U.S. stocks markets closed higher on Wednesday recouping some of the losses of the past three trading sessions. Market participants ignored higher crude oil prices and soaring yields on government bonds globally. Strong earnings data, however, bolstered investor sentiment. All three major stock indexes ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.6% or 295.07 points to close at 53,061.95. Twenty-two components of the 30-stock index ended in positive territory and eight ended in negative territory. The tech-heavy Nasdaq Composite ended at 26,217.83, rising 0.5% or 118.05 points on solid performance by artificial intelligence (AI) stocks.
The S&P 500 gained 0.5% to finish at 7,666.60. However, seven out of 11 sectors of the broad-market index ended in negative territory while four finished in positive territory. The Consumer Discretionary Select Sector SPDR (XLY), the Information Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB) and the Industrials Select Sector SPDR (XLI) fell 1.7%, 1.5%, 1.2% and 1.4%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) rose 1.3%.
The fear gauge CBOE Volatility Index (VIX) fell 7% to 15.20. A total of 14.75 billion shares were traded on Wednesday, lower than the last 20-session average of 15.19 billion. Advancers outnumbered decliners on the NYSE by a 1.78-to-1 ratio. On the Nasdaq, a 1.85-to-1 ratio favored advancing issues.
Higher Crude Oil Prices and Bond Yields
The U.S.-Iran war escalated from Aug 30, for the first time since late July. As a result, crude oil prices spiked. The price of the U.S. benchmark — the West Texas Intermediate crude oil future — rose 1% to settle at $91.01 per barrel. The price of the global benchmark — the Brent crude oil future — rose 1% to settle at $95.63 per barrel.
Higher oil prices will worsen the global inflationary situation as the transportation costs will rise affecting the general price level. Consequently, the yield on the benchmark 10-Year U.S. Treasury Note touched 4.818%, marking its highest level since November 2023.
Moreover, Japan’s benchmark 10-Year Treasury Note yield hit 3% for the first time since 1996. The yield on U.K. 10-year government Gilt hit 5.2501%, the highest level since June 2008. Additionally, yields on German and French Government bonds also moved higher.
Strong Earnings Data
Dell Technologies Inc. DELL came up with quarterly adjusted earnings of $7.04 per share, beating the Zacks Consensus Estimate of $4.97 per share. This compares to earnings of $2.32 per share a year ago. The company posted revenues of $46.97 billion, surpassing the Zacks Consensus Estimate by 3.60%.
GitLab Inc. GTLB reported quarterly non-GAAP earnings of $0.24 per share, which remained unchanged year over year and 33.33% above the Zacks Consensus Estimate. Quarterly revenues of $286.25 million rose 21.3% year over year and beat the consensus mark by 4.74%.
As a result, stock prices of Dell Technologies and GitLab jumped 15.8% and 10%, respectively. Dell Technologies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Economic Data
Automatic Data Processing Inc. ADP reported that U.S. private companies added 38,000 jobs in August, fewer than the upwardly revised 46,000 jobs in July. The consensus estimate was 47,000.
New orders for manufactured goods in July rose 0.9%, beating the Zacks Consensus Estimate of 0.7%. The metric for June was revised upward to a decline of 0.2% from a drop of 0.3% reported earlier. In July, new orders for manufactured durable goods increased 1.1% and new orders for manufactured nondurable goods rose 0.7%.
For the week ending Aug 28, commercial crude oil inventories (excluding the Strategic Petroleum Reserve) decreased 4.5 million barrels.
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