The S&P 500 and the Dow closed lower on Tuesday amid heightened political uncertainty in the U.S following news that President Trump had shared sensitive information with Russian officials. Energy shares declined following a report released by International Energy Agency (IEA). The Nasdaq notched a record high for the second time in a row, boosted primarily by technology stocks. Meanwhile, investors kept a close watch on the housing starts and the industrial production data released on Tuesday.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 2.19 points to close at 20,979.75. The S&P 500 fell 0.1% to close at 2,400.67 retreating from intraday record of 2,405.77. The S&P 500 declined for its fifteenth straight session, marking its longest such streak since February 1969. The tech-laden Nasdaq Composite Index advanced 0.3% to close at 6,169.87, marking its 32nd record close of the current year after retreating from an intraday record of 6,170.16. A total of around 6.4 billion shares were traded on Tuesday, lower than the last 20-session average of 6.8 billion shares. The fear-gauge CBOE Volatility Index (VIX) closed at 11.78. Decliners outnumbered advancing stocks on the NYSE by a 1.24 to 1 ratio.
Trump Shares Classified Information
According to U.S. officials, Trump disclosed sensitive intelligence, acquired from an U.S. ally with foreign minister and ambassador of Russia in a meeting held in last week. Trump held the meeting with Russian foreign minister Sergei Lavrov and Russian ambassador Sergei Kislyak in the Oval Office. This controversy comes a few days after James Comey, Director of the Federal Bureau of Investigation was fired by the President.
As per U.S. officials, Trump shared sensitive information about the Islamic State with Russian officials that could jeopardize the intelligence source. However, Trump’s top security adviser H.R. McMaster, on Tuesday commented that the disclosure of classified information with Russian officials during the meeting was “wholly appropriate”.
Oil Prices Drop
Oil prices declined after IEA released a report on Tuesday. IEA warned that an extension to the cuts in oil production agreed last year by OPEC members would not be enough to stabilize the global crude market and reduce global oil inventories to their five-year average level.
WTI crude prices declined by $0.19, or 0.4%, to $48.66 a barrel. The broader Energy Select Sector SPDR (XLE) fell 0.5%. Some of the key holdings of the energy sector in the S&P 500 including EOG Resources (EOG – Free Report) and ConocoPhillips (COP – Free Report) declined by 1% and 0.7% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Technology Shares Gain
Tech stocks moved north helped by anticipation about changes to the US tax code that would enable companies to repatriate overseas funds to the US at a lower rate. Last month Trump administration released a short tax-reform plan which included provisions for “one-time tax on trillions of dollars held overseas.”
US companies are speculated to hold more than $2 trillion profits overseas. As per fourth-quarter company filings compiled by UBS, last year, Microsoft (MSFT – Free Report) had the largest profits among S&P 500 companies kept abroad. Gains in technology stocks had a positive impact on the Nasdaq.
As per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, privately-owned housing starts in April were recorded at a seasonally adjusted annual rate of 1,172,000. The figure came in 2.6% below the revised March estimate of 1,203,000. However, it came in above the rate of 1,164,000 recorded in April 2016. Single-family housing starts hit a pace of 835,000 which is 0.4% higher than the revised figure of 832,000 recorded in March.
On the other hand, as per the Federal Reserve, industrial production recorded a growth of 1% in April, marking its largest increase since February 2014. Manufacturing output saw an increase of 1%. Indexes for mining and utilities recorded increases of 1.2% and 0.7%, respectively. Total industrial production in April was up 2.2% compared to the year-earlier level.
Stocks that made Headlines
After delivering positive top and bottom-line surprises for three straight quarters, DICK’S Sporting Goods Inc. (DKS – Free Report) posted in-line earnings in first-quarter fiscal 2017, while sales lagged estimates. (Read More)
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