Stock Market News For Feb 5, 2018

Markets ended in negative territory on Friday following the addition of a staggering number of jobs to the U.S. economy. The report led to a surge in interest rates, resulting in benchmark 10-year yield rising to their highest levels since 2014. All the major benchmarks ended in the negative territory, with Dow posting its sixth biggest daily decline since inception.

The Dow Jones Industrial Average (DJI) decreased 2.5%, to close at 25,520. However, the S&P 500 fell 2.1% to close at 2,762.13. The tech-laden Nasdaq Composite Index closed at 7,240.95, losing 2%. The fear-gauge CBOE Volatility Index (VIX) increased 37.1% to close at 18.47 — its highest level since November 2016.

A total of around 5.39 billion shares were traded on Friday, lower than the last 20-session average of 7.33 billion shares. Decliners outnumbered advancers on the NYSE by a 7.70 -to-1 ratio. On Nasdaq, a 3.90-to-1 ratio favored declining issues.

How Did the Benchmarks Perform?

The Dow nosedived 666 points on Friday to end below the below the 26,000 mark in the negative territory. Such a decline marks its sixth largest drop in terms of points since inception. Moreover, this was also the first time since June 2016 that the blue-chip index plummeted more than 500 points in a single session. Losses for the Dow were rather broad based, with all of its 30 components ending in the red.

The S&P 500 lost 60 points to close in negative territory. All of the major 11 sectors of the S&P 500 ended in the red, with energy leading the decliners. The Energy Select Sector SPDR ETF (NYSE:XLE) dipped 4.1% on Friday — its worst one day drop since Jan 25, 2016.

Finally, the Nasdaq plunged 145 points following a decline in tech shares. Technology shares declined 3% on Friday following a spate of dismal earnings from some of the big names in the space.

Shares of Apple (NASDAQ:AAPL) declined 4.3% after reporting first-quarter fiscal 2018 earnings. The company reported earnings of $3.89 per share, which beat the Zacks Consensus Estimate by 7 cents and increased almost 16% year over year. Sequentially, earnings jumped 88.2%. However, iPhone unit sales of 77.3 million missed the Zacks Consensus Estimate of 79.8 million. Apple Services (9.6% of sales) revenues of $8.47 billion also missed the consensus estimate of $8.65 billion. (Read More)

Shares of Alphabet (NASDAQ:GOOGL) declined 5.3% after reporting fourth-quarter diluted non-GAAP earnings of $9.70 missed the Zacks Consensus Estimate of $10.12. However, earnings increased 2% sequentially and 29% year over year. The increased spending on its consumer gadgets, YouTube video app and cloud computing services impacted its profits. (Read More)

What Moved the Broader Markets?

Broader markets suffered losses on Friday after the Bureau of Labor Statistics reported that the U.S. economy added a total of 200,000 jobs for the month of January, more than the consensus estimate of 183,000.

On the other hand, average hourly earnings surged 0.3%, more than the consensus estimate of 0.2%. This boosted the yearly average to 2.9% — the highest since June 2009. Meanwhile, the unemployment rate remained at a 17-year low of 4.1%.

Such staggering figures led to a surge in interest rates, with the benchmark 10-year yield rising as much as 2.9% to hit a four-year high. Such an increase in interest rates weighed on investor sentiment and led to broad based losses for the markets.

On the economic data front, total vehicles sales for January increased 17.1%; lower than the consensus estimate of 17.2%. Meanwhile, factory orders remained unchanged at 1.7%, surpassing the consensus estimate of an increase of 1.1%.

On the Earnings Front

Shares of Exxon Mobil Corporation (NYSE:XOM) declined 5.1% after reporting fourth quarter 2017 earnings per share of $0.88, lower than the Zacks Consensus Estimate of $1.06. Meanwhile, Chevron Corporation (NYSE:CVX) ’s shares declined 5.6% after reporting fourth quarter 2017 earnings per share of $0.73, lower than the Zacks Consensus Estimate of $1.27. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Weekly Roundup

For the week, the Dow, the S&P 500 and the Nasdaq declined 4.1%, 3.9% and 3.5%, respectively. Expectations of an increase in growth and inflation boosted yield on the U.S. 10-year Treasury note, following which sectors like real estate and utilities that are considered as alternatives to bonds declined. An increase in U.S. shale production led energy stocks downward.

Moreover, rising bond yields had a broad-based negative impact on all the three key indexes. Markets also lost some of their gains after the Fed’s stated that inflation was likely to reach its desired level in the medium term and projected gradual increase in key rates. Finally, investors switched from equities to bonds after Treasury bond yields continued to hover near their best levels since April 2014.

Stocks That Made Headlines

Church & Dwight Beats on Q4 Earnings, Guides for FY18

Church & Dwight Company, Inc. (NYSE:CHD) posted mixed fourth-quarter 2017 results, wherein earnings topped estimates while sales lagged. However, both top and bottom lines grew year over year. (Read More)

Delta Dips on Disappointing January Traffic Statistics

Shares of Delta Air Lines, Inc. (NYSE:DAL) dipped 3.2% at the close of business on Feb 2, following the traffic release for January. (Read More)

Sysco Tops Q2 Earnings & Sales Again; Improves Y/Y

Sysco Corporation (NYSE:SYY) reported second-quarter fiscal 2018 results, wherein both top and bottom lines grew year over year and surpassed the Zacks Consensus Estimate. (Read More)

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