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Dow Jones scored its biggest single-day growth in 8 months

The US markets ended Wednesday's trading session with strong growth with Dow and Nasdaq scoring top one-day increase in several months.

Dow index high

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The US markets ended Wednesday’s trading session with strong growth after Federal Reserve Chairman Jerome Powell said earlier today that interest rates are close to their neutral level – a shift from the governor’s statement two months ago.

The blue-chip index Dow Jones Industrial Average jumped to more than 600 points, or 2.5%, reaching a level of 25,366.43 points. This is the biggest one-day growth of the index since March 26 and its second best day for the year. For the week Dow reports a growth of more than 1,000 points.

Dow index

The broader index S&P 500 jumped by 2.3% to 2,743.78 points. The technology index Nasdaq Composite rose by nearly 3% to a level of 7,291.59 points, which is its best one-day performance since October 25.

Thanks to their good performance on Wednesday, the Dow and the S&P 500 are in positive territory for the month.

Jerome Powell’s commented are exactly what the markets expected to hear. They also led to a decline in yields on US government bonds. The yields on 2-year Treasuries declined to 2.813%, while 10- and 30-year bonds rose to 3.063% and 3.348% respectively.

The US dollar also fell after Powell’s statement. The dollar index fell by 0.55% to 96.84 points.

Relief of trade tensions between the US and China also contributed to a better performance in the markets on Wednesday. Earlier today, the New York Times reported that the US president is worried about the effect of a long-term trade war with China on markets and the economy, which means he will try to find a compromise with Beijing.

Corporate performance

Banking stocks rose after short-term borrowing interests fell and long-term rates grew after Powell’s comments. Morgan Stanley and Goldman Sachs ended the session with an increase of over 2% and those of J.P. Morgan Chase by 1.11%.

The technology sector also posted growth on Wednesday, recovering part of its recent losses. Amazon and Netflix shares jumped by more than 6%, while Apple and Alphabet jumped by more than 3.5%. The stocks of Facebook rose by 1.3%.

The stocks of software developer Veeva Systems appreciated by 6.6% on Q3 results that beat EPS and revenue estimates with 27% YoY revenue growth. Upside Q4 guidance has revenue of 226 million USD to 227 million USD and earnings per share at around 0.40 USD.

The stocks of the American clothing brand and retailer Guess fall sharply after investors seized on the company’s Q3 profit miss. The company’s operating margin for the quarter was 2.2% of sales, compared to 1.0% a year ago.

Corporate earnings

The Russian multinational energy corporation reported revenue of 2.31 trillion RUB (34.65 billion USD) in Q3 2018, which represents an increase of 56.1% YoY. The earnings per share amounted to 255.54 RUB (3.83 USD).

Veeva Systems, a leading provider of industry cloud solutions for the global life sciences industry, announced revenues of 224.7 million USD in Q3 2018, representing an increase of 27% YoY. The subscription services revenues for the third quarter were 178.2 million USD, up from 142.8 million USD one year ago, an increase of 25% year-over-year. The operating income was 63.1 million USD.

Royal Bank of Canada reported earnings per share of 2.20 CAD in Q3 2018 (fiscal Q4 for the bank), which beats consensus estimate by 0.05 CAD, with Year-on-year growth in personal and commercial banking, wealth management, capital markets, and insurance. The bank reported earnings of 3.25 billion USD, representing an increase of 15% YoY, driven by higher results in Personal & Commercial Banking. Capital Markets, Wealth Management, and Insurance. Investor & Treasury Services results were relatively flat. The earnings were up by 141 million or 5% from last quarter, largely due to higher earnings in Insurance, Personal & Commercial Banking, and Investor & Treasury Services. These factors were partially offset by lower earnings in Wealth Management and Capital Markets.

The American luxury jewelry and specialty retailer Tiffany & Co reported same-store sales growth of 3% in Q3, missing the consensus estimate for a 5.4% gain. In the Americas region, same-store sales increased by 5%, while in Japan they were up 2% and in Europe were flat. The retailer’s gross margin increased by 70 bps to 62.2% of sales as favorable product input costs and lower wholesale sales of diamonds.