Dow Jones extended its negative series ahead of Powell’s testimony | Finance and Markets

Share This On Social

The Wall Street stocks were mixed at the close with the blue-chip index Dow Jones Industrial Average dropped slightly as investors await new signals for the Fed’s monetary policy. The benchmark ended the session on Tuesday with a fall of 0.08% to 26,783.94 points, marking a third consecutive day of losses. Shortly before the end of the trading session, Dow managed to pass briefly into the green but finally closed with a slight decline.

More positive was the performance of the other two leading indicators – the S&P 500 and the Nasdaq Composite, adding respectively 0.12% to 2,979.63 points and 0.54% to 8,141.73 points.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 0.93% to 14.09.

dow jones index

Investors await the testimony of the Federal Reserve Governor Jerome Powell to the Financial Services Commission to the House of Representatives on Wednesday. Data on the better-than-expected US labor market was published on Friday, which in turn has diminished expectations for a cut in interest rates later this month.

Investors are looking forward to Jerome Powell’s speech as they hope to get signals about whether the central bank is preparing to loosen its monetary policy this month, which is the predominant expectation. Traders were betting a 100% chance of lowering interest rates in July, according to the FedWatch data.

Expectations for interest rate cut have given a strong stimulus to stock markets over the last week. They also helped the leading indexes to show strong growth in June. S&P 500 reported a rise of 6.9% for the month, while Dow Jones and Nasdaq added over 7%.

The markets received strong support last month from the leap in US-China trade relations after the meeting between the US President Donald Trump and Chinese leader Xi Jinping at the G20 summit.

Meanwhile, today, the yield on US Treasury bonds inched slightly higher. The 10-year bond last yielded 2.0631%,

Corporate stocks performance

The stocks of the manufacturing conglomerate 3M declined by more than 2% after their rating was downgraded by RBC Capital Markets because of worries about the macroeconomic environment and concerns about court issues.

Netflix shares rose 1% after the streaming company reported that the third season of the Stranger Things series has recorded a viewing record. Other FAANG stocks were also into the green with Facebook and Amazon gaining about 1.8% each, while Apple and Google added by 0.6% each.

The stocks of Cisco Systems inched higher by 0.3% after the networking giant agreed to acquire Acacia Communications for 2.6 billion USD in cash.

The stocks of Chevron Corp fell by 2.2%, leading the losers among the blue-chip components.

Payment processor Square gained nearly 5% after Raymond James upgraded the stock from underperform to market perform.

The top performers on the S&P 500 were EQT Corporation (+3.91%), Harris Corporation (+3.56%) and Advanced Micro Devices Inc (+3.46%), while on the flipside were DaVita HealthCare Partners Inc (-5.37%), L Brands Inc (-4.17%) and Freeport-McMoran Copper & Gold Inc (-3.21%).

Corporate earnings

PepsiCo reported better-than-expected second-quarter earnings. Healthier snacks and sparkling water helped fuel sales growth and offset a drag from foreign exchange. The company’s adjusted earnings per share amounted to 1.54 USD, beating analysts estimates of 1.50 USD, while the revenue rose by 2.2% to 16.449 billion USD. The comeback of its North American beverage business continued during the second quarter, helped by its Starbucks coffee drinks and water business. Its organic revenue grew by 2.2%. As consumers drink less soda, Pepsi has turned to higher-growth beverage categories instead, releasing energy drinks like Mtn Dew Game Fuel and jumping in on the sparkling water trend with Bubly. In fiscal 2019, the company expects organic revenue to grow by 4% and adjusted earnings per share, assuming constant foreign currency exchange rates, to decline by 1%.

The denim maker Levi Strauss & Co reported second-quarter financial report that missed analyst expectations on earnings per share but beat on revenue. The company attributed the lower-income to the 29 million USD cost associated with its initial public offering in March, as well as higher advertising costs. During the reporting quarter, the company had adjusted earnings per share of 0.07 USD, compared to analysts estimates of 0.12 USD. However, the revenue succeeded to beat the expectation and amounted to 1.3 billion USD.