A single trading day does not make or break a trend, but after being chastened in May, investors were likely pleased with Tuesday’s outcomes. The Nasdaq Composite jumped 2.65% while the S&P 500 climbed 2.14%.
After nudging higher yesterday, the Dow Jones Industrial Average gained 2.06% on Tuesday. Stocks were bolstered Tuesday after Federal Reserve Chair Jerome Powell said at a Chicago conference that the central bank is keeping close tabs on the trade war and that it “will act as appropriate to sustain the expansion” if the trade conflict harms the U.S. economy.
While Powell added the Fed is not considering negative interest rates, there is increasing speculation in the financial community that the central bank could consider lowering interest rates, perhaps doing so as soon as later this year.
In late trading, nearly all of the Dow Jones’s components were higher on the day and the blue-chip index was receiving some support from some marquee names, including Apple (NASDAQ:AAPL). A day after big tech stocks, including Apple, were stung by news that the Justice Department is considering looking into anti-trust issues at some of the largest U.S.-based firms, shares of the iPad maker jumped 3.66%.
California-based Apple is conducting its worldwide developers conference, and analysts now appear enthusiastic about the company’s emphasis on privacy protocols.
“The analysts were particularly intrigued by Apple’s focus on features related to data privacy, which not accidentally stands in contrast with the growing view that the social-media giants don’t take the issue seriously,” reports Barron’s.
Nike (NYSE:NKE) was another big Dow winner on Tuesday, rising 4.69% despite news out yesterday that Toronto Raptors star Kawhi Leonard filed a lawsuit against the athletic apparel giant over use of a logo he believes he owns the rights to.
“Leonard claims that he developed the logo himself by tracing his very large hands,” according to the Associated Press. “The ring and pinky fingers of the logo are shaped into a ‘K,’ the middle finger and thumb form an ‘L’ and the index finger is designed to resemble an elongated ‘2’ — all nods to his initials and jersey number.”
Leonard, whose Raptors are playing the Golden State Warriors for the NBA championship, was a Nike endorser until 2018. He now endorses New Balance sneakers.
Shares of embattled aerospace and defense behemoth Boeing (NYSE:BA), the largest member of the price-weighted Dow, closed higher Tuesday after UBS analyst Myles Watson published research indicating that while air travelers are still expressing concern about the safety of Boeing’s 737 MAX jet, the issue can be overcome by the company.
The good news in Watson’s research: “almost 89% of respondents who are worried about the 737 MAX said fears would subside after six months of safe operation,” according to Barron’s.
Bottom Line on the Dow Jones Today
Markets have been sagging due in large part to the White House’s insistence on a multi-front trade war, so all it took was a glimmer of positive thinking to ignite a rally on Tuesday. That glimmer came courtesy of dovish comments by the Fed.
Translation: the trade war issue has not gone away. If anything, it could intensify as President Donald Trump continues lobbing harsh rhetoric at Mexico. Still, Mexican President Andres Manuel Lopez Obrador told reporters Tuesday that he believes the two sides can reach a trade truce. Obrador made those remarks even after Trump threatened more tariffs on goods imported from Mexico, the largest trading partner of the U.S.
Again, Tuesday is just one day, but it could be a positive sign that the only two sectors in the red for the day were the defensive real estate and utilities groups. Those sectors are not represented in the Dow and are among the smallest sector weights in the S&P 500.
As of this writing, Todd Shriber did not own any of the aforementioned securities.