US Markets

Stock Market News for Oct 21, 2019

U.S. stocks closed sharply lower on Friday owing to negative report of two important Dow stocks, disappointing growth of China in the third quarter and Brexit-related uncertainties. All three major stock indexes ended in the red. For the weak as a whole, the Dow finished in the red while both the S&P 500 and Nasdaq Composite closed in positive territory.

The Dow Jones Industrial Average (DJI) plunged 1% or 255.68 points to close at 26,770.20. The S&P 500 shed 0.4% to close at 2,986.20. Meanwhile, the Nasdaq Composite Index closed at 8,089.54, surging 0.8%. The fear-gauge CBOE Volatility Index (VIX) increased 3.3% to close at 14.25.  A total of 6.24 billion shares were traded on Friday, lower than the last 20-session average of 6.55 billion. Decliners outnumbered advancers on the NYSE by a 1.03-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored declining issues.

How Did The Benchmarks Perform?

The Dow closed in negative territory with 16 components of the 30-stock blue-chip index closing in the red while 13 ended in green and 1 remained unchanged. The S&P 500 also ended in the red. The Communications Services Select Sector SPDR (XLC) and Technology Select Sector SPDR (XLK) dropped 1.2% and 1%, respectively. Notably, seven out of total 11 sectors of the benchmark index closed in the red while four finished in red. The Nasdaq Composite finished in the red due to weak performance of large-cap technology stocks.

Boeing And Johnson & Johnson Led Dow’s Decline

According to the internal messages, which were obtained by NBC News, The Boeing Co. BA mislead the Federal Aviation Authorities (FAA) regarding the safety of the 737 Max jet, which was grounded by several airlines after to disastrous clashes. 

The message told that a Boeing pilot warned about problems with the flight-control program on the 737 Max. However, the company told the FAA not to include the system in pilot manuals before clearing regulatory hurdle. Consequently, shares of the Boeing plummeted 6.8%, its biggest single-day drop since February 2016.

Meanwhile, Johnson & Johnson JNJ declared that the company was recalling a single lot of its Johnson’s Baby Powder after the FDA’s test found “sub-trace levels” of chrysotile asbestos. Following the news, shares of the company plunged 6.2%, its largest one-day drop in ten months.

Both The Boeing and Johnson & Johnson carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

China Suffered Massive Setback in Q3 GDP

According to data published Friday by the National Bureau of Statistics, China’s third-quarter 2019 GDP growth fell to 6% compared with 6.2% in the second and 6.4% in the first quarter. Notably, third quarter GDP is the lowest in the last 27 years.

Investment in the agricultural, manufacturing and industrial sectors shrank while infrastructural investment grew in September.  As per Chinses government, the final consumption expenditure at 60.5% of the GDP in the first nine months of the year, with investment at 19.8% and net exports at 19.6%.

Uncertainty About Brexit

Last week the 27-nation European Union and the UK reached a deal through which The UK will exit the EU effective Oct 31. However, the deal needs to clear British Parliament through majority voting. The vote was scheduled to took place at a special parliamentary session on Oct 19. Political experts were divided whether the deal will clear parliamentary voting or not.

Weekly Roundup

Last week was a mixed one for Wall Street. Both the S&P 500 and Nasdaq Composite advanced 0.5% and 0.4% respectively. However, the Dow declined by 0.2% last week. Global economic slowdown, uncertainty about U.S.-China partial trade deal and Brexit were major negative factors. Meanwhile, investors’ confidence was boosted by better-than-expected third quarter 2019 earnings results released so far.

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