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Strong earnings gave wings to Wall Street indexes

Wall Street indexes

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Wall Street indexes ended the Thursday trading session with increases, marking the third consecutive growth session after investors shrugged concerns about US-China trade and focused on the positive financial data from Walmart and Cisco Systems, as well as surprisingly robust data on the labor and housing markets.

The blue-chip index Dow Jones Industrial Average rose by 214 points, or 0.8%, to 25,862.68 points, while the S&P 500 added approximately 25 points, or 0.9%, to 2,876.32 points. The technology index Nasdaq Composite rose by about 76 points, or 1%, to 7,898.05 points.

nasdaq index

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 7.00% to 15.29.

In the US, the new jobless claims have been below consensus expectations, highlighting the sustained strength of the labor market, which should support the economy against the slowing growth.

Meanwhile, the homebuilders have started 6% more new homes in April. New homeowners increased by 5.7% to an annual rate of 1.24 million units after the 1.7% growth in March, according to data released today. Building permits, which are an indication of future construction, increased by 0.6% to an annual rate of 1.30 million units. Both newly-built homes and building permits are at their highest level in three years, which predicts a good future for the sector amid the lower interest rates on mortgages and the Federal Reserve’s patience to raise key interest rates.

At the same time, concerns about the continuing US-China trade war are diminishing, though White House officials have taken measures to ban the technology giant Huawei Technologies Co in building the local telecommunication network.

The market’s sentiment is importing amid the expectation that the two leading economies in the world will resume soon trade negotiations in Beijing. The reason for this hope was given by Finance Minister Steven Mnuchin, who said US officials “most likely” would meet with the Chinese delegation again in Beijing, although he did not set a specific date for his visit. The government in Beijing, however, insists that there is no information about any plans for such a visit by the US delegation.

Trade worries led to a massive sell-off in equities to start off the week. The Dow fell more than 600 points on Monday, while the S&P 500 and Nasdaq dropped 2.4% and 3.4%, respectively.

Corporate stocks performance

Rising stocks outnumbered declining ones on the New York Stock Exchange by 2013 to 978 and 95 ended unchanged, while on the Nasdaq Stock Exchange, 1511 rose and 1134 declined, while 81 ended unchanged.

The stocks of Walmart rose by 1.4% after the retailer reported optimistic data and expectations on Thursday morning, while Cisco’s shares added more than 6.6% as a result of a positive report on Wednesday night.

Shares of Citigroup, J.P. Morgan Chase, Bank of America and Goldman Sachs all gained more than 1%. Banks rose as the benchmark 10-year Treasury yield climbed back above 2.4% on stronger-than-forecast data. Housing starts for April topped expectations while weekly jobless claims dropped more than expected.

The trade tension continues to weight on the stocks of 3M Company, which lost 1.33%, falling to 52-week.

The top performers on the S&P 500 were Cisco Systems Inc (+6.66%), Mettler-Toledo International Inc (+3.59%) and Northrop Grumman Corporation (+3.47%), while on the flipside were Xilinx Inc (-7.27%), Qorvo Inc (-7.14%) and Smith AO Corporation (-6.27%).

Corporate earnings reports

The world’s largest retailer Walmart reported better-than-expected earnings during the first quarter, driven by strength in its US e-commerce business. For the first quarter, Walmart delivered adjusted earnings per share of 1.13 USD, surpassing Wall Street analysts’ expectations of 1.02 USD. The revenue for the quarter came in at 123.9 billion USD. The closely followed comp sales number came in at 3.4%, marking the best first quarter in 9 years, the retailer noted. The comp store sales number was in-line with expectations. The sales of Walmart’s stores opened at least one year ago rose 3.4% in the quarter to April 30. The analysts expected growth of 3.1%. At the end of the quarter, Walmart has 2,450 stores with grocery pickup in the U.S. and nearly 1,000 locations with delivery. The retailer expects to offer grocery pickup at 3,100 of its stores and delivery at 1,600 of those locations by year-end. This is the highest growth of nine years. Walmart said its e-commerce sales in the U.S. grew 37% during the quarter, driven by strong growth in online grocery and its home and fashion categories.