Profit Taking May Contribute to Initial Weakness on Wall Street

October 30, 2017
wall street

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Monday following the upward move seen last week. Profit taking may contribute to initial weakness on Wall Street.

Trading activity may be somewhat subdued, however, with some traders likely to stick to the sidelines ahead of the release of some key economic data and earnings news in the coming days.

After ending Thursday’s trading mixed, stocks moved mostly higher over the course of the trading day on Friday. With the upward move on the day, the tech-heavy Nasdaq and the S&P 500 climbed to new record closing highs.

The major averages all closed in positive territory, but the Nasdaq outperformed its counterparts by a wide margin. The Nasdaq spiked by 144.49 points or 2.2 percent to 6,701.26, while the S&P 500 climbed 20.67 points or 0.8 percent to 2,581.07 and the Dow inched up 33.33 points or 0.1 percent to 23,434.19.

For the week, the Nasdaq jumped by 1.1 percent, the Dow rose by 0.5 percent and the S&P 500 edged up by 0.2 percent.

The strength on Wall Street came in reaction to upbeat earnings news from several well known companies.

Amazon (AMZN), Microsoft (MSFT), Intel (INTC) and Alphabet (GOOGL) all moved notably higher after reporting quarterly earnings that beat analyst estimates after the close of trading on Thursday.

Additionally, Merck (MRK), Chevron (CVX) and Exxon Mobil (XOM) also reported quarterly earnings before the start of today’s trading that exceeded expectations.

Positive sentiment was also generated in reaction to a report from the Commerce Department showing stronger than expected economic growth in the third quarter.

The report said real gross domestic product jumped by 3.0 percent in third quarter after surging up by 3.1 percent in the second quarter. Economists had expected GDP to increase by 2.5 percent.

Meanwhile, a separate report from the University of Michigan showed consumer sentiment improved by slightly less than initially estimated in October.

The report said the consumer sentiment index for October was downwardly revised to 100.7 from 101.1 but is still up from 95.1 in September. Economists had expected the index to be downwardly revised to 100.9.

In other news, reports said President Donald Trump is leaning toward nominating Federal Reserve Governor Jerome Powell as the next Fed Chair.

People familiar with the matter told Bloomberg the decision is not yet final and cautioned that Trump could change his mind at any time.

With Microsoft leading the way higher, software stocks showed a substantial move to the upside on the day. Reflecting the strength in the sector, the Dow Jones Software Index jumped by 3.4 percent.

Microsoft surged up by 6.4 percent in reaction to its upbeat quarterly results, helping the software index reach a record closing high.

Significant strength was also visible among natural gas stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Natural Gas Index. Cabot Oil & Gas (COG), Chesapeake Energy (CHK), and QEP Resources (QEP) posted standout gains.

Retail, semiconductor, internet, and trucking stocks also saw considerable strength, while computer hardware stocks showed a notable move to the downside.

Within the hardware sector, Electronics for Imaging (EFII) posted a steep loss after reporting weaker than expected third quarter results.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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