.
How Did the Benchmarks Perform?
The Dow ended at 25,822.29 with 19 components of the 30-stock index closing in the green while eleven finished in the red. The blue-chip index is currently 3% below its all-time record high level.
Tech-heavy Nasdaq Composite surged 0.5% supported by strong performance of some large-cap tech giants. The tech-laden index is at present less than 1% away reaching an all-time high.
The S&P 500's gain was led by a 0.8% increase in Consumer Discretionary Select Sector SPDR (XLY) and 0.7% rise in Industrials Select Sector SPDR (XLI). Notably, eight out of 11 sectors of the benchmark index closed in the green while three ended in the red. During Tuesday's trading, the S&P 500 touched an intraday high of 2,873.23, surpassing its all-time high of 2,872.87 recorded in Jan 26.
The benchmark index's achievement was tied with historically longest serving bull-run in Wall Street which turned 3,452 days old on Aug 21. By most definition, Aug 22, 2018 will mark the longest ever bull-run in Wall Street which was started on Mar 9, 2009. During this bull-run, the S&P 500 more than quadrupled itself.
Robust Earnings Momentum
As of Aug 17, 467 S&P 500 members have reported their second-quarter results. Total earnings of these companies are up 25.5% on 9.9% higher revenues.
On Aug 21, leading homebuilder Toll Brothers Inc. TOL came out with fiscal third-quarter 2018 earnings of $1.26 per share beating the Zacks Consensus Estimate of $1.03 per share. Total revenues of $1.91 billion surpassed he Zacks Consensus Estimate of $1.81 billion. ( Read More ). Toll Brothers has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Consequently, the stock price of Toll Brothers jumped 13.8%. Impressive performance of Toll Brother also moved up share prices of its peers. Stock price of PulteGroup Inc. PHM , Lennar Corp. LEN and D.R. Horton Inc. DHI were up 5.5%, 4.2% and 3.8%, respectively. Moreover, SPDR S&P Homebuilders ETF (XHB) also increased 2.6%.
The Fed is in Focus
On Aug 22, the Federal Reserve will release the minutes from its latest meeting. Thereafter on Aug 24, Fed Chairman Jerome Powell will deliver a lecture at the Kansas City Fed's annual summer retreat in Jackson Hole, Wyo. Investors will closely monitor these two events to find out whether the central bank identified any loophole in the economy, its view on government's trade policies and any indication of rate hike and change in monetary policies.
Notably, on Aug 20, President Trump criticized the Fed stating that "he is not thrilled" with the central bank's systematic short-term interest rate hike policy. According to Trump, higher interest rate is acting as hindrance of his government's massive fiscal stimulus.
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