The US markets ended Wednesday’s trading session with increases as investors are becoming more convinced that the Federal Reserve will lower interest rates this year in an attempt to help the economy.
The blue-chip index Dow Jones Industrial Average added more than 200 points, or 0.82%, reaching a level of 25,539.57 points. The broader benchmark S&P 500 also rose by 0.82% to 2,826.15 points, while the technology Nasdaq Composite added 0.64% to a level of 7,575.48 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 5.52% to 16.09.
Dow Jones ended the Tuesday session with a growth of more than 500 points, which was its second-best performance for the year after Fed Governor Jerome Powell hinted for interest rate cuts.
He said on Tuesday that the central bank will keep an eye on what is happening on the economic front and will do whatever it takes to maintain the growth. However, Jerome Powell noted that the Fed can not determine when and how the problems of global trade will be settled.
It seems the central bank is moving towards interest rate cuts. According to him, central bankers tend to slash interest rates by 75 basis points by the end of the year.
The worries about the state of the economy on a global scale continue in the face of weaker economic data and ongoing trade tensions.
Bad news means that the Fed can keep cheap money and that it is inclined to lower interest rates. That’s what they wanted to hear about the markets, and that supports the opportunity to cut rates.
The yield on the US 10-year Treasury traded at 2.12% on Wednesday, holding its rebound from a day earlier. Bond yields came back on Tuesday after Fed Chairman Jerome Powell struck a dovish note on monetary policy, with the 10-year bouncing from a 20-month low reached earlier in the week.
Corporate stocks performance
Shares in the technology sector rose by 1.4%, as well as the utilities and real estate sectors.
The stocks of Apple added 1.6% to its value after Chief Executive Tim Cook said the technology giant was not the target of Chinese attacks.
Salesforce adds nearly 5% thanks to the company’s better-than-expected report.
The shares of Cisco Systems and Microsoft Corporation were also performing strong, adding 2.86% and 2.17%, respectively.
The shares of Range Resources fell to 5-year low, wiping out 6.86%, after the company agreed to pay 3 million USD to settle a lawsuit last year with three Washington County families who alleged the natural gas drilling company contaminated their properties and made them sick.
The stocks of InflaRx collapsed by 91.79% to an all-time low after its lead drug failed to benefit patients with a debilitating skin disease in a clinical trial.
The top performers on the S&P 500 were Pacific Gas & Electric Co (+10.73%), Campbell Soup Company (+10.02%) and Salesforce.com Inc (+5.06%), while on the flipside were Range Resources Corp (-6.86%), Chesapeake Energy Corporation (-6.47%) and Signet Jewelers Ltd (-5.45%).
Corporate earnings reports
The global leader in data visualization technologies AstroNova announced financial results for the fiscal 2020 first quarter ended May 4, 2019. The revenue in the first quarter totaled 36.2 million USD, an increase of 14.9% from 31.5 million USD in the first quarter of fiscal 2019, reflecting higher sales in both the Product Identification and Test & Measurement segments. The gross profit in the first quarter was 14.2 million USD, or 39.4% of revenue, compared with 12.1 million USD, or 38.5% of revenue, for Q1 fiscal 2019. The increase in gross profit dollars and margin reflected higher revenue in the 2020 period. Operating expenses for the first quarter were 11.8 million USD compared with 10.8 million USD in the same period of fiscal 2019. The net income for the first quarter was 1.7 million USD or 0.23 USD per diluted share.
IDT Corporation reported EPS of 0.15 USD on revenue of 341.3 million USD for the third quarter of FY 2019, the three months ended April 30, 2019. The revenue decreased to 341.3 million USD from 365.4 million USD, while the income from operations increased to 2.7 million USD from a loss from operations of 1.7 million USD. The adjusted EBITDA increased to 8.9 million USD from 8.1 million USD.