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Stock Market News for Sep 2, 2020

Wall Street started September on a positive note closing higher on Tuesday. Investors enjoyed better-than-expected economic data and positive news on a fresh fiscal stimulus. All three major stock indexes ended in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) advanced 0.8% or 215.61 points to close at 28,645.66, reversing previous day's losses. Notably, 17 components of the 30-stock index ended in the green while 13 finished in red. The blue-chip index entered into positive territory year to date.

The S&P 500 gained 0.8% to end at 3,526.65, marking its 21st record close year to date. In the intra-day session, the broad-market index recorded an all-time high of 3,528.03, its 26th all-time high so far this year.

The Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB),  the Industrials Select Sector SPDR (XLI) and the Consumer Discretionary Select Sector SPDR (XLY) climbed 1.9%, 2.8%, 1% and 1.1%, respectively. Notably, eight out of  eleven sectors of the benchmark index closed in positive territory while three in negative territory.

The largest gainer of the S&P 500 Index was L. Brands Inc. LB that rallied 7.3% on Sep 1 to close at $31.54. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the tech-laden Nasdaq Composite ended in positive territory to close at 11,939.67, surging 1.1%. This marked its 41st closing high this year so far. In the intra-day session, the tech-heavy index recorded an all-time high of 11,945.72, signifying its 47th all-time high year to date.

The fear-gauge CBOE Volatility Index (VIX) down 1.1% to 26.12. A total of 8.93 billion shares were traded on Tuesday, lower than the last 20-session average of 9.14 billion. Advancers outnumbered decliners on the NYSE by a 1.62-to-1 ratio. On Nasdaq, a 1.20-to-1 ratio favored advancing issues.

Positive News on Fresh Fiscal Stimulus

On Aug 28, Reuters reported that President Donald Trump is willing to sign a $1.3 trillion coronavirus relief bill. On Sep 1, White House Chief of Staff Mark Meadows said that the White House and Senate Republicans are likely to introduce the new bill next week. Moreover, Treasury Secretary Steven Mnuchin said he would reopen negotiation process with House Speaker Nancy Pelosi about stalled coronavirus aid program.

On Sep 1, in a major development, the Trump administration issued an eviction moratorium. Through the moratorium, the Centers for Disease Control and Prevention will invoke its authority to halt evictions through the end of the year in an effort to slow the spread of the pandemic.

This will stop nearly 40 million U.S. renters from being thrown out of their rental homes. These people are unable to pay rent due to coronavirus-induced job losses. Moreover, the termination of the paycheck protection program in July has made the situation worse.  

Economic Data

The Institute for Supply Management (ISM) reported that the U.S. manufacturing purchasing managers' index (PMI) for August came in at 56%, its highest reading since January 2019. The consensus estimate was 54.5% while July's PMI was 54.2%. Notably, any reading above 50% indicates expansion of manufacturing activities.

Moreover, August was the fourth consecutive months of manufacturing uptrend after the index attained an 11-year low of 41.5% in April. Furthermore, 15 of the 18 industries tracked by ISM expanded in August, up from 13 in the previous month. Notably, the manufacturing sector constitutes 12% of the U.S. GDP.

The ISM reported that manufacturing production jumped to 63.3% in August from 62.1% in July. Meanwhile, new orders climbed to 67.6% in August from 61.5% in July. Employment index rose to 46.4% in August from 44.2% in July. However, the index is still below 50%, implying job retrenchment in this sector.  

The IHS Markit reported that its final purchasing managers' index for the U.S. manufacturing sector rose to 53.1% in August from 50.9% in July, reflecting the U.S. manufacturing industries are turning out gradually. This was the fastest monthly expansion since January 2019.

The IHS Markit Eurozone manufacturing purchasing managers’ index (PMI) decreased marginally to 51.6% in August from 51.7% in July. The U.K., the manufacturing PMI rose to a 30-month high of 55.2% in August, up from 53.3% in July. Meanwhile, the Caixin/Markit manufacturing Purchasing Managers' Index for China rose 53.1% in August from 52.8% in July.

U.S. construction spending rose 0.1% in July compared with a revised 0.5% decline in June. However, the consensus estimate was for an increase of 1.2%.

Stocks That Made Headline

Schlumberger to Combine U.S. Fracking Business With Liberty

Schlumberger Ltd. SLB recently agreed to contribute the onshore hydraulic fracturing business in the United States and Canada, known as OneStim, to its smaller rival Liberty Oilfield Services Inc. LBRT for a 37% stake in the combined entity. (Read More)

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