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Stock Market News for Jul 17, 2020

Benchmarks closed lower on Thursday, mostly dragged down by decline in tech stocks. Mixed earnings as well as economic reports further dampened investors’ sentiment.

The Dow Jones Industrial Average (DJI) fell135.39 points or 0.5%,to close at 26,734.71and the S&P 500 shed10.99 points, or 0.3% to close at of 3,215.57. The Nasdaq Composite Index closed at 10,473.83, shedding76.66 points, or 0.7%. The fear-gauge CBOE Volatility Index (VIX) increased0.9%, to close at 28.00.Declining issues outnumberedadvancingones for 3.09-to-1 ratio on the NYSE and a 3.39-to-1 ratio on the Nasdaq favored decliners.

How Did the Benchmarks Perform?

On Thursday, technology stocks weighed heavily on the major averages. The S&P 500 tech sector closed 1.2% lower for the day. Amazon.com, Inc. AMZN closed 0.3% lower on Jul 16 and the company is now on pace to snap its record 10-week winning streak. And Microsoft Corporation MSFT declined nearly 2% and is on way to record its worst week since March, 2020.

Additionally, Twitter, Inc. TWTR declined 1.1% after hackers accessed its internal systems to hijack the platform’s top voices like Joe Biden, Barack Obama, Kim Kardashian West, Elon Musk and others and used them to solicit digital currency.

Shares of companies benefitting from the economy reopening also struggled on Thursday as spike in cases constantly jeopardize reopening plans. Shares of Carnival Corporation & Plc CCL and American Airlines Group Inc. AAL slid 9.7% and 7.4%, respectively on Thursday.

Of the 11 major sectors of the S&P 500, four ended in the positive territory. Overall, the S&P 500 posted 20 new 52-week highs and no new lows, while the Nasdaq Composite recorded 51new highs and nine new lows.

Mixed Economic Data Dampens Investors’ Sentiment

On Jul 16, the Commerce Department reported that retail sales jumped 7.5% in June compared to the consensus estimate of 5%, signaling that the economy was continuing to make a way out of a coronavirus-driven slump. The figures for the month of May were also revised to a 18.2% increase compared to the previously reported 17.7%.

Non-store retail sales were up 23.5%compared to June 2019, while building material and garden equipment and supplies dealers registered a 17.3% from last year.

While retail sales showed signs of economic activity rebounding, an additional 10,000 people filing for initial jobless claims for the week ending Jul 11 marred the overall economic outlook.

On Thursday, the Labor Department reported that total of 1.3 million Americans filed for unemployment benefits for the week ending Jul 11, much above the consensus estimate of 12.2 million.  The organization also reported that the number of initial claims for the week before was also revised to 1.310 million instead of the previously reported 1.314 million. The continuing claims for the week ending Jul 4 was 17.338 million.

Mixed Q2 Earnings Report

Bankers continue to report upbeat second-quarter earnings on Thursday, joined by big brands like Johnson & Johnson JNJ, Domino's Pizza, Inc. DPZ and others.

Morgan Stanley MS reported second-quarter 2020 earnings of $2.04 per share, beating the Zacks Consensus Estimate of $1.17. The bank posted revenues of $13.41 billion for thequarter surpassing the Zacks Consensus Estimate by 24.47%. Investment banking revenue grew 39% to $7.98 billion which was boosted by a 64% jump in underwriting revenue as new stock and debt issuance surged.Shares of Morgan Stanley closed 2.5% higher for the day. (Read More)

Performing better-than-expected in the second-quarter 2020, Bank of America Corporation BAC reportedearnings of 37 cents per share beating the Zacks Consensus Estimate of 28 cents. However, the bank’s earnings included the impact of a reserve build of $4 billion, mainly done to combat persistent economic slowdown due to the coronavirus pandemic. Additionally, a low interest rate environment and muted loan demand hurt its net interest income. Net income plunged 52% from the prior-year quarter to $3.5 billion. Shares of Bank of America slid 2.7% on Thursday. (Read More)

Both Morgan Stanley and Bank of America carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Separately, large-cap pharmaceutical giant Johnson & Johnson reported second-quarter 2020 earnings of $1.67 per share, which beats the Zacks Consensus Estimate of $1.50. The company’s shares rose 0.7% on Thursday. Excluding the impact of acquisitions and divestitures, organic sales decreased 8.8% compared to the 5.6% increase in seen in the first quarter mainly due to the negative impact of the coronavirus pandemic. (Read More)

Domino's Pizza also reported second-quarter earnings on Jul 16. The company came out with earnings of $2.99 per share, beating the Zacks Consensus Estimate of $2.25 and revenues of $920.02 million, surpassing the Zacks Consensus Estimate by 2.31%. Both earnings and revenues have improved year over year. The pizza maker also reported robust U.S. same-store sales. In fact, Domino's robust results can primarily be attributed to solid digital ordering system and higher global retail sales. However, shares of the company ended 1.5% lower for the session. (Read More)

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