Wall Street indexes ended trading on Wednesday with slight gains, recovering from their earlier entry into the red territory after a large decline in bond yields stabilized and eased worries about a slowdown in economic growth. All three key equity benchmarks recovering from losses of at least 1% which were partly driven by signs that global economic growth was slowing as the US-China trade war intensifies.
The blue-chip index Dow Jones Industrial Average finished 22.45 points lower at a level of 26,007.07 points. The benchmark erases 589-point skid during the session to end nearly flat in the sharpest turnaround in 7 months.
The broader S&P 500 added 2.22 points, or 0.08%, to 2,883.98 points, while the technology Nasdaq Composite is up by 29.56 points, or 0.38%, to 7,862.83 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 3.37% to 19.49.
Stocks have rebounded, thanks to the fact that the decline in the value of the Chinese yuan against the dollar has become more moderate. The USD/CNY exchange rate is about 7.06 CNY. The currency recovered in the morning in the US, at about the same time that major indexes began to overcome losses.
Still, concerns about global growth remain as gold is trading at a new high. The value of gold jumped by over 2%, marking the first time since 2013 that precious metal is trading at a price above 1,500 USD. Further rate cuts from the Federal Reserve could even push the gold price past 1,650 USD, according to the analysts. The annual growth of the gold exceeded that of the S&P 500.
Stocks initially sank as US Treasury and European government bonds yields plumbed fresh lows. The 10-year Treasury fell below 1.70%, falling to an intraday nadir at 1.60%, around the lowest since late 2016, but were backing up in late-session trade Wednesday. Meanwhile, comparable German bonds hit a record low at negative after declining by 0.59%.
Corporate stocks performance
Bank stocks, including J.P. Morgan Chase and Bank of America, went down after the sector suffered the biggest losses as a result of falling interest rates. The shares of J.P. Morgan declined by 2.1%, while Bank of America was down by 1.9%. Citigroup and Well Fargo recorded a drop of more than 1% each.
The stocks of Walt Disney dropped by almost 5% after reporting weaker than expected results for the previous quarter.
Walgreens Boots Alliance and Coca-Cola Company were among the best performers and gainers within the blue-chip composition, adding 2.00% and 1.74%, respectively.
Shares of CVS Health Corp rose by 7.5% Wednesday after the drugstore chain reported earnings that topped Wall Street expectations.
The shares of Office Depot Inc gained 0.6% after the business supply retailer reported second-quarter earnings that beat expectations.
Shares of IAC/InterActiveCorp advanced by 11% toward a record, as a big rally in Match Group Inc’s stock helped to provide a boost after reported results on Tuesday.
Shares of home-security-camera company Arlo Technologies Inc finished down by 17.8% after the company reported better-than-expected results for its second quarter but delivered a disappointing outlook for the third quarter.
The top performers on the S&P 500 were Fleetcor Technologies Inc (+8.20%), Assurant Inc (+7.53%) and CVS Health Corp (+7.45%), while on the flipside were ABIOMED Inc (-5.26%), Walt Disney Company (-4.94%) and SVB Financial Group (-4.71%).
Corporate earnings reports
Walt Disney came out with quarterly earnings of 1.35 USD per share, missing the estimates of 1.76 USD per share and fells below the earnings of 1.87 USD per share a year ago. These figures are adjusted for non-recurring items. Disney posted revenues of 20.25 billion USD for the quarter ended June 2019, missing the analysts’ forecasts by 6.61%. However, the company has strong growth in revenues, compared to the year-ago result of 15.23 billion USD. The company has topped consensus revenue estimates three times over the last four quarters.
Fox Corp reported revenue of 2.51 billion USD, up 5% from the year-ago quarter and pre-tax income of 656 million USD. The adjusted earnings per share came in at 0.62 USD per share, down by 7% from the year-ago quarter. Both revenue and earnings per share came in slightly above analysts’ expectations. Net income for the quarter came in at 454 million USD, down from 471 million USD. Fox’s fiscal fourth-quarter marks its first full quarter as a standalone entity following the sale of most of 21st Century Fox’s assets to Disney, a deal that closed in March. Fox’s year-ago figures are estimates based on calculations as if the businesses had been operating autonomously within 21st Century Fox.
CVS Health smashed Wall Street’s second-quarter expectations, with its three businesses posting better-than-expected results. The company also raised its full-year forecast on Wednesday. The company reported earnings per share of 1.89 USD, compared to 1.69 USD expected by the analysts. The revenues of the company also beat forecasts, reaching 63.43 billion USD. Prices of brand name medicines rose in the quarter, boosting CVS’ drugstore and pharmacy benefit manager’s results. Both units make more money when prices are higher. Drugmakers, facing political scrutiny, had shown reluctance to hike their prices earlier this year. CVS’ pharmacy filled 19% more prescriptions this quarter than in the same period last year, which the company attributed to clinical programs intended to keep people on their prescribed medicines. Sales in the front of CVS’ drugstores also rose, mostly thanks to an increase in people buying health products like cough medicine.