Stock Market News for Jul 22, 2020

U.S. stocks finished mixed on Tuesday as investors are waiting for next round of stimulus from the U.S. government. Meanwhile, a fresh dosage of stimulus by the European Union and better-than-expected earnings results of a few big companies strengthened investors’ confidence to some extent. The Dow and the S&P 500 closed in the green while the Nasdaq Composite ended in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.6% or 159.53 points to close at 26,840.40. Notably, 21 components of the 30-stock blue-chip index ended in the green while 9 closed in red. The Nasdaq Composite ended at 10,680.38, sliding 0.8% due to profit realization on technology sector. However, during intraday trading, the tech-heavy index recorded a fresh all-time high of 10,839.93.

Meanwhile, the S&P 500 rose 0.2% to end at 3,257.30, its highest closing since Feb 21. The Energy Select Sector SPDR (XLE) jumped 6%. Notably, eight out of eleven sectors of the benchmark index closed in positive territory while three in negative territory.

The fear-gauge CBOE Volatility Index (VIX) was up 1.6% to 24.86. A total of 11.82 billion shares were traded on Tuesday, higher than the last 20-session average of 11.37 billion. Advancers outnumbered decliners on the NYSE by a 3.26-to-1 ratio. On Nasdaq, a 1.58-to-1 ratio favored advancing issues.

European Union Injects Massive Stimulus

After five days of intense discussions, the European Union (EU) leaders finally reached on a massive fiscal stimulus package. The EU will create a recovery fund worth €750 billion ($858 billion) to rebuild the economies of member countries devastated by the outbreak of the coronavirus infections.
Out of the total allocated fund, €390 billion ($446 billion) will be used as grants to those member countries that are hardest hit by the deadly virus.

The European Commission (EC) will borrow the total fund on financial markets. The rest of the amount will be distributed as loans. Moreover, member countries have agreed a new EU budget of nearly €1.1 trillion ($1.3 trillion) for 2021-2027. Therefore, the total size of the new stimulus  will be around $2 trillion.

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Expectations of a Fresh U.S. Stimulus

Market participants are closely watching the outcome of the ongoing negotiations between U.S. lawmakers about a fresh  round of fiscal stimulus to combat coronavirus-induced economic devastations.

The U.S. government is expected to unveil another $1 trillion of fiscal stimulus, much lower than $3.5 trillion proposed by Senate Democrats. The investors’ are expecting around $1.5 trillion of fresh stimulus. Notably, the government already injected $2 trillion of fiscal stimulus in April.

Q2 Earnings Results

Lockheed Martin Corp. LMT came out with quarterly earnings of $6.13 per share, beating the Zacks Consensus Estimate of $5.71 per share. This compares to earnings of $5 per share a year ago. These figures are adjusted for non-recurring items.

The company posted revenues of $16.22 billion for the quarter ended June 2020, surpassing the Zacks Consensus Estimate by 6.46%. This compares to year-ago revenues of $14.43 billion. (Read More)
 

The Coca-Cola Co. KO has delivered second-quarter 2020 results, wherein earnings beat estimates, while sales lagged. Quarterly adjusted earnings of $0.42 per share beat the Zacks Consensus Estimate of $0.40 but declined 33% from the year-ago period.

Revenues of $7,150 million missed the Zacks Consensus Estimate of $7,153.5 million and declined 28% year over year. (Read More)

Shares of Lockheed Martin and Coca-Cola gained 2.6% and 2.3%, respectively. Both Lockheed Martin and Coca-Cola carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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