US Markets

Stock Market News for Jul 27, 2020

Benchmarks closed lower on Friday as investors grew anxious about rising US-China tensions, along with fears of a rise in coronavirus cases and slump in technology shares.

The Dow Jones Industrial Average (DJI) fell 182.44 points, or 0.7%, to close at 26,469.89 and the S&P 500 shed 20.03 points, or 0.6% to close at of 3,215.63. The Nasdaq Composite Index closed at 10,363.18, shedding 98.24 points or 0.9%. The fear-gauge CBOE Volatility Index (VIX) decreased 5.9%, to close at 25.84. Declining issues outnumbered advancing ones for 1.70-to-1 ratio on the NYSE and a 2.33-to-1 ratio on the Nasdaq favored decliners.

How Did the Benchmarks Perform?

Stocks had taken a roller coaster ride throughout the week as rise in new coronavirus cases keep hindering the reopening plans. The United States now has over 4.4 million cases and the spike in cases in 40 American states have led to limiting business and consumer activity and threaten economic recovery.

Along with that, 16.2% decline in Intel Corporation’s INTC share on Friday weighed heavily on the benchmarks. Intel reported that it is six months behind schedule in developing the next-generation, power-efficient chip technology. The company may use a third party to manufacture the chip, as a contingency plan.

Technology giants like Facebook, Inc. FB, Alphabet Inc. GOOGL, and Microsoft Corporation MSFT closed at least 0.5% lower for the day.

10 of the 11 major sectors of the S&P 500 ended in the negative territory, with the technology and health sector dragging the broader index lower. The consumer discretionary sector closed 0.3% higher for the session. Overall, the S&P 500 posted eight new 52-week highs and no new lows, while the Nasdaq Composite recorded 19 new highs and 17 new lows.

US-China Tension Sparks

On Friday, China ordered the United States to close its consulate in Chengdu, as both the economies get engaged in an increasingly bitter diplomatic conflict. This order was followed by the U.S. closure of the Chinese consulate at Houston on Jul 21.

On Tuesday, the Trump administration had ordered closure of the Houston consulate within 72 hours. The United States had claimed that Chinese agents tried to steal data from facilities in Texas, which also included the Texas A&M medical system.

Q2 Earnings Clock in

As of Jul 22, 76 members of the S&P 500 have reported Q2 results and total earnings are down 45.3% on 5.2% lower revenues, with 75% beating EPS estimates and 63.2% beating revenue estimates. The Q2 report reveals the lowest earnings growth pace since the last earnings downturn following the 2008 recession (Read More: Early Signs of Earnings Improvement)

On Friday, Verizon Communications Inc. VZ reported second-quarter 2020 earnings of $1.18 per share surpassing the Zacks Consensus Estimate by 2 cents. The company posted revenues of $30.45 billion surpassing the Zacks Consensus Estimate by 1.80%.  Total revenues declined 4% year over year due to significant loss in wireless equipment revenues due to low activation levels. Additionally, service revenues declined 2.8% to $15,900 million from a year ago due to reduced roaming, usage and waived fees on account of coronavirus pandemic. (Read More)

Shares of Verizon that carries a Zacks Rank #3 (Hold) ended 1.8% higher on Jul 24. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Express Company AXP reported second-quarter 2020 earnings of 29 cents per share, beating the Zacks Consensus Estimate of 13 cents. However, the company reported total revenues of $7.7 billion that missed the Zacks Consensus Estimate by 2.5% and also declined 28.7% year over year. Drop in total revenues, net of interest expenses reflected decline in Card Member spending and a lower average discount rate from the prior-year levels. Share of American Express declined 1.4% on Jul 24. (Read More)

On the same day, Honeywell International Inc. HON reported second-quarter 2020 earnings of $1.26 per share, surpassing the Zacks Consensus Estimate of $1.15. The company’s revenues were $7,477 million, beating the consensus estimate of $7,237 million. Honeywell’s top line recorded a decline of 19% on a year-over-year basis and the fall was primarily attributable to an 18% decline in organic revenues. Notably the decline was on account of weakness in end markets due to the coronavirus outbreak-led issues and oil price volatility. Shares of the Honeywell closed 2.8% lower on Friday. (Read More)

Weekly Roundup

For the week the Dow, the S&P 500, and the Nasdaq lost 0.8%, 0.3% and 1.3%, respectively. The Dow snapped its three-week winning streak, while the S&P 500 posted its first weekly decline in four weeks and the Nasdaq recorded its first back-to-back weekly loss since May. Benchmarks ended the week with losses as investors gave up on big technology stocks which had helped the broader market rally in the recent months. Investors however cheered second-quarter results that exceeded expectations in the middle of pandemic.

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Verizon Communications Inc. (VZ): Free Stock Analysis Report

Intel Corporation (INTC): Free Stock Analysis Report

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