Benchmarks declined 1% on Thursday with the Dow snapping its four-day winning streak to end in the red. Dismal earnings results from Cisco weighed on the Dow. Moreover, speculations regarding Gary Cohn’s resignation from the post of chief economic advisor to President Trump and the terrorist attack in Barcelona also hurt the investor sentiment. The S&P 500 suffered its worst performance of the year with all its sectors ending in the red. The Nasdaq declined due to a slump in tech shares and posted its third worst performance for the year.
The Dow Jones Industrial Average (DJIA) closed at 21,750.73, declining 1.2% or 274.14 points. The S&P 500 Index (INX) declined 1.5% or 38.10 points to close at 2,430.01. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,221.91, decreasing 123.19 points or 1.9%. A total of around 6.7 billion shares were traded on Thursday, above the last 20-session average of 6.3 billion shares. Declining issues outnumbered advancers on the NYSE by 4.55-to-1 ratio. On the Nasdaq, decliners outnumbered advancers by a 3.89-to-1 ratio.
Cisco Disappoints, Drags the Dow Lower
Dow ended its four-day winning streak and finished to close at its lowest levels since May 17. The blue-chip index had amassed 180 points during its four day winning streak. The biggest drag on the Dow was a decline in shares of Cisco Systems (CSCO – Free Report) after the revenues from its security business fell in the previous quarter. This negated the overall profits that the company incurred for fourth quarter 2017. Its revenues declined 4% year over year to $12.13 billion, slightly better than the Zacks Consensus Estimate. Management had anticipated revenues to decline in the range of 6-4% on a year-over-year basis. (Read More: Cisco (CSCO – Free Report) Meets Q4 Earnings Estimates, Revenues Beat)
Also, Walmart’s (WMT – Free Report) dismal performance in the second quarter weighed on the Dow. It posted adjusted earnings of $1.08 per share, just beating the Zacks Consensus Estimate and prior-year quarter’s adjusted earnings of $1.07. In an unforgiving retail landscape, this small earnings beat and miniscule year-over-year growth was enough to send the company’s stock lower on Thursday morning. (Read More: Walmart’s Earnings Report Just Proved It’s a Legit Amazon Competitor)
The index also took a battering after news regarding Gary Cohn’s resignation engulfed the market. There were widespread fears regarding Cohn, a business advisor to the President, could resign from his post as director of National Economic Council due to Trump’s remarks on the Charlottesville incident. This comes after the President himself disbanded two advisory panels, the Manufacturing Council and Strategic and Policy Forum, after top corporate leaders resigned from their positions in the respective panels. These fears impacted the overall market and brought about broad based losses.
Cohn’s resignation from the post would’ve crushed all hopes for tax and regulatory reforms which the investors are hopeful of. However, the Dow could trim the losses briefly after the news was out that Cohn’s resignation was just a speculation and he would continue his term with the advisory panel. Later in the day, the White House issued an official statement which said that Cohn would not be resigning from his post. Even after the official statement was out, the losses could not be negated and Dow still ended in the red.
S&P 500, Nasdaq Suffer Worst Performances
The S&P 500 suffered its worst performance for the year on Thursday after it declined more than one 1%, with all of its primary sectors finishing in the negative territory, led by technology sector. This has happened on only two other occasions this year. The overall technology sector was down due to broad based losses in the information technology shares. The Select Sector SPDR for Technology (XLK) dipped almost 2%. The overall markets dropped on Thursday not only because of speculations regarding Cohn’s resignation but also due to the terror attack in Barcelona, Spain. The S&P 500 is trading 2.1% off its closing high for the year.
The Nasdaq also slumped almost 2% due to broad based losses in the market, registering its third largest daily loss for the year. Also, the Russell 2000 index closed below its 200-days moving average.
The Initial Jobless Claims for the month of August fell 3.7% to 232,000 whereas the consensus estimated it to decrease to 241,000. The industrial production showed an increased to 0.2% from the last month whereas the consensus estimated it to increase by 0.3% from the previous month. The Capacity utilization remained consistent at 76.7% with the previous month whereas the consensus estimated it to increase to 76.8%.
Stocks That Made Headlines
Comcast Enters Wireless Arena with Xfinity Mobile
On Aug 17, leading cable multi service operator and media giant Comcast Corp. (CMCSA – Free Report) completed the nationwide rollout of its wireless services under the “Xfinity Mobile” brand.(Read More)
Ross Stores Up on Q2 Earnings Beat, Raises FY17 View
Ross Stores, Inc. (ROST – Free Report) reported solid second-quarter fiscal 2017 results, wherein both the top and bottom lines topped estimates and improved year over year. (Read More)
Wall Street Lauds Gap’s (GPS – Free Report) Q2 Earnings Beat, Higher View
The Gap Inc. (GPS – Free Report) gained in yesterday’s after-market trading session, as the company raised its fiscal 2017 earnings outlook, following the better-than-expected second quarter results. (Read More)
Verizon to Enter Dedicated Public Safety Network Business
The market for U.S. public safety network for first responders and civil protection services is gradually becoming intensely competitive. (Read More)
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