Stock Market News for Jan 29, 2018

All the three key U.S. indexes closed at record levels on Friday following better-than-expected earnings from Intel, AbbVie and Honeywell. Additionally, continued economic growth and optimism over a weaker dollar had a positive impact on investor sentiment. The S&P 500 has finished at a record level for 14 trading days so far this month, its best such feat in a month since June 1955. The index also posted its best one-day rise since March 1, 2017.

Additionally, the Dow posted a rise of more than 220 points on Friday, while the Nasdaq registered its biggest one-day gain since Jan 2. Further, all the three indexes advanced more than 2% for the week, posting their fourth straight week of gains.

How the Benchmarks Fared?

The Dow Jones Industrial Average (DJI) increased 0.8%, or 220.13 points to close at 26,115.65. The S&P 500 rose 1.2% to close at 2,872.87. The tech-laden Nasdaq Composite Index closed at 7,505.77, gaining 1.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 4.3% to close at 11.08. A total of around 6.58 billion shares were traded on Friday, lower than the last 20-session average of 6.81 billion shares. Advancers outnumbered decliners on the NYSE by a 1.20-to-1 ratio. On Nasdaq, a 1.54-to-1 ratio favored advancing issues.

Upbeat Q4 Earnings Boost Sentiment

Encouraging earnings results from Intel Corporation INTC, AbbVie Inc. ABBV and Honeywell International Inc HON lent further impetus to the markets’ rally. Intel’s shares climbed 10.6% after the chipmaker posted fourth quarter earnings per share (EPS) and revenues, which beat the respective Zacks Consensus Estimate. Intel guided first-quarter 2018 non-GAAP revenues of around $15 billion, up 5% year over year excluding McAfee. (Read More)

Shares of AbbVie jumped 13.8% after the pharmaceutical products manufacturer reported fourth quarter EPS and revenues, which surpassed the respective Zacks Consensus Estimate. AbbVie raised its adjusted EPS in the range of $7.33-$7.43 for 2018 compared with $6.37-$6.57, predicted earlier. The Zacks Consensus Estimate for current-year earnings is pegged at $6.58 per share. (Read More)

Honeywell’s shares increased 2% after the diversified technology companyposted solid fourth-quarter results with healthy year-over-year increase in revenues and adjusted earnings. Further, Honeywell revised full-year 2018 earnings guidance to better reflect the favorable impact from the tax reform. (Read More)

Economic Data

U.S. GDP increased at a seasonally adjusted annual rate of 2.6% in the final three months of 2017 following gains of more than 3% in the two previous quarters, as per the “advance” estimate released by the Bureau of Economic Analysis. In fact, this marked the economy’s strongest stretch of growth since the expansion started in mid-2009.

The economy was boosted by solid consumer spending, which increased at 3.8% over the quarter after a 2.2% gain in the third quarter. Consumer outlays registered its fastest pace of growth in the fourth quarter in almost two years. Companies also ramped up spending in the fourth quarter by 6.8%. Among other bright spots, government spending also increased at a clip of 3%.

Weak Dollar Bodes Well For Large-Caps

Additionally, during the week, U.S. Treasury Secretary Steven Mnuchin said that any weakness in the dollar was beneficial for trade. His comments led to the ICE U.S. Dollar Index falling to its lowest level since Dec 2014 on Wednesday. Although, later Mnuchin said that his remarks regarding dollar was “misinterpreted.”

Meanwhile, President Trump in the World Economic Forum in Davos, Switzerland said that "the dollar is going to get stronger and stronger” and eventually he wished the greenback to strengthen. However, the ICE U.S. Dollar Index fell 1.5% for the week to settle at 89.07, following Mnuchin’s comments. A weaker dollar bodes well for large-cap multinationals, which generate revenues mainly from buyers outside the U.S.

Weekly Roundup

For the week, the Dow, the S&P 500 and the Nasdaq gained 2.1%, 2.2% and 2.3%, respectively. Benchmarks registered their fourth straight weekly increase after the Senate gave its consent to pass a Bill that ends the recent government shutdown. Additionally, encouraging earnings results by Netflix, Inc. NFLX, The Travelers Companies, Inc. TRV, 3M Company MMM and Caterpillar Inc. CAT also boosted markets.

Stocks That Made Headlines

Diageo 1H18 Interim Earnings & Sales Up Year Over Year

Diageo plc DEO recently announced interim results for the half yearly period ended Jul 31, 2017. (Read More)

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Diageo PLC (DEO) : Free Stock Analysis Report
 
3M Company (MMM) : Free Stock Analysis Report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
Caterpillar, Inc. (CAT) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
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