Stock Market News for Jul 31, 2020

The Dow and the S&P 500 closed lower on Thursday after economic data pointed at the steepest contraction of the US economy since the Great Depression in the second quarter. However, the Nasdaq closed in the green as investors braced for quarterly earnings reports from tech and e-commerce behemoths.

The Dow Jones Industrial Average (DJI) slid 225.92 points or 0.9%, to close at 26,313.65 and the S&P 500 fell 12.22 points or 0.4% to close at of 3,246.22. The Nasdaq Composite Index closed at 10,587.81, shedding 44.87 points or 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 2.7%, to close at 24.76. Declining issues outnumbered advancing ones for 2.17-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq favored advancers.

How Did the Benchmarks Perform?

Of the 11 major sectors of the S&P 500, three sectors ended in the positive territory led by a 0.5% gain in the technology sector. The blue-chip Dow was weighed by more than 4% decline in shares of Exxon Mobil Corporation XOM and Chevron Corporation CVX.

On the brighter side, anticipation of positive second-quarter earnings results from tech giants pushed the Nasdaq to close in the green. Overall, the S&P 500 posted 26 new 52-week highs and no new lows, while the Nasdaq Composite recorded 69 new highs and 26 new lows.

GDP Plunges to Record Low in Q2

On Thursday, the Commerce Department reported that GDP fell at a record 32.9% annual pace in the second quarter compared to the consensus estimate of a 34% decline. With millions of Americans still out of work, and several businesses closing doors amid the global pandemic, the U.S. economy had to suffer its steepest contraction since the Great Depression in the second quarter. The report comes amid a recession that began in February led by the coronavirus pandemic and pulled first-quarter growth down 5%.

Initial Claims Spikes Again

The Labor Department reported on Thursday that Initial jobless claims rose by 12,000 to 1.434 million in the week ended July 25. The figure stands below the consensus estimate of 1.445 million, but is higher than the prior week’s revised figure of 1.422 million. Additionally, the new federal relief program for so-called “gig” workers like Uber drivers also totaled 829,607 in the week under consideration. The number of people collecting continuing claims rose by 867,000 to 17.06 million.

Q2 Earnings Report

Investors have kept a close watch on second-quarter 2020 earnings report and several tech giants are scheduled to report after market close on Jul 30. However, better-than-expected results from QUALCOMM Incorporated QCOM pushed the Nasdaq to close in the green.

Shares of QUALCOMM jumped 15.2% on Thursday after the company reported solid third-quarter fiscal 2020. The company reported net income of $845 million or 74 cents per share compared with $2,149 million or $1.75 in the prior-year quarter. The company’s earnings were boosted by ramp-up in 5G-enabled chips. Revenues from Qualcomm CDMA Technologies (QCT) improved 7% year over year to $3,807 million on strength across 5G and higher demand in adjacent platforms.

QUALCOMM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On the same day, Mastercard Incorporated MA reported second-quarter 2020 earnings of $1.36 per share beat the Zacks Consensus Estimate by 18.3%. Additionally, the company whooped up revenues of $3.3 billion beat the Zacks Consensus Estimate by 2.3%. However, Mastercard witnessed year over year decline of 26% earnings due to a contraction in gross dollar volume, lower switched transactions and a weak cross-border business. But again, decreased rebates and incentives helped earnings to some extent. (Read More)

On Thursday, shares of The Procter & Gamble Company PG closed 2.4% higher after the company reported fourth-quarter fiscal 2020 core earnings of $1.16 per share, surpassing the Zacks Consensus Estimate of $1.01. Sudden spike in demand for household cleaning, personal health and cleansing products from the ongoing COVID-19 pandemic led to sturdy sales growth and improved operating margin. (Read More)

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