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Stock Market News for Oct 13, 2020

U.S. stock markets closed sharply higher on Monday supported by strong performance of large-cap technology stocks. Moreover, market participants are gearing up for the third-quarter earnings season that will start this week. All the three major stock indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.9% or 250.62 points to close at 28,837.52, maintaining 4-day winning streak. Notably, 23 components of the 30-stock index ended in the green while 5 finished in red and 2 remained unchanged.

Moreover, the tech-laden Nasdaq Composite finished at 11,876.26, surging 2.6% or 296.32 points due to the strong performance by large-cap technology stocks. The tech-heavy index has gained for four successive days. This was the index's best single-day performance since Sep 9.

Meanwhile, the S&P 500 advanced 1.6% to end at 3,534.22, continuing 4-day winning run. The Communication Services Select Sector SPDR (XLC) and the Technology Select Sector SPDR (XLK) advanced 2.6% and 2.7%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in positive zone and one in the red.

The fear-gauge CBOE Volatility Index (VIX) was up 0.7% to 25.07. A total of 8.2 billion shares were traded on Monday, lower than the last 20-session average of 9.7 billion. Advancers outnumbered decliners on the NYSE by a 1.79-to-1 ratio. On Nasdaq, a 1.57-to-1 ratio favored advancing issues.

Technology Sector Drives Wall Street

The technology sector played the lead role for market's strong rally yesterday. Apple Inc. AAPL climbed 6.4%, marking its best daily gain since Jul 31. The company is set to launch a 5G iPhone on Oct 13. Moreover, Inc. AMZN advanced 4.8% and investors are waiting for the company's Prime Day shopping event on Oct 13 and 14.

Moreover, Facebook Inc. FB, Alphabet Inc. GOOGL and Microsoft Corp. MSFT rallied 4.3%, 3.6% and 2.6%, respectively. Each of these stocks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, last year, which recorded the best performance of Wall Street in six years, technology stocks drove the overall market. This year, which witnessed an unprecedented health-hazard-led massive economic devastations, again the technology sector is leading the recovery.  

Third-Quarter Earnings Likely to Remain Negative

Overall, the third-quarter earnings for the S&P 500 Index are projected to be down 22% year over year on 2.9% lower revenues. This is an improvement over the second-quarter earnings that plunged 32.3% on 9.2% lower revenues. Remarkably, the first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: Are Bank Stocks Cheap or Value Traps?)

Despite negative expectations for the third-quarter earnings results, the important fact is that the overall projections have gradually improved since July, on the reopening of a large part of the U.S. economy. The U.S. economy is notably growing, albeit at a slow pace, despite the lack of a second round of fiscal stimulus. This should sustain the improving earnings trend.

Stocks That Made Headline

BP Kick-Starts Ghazeer Gas Production Ahead of Schedule

BP plc BP recently announced the commencement of production, ahead of schedule, from the Block 61 Phase 2 Ghazeer gas field in Oman. (Read More)

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