Wednesday was another record-setting day on Wall Street with the S&P 500 (+0.6%), the Nasdaq Composite (+1.0%), and the small-cap Russell 2000 (+0.4%) closing at all-time highs for the fourth day in a row. The Dow Jones Industrial Average (+0.2%) finished at a seven-month high, coming within 2.0% of its January 26 record.
Gains were broad-based on Wednesday, with eight of eleven sectors finishing in the green. The consumer discretionary and information technology sectors were the top-performing groups, benefiting from a rise in most FAANG names, including Amazon (AMZN 1998.10, +65.28, +3.4%) and Apple (AAPL 222.98, +3.28, +1.5%), both of which finished at new all-time highs.
Amazon shares nearly broke the $2000 mark after Morgan Stanley raised its target price for the internet retail giant to $2500 -- a new Street high.
Meanwhile, the energy sector (+0.6%) also had a positive session, helped by a rise in crude prices. West Texas Intermediate crude futures finished higher by 1.4% at $69.50/bbl, extending gains after the Department of Energy's weekly inventory report showed that U.S. crude stockpiles decreased by 2.6 million barrels last week.
The trade-sensitive industrial sector (+0.1%) struggled to stay afloat despite both President Trump and Canadian Prime Minister Justin Trudeau expressing optimism over U.S.-Canada trade talks, which they are looking to wrap up by Friday. In turn, the heavily-weighted financial sector (-0.02%) underperformed, as did the telecom services (-0.8%) and real estate (-0.1%) sectors.
In earnings news, retailers were in focus once again, with American Eagle (AEO 25.50, -1.78, -6.5%), Dick's Sporting Goods (DKS 35.60, -0.76, -2.0%), and Express (9.93, -0.06, -0.6%) all dropping in reaction to their quarterly results. Conversely, Shoe Carnival (SCVL 41.74, +4.83, +13.1%) spiked after reporting better-than-expected earnings, revenues, and guidance.
Looking at other markets, U.S. Treasuries finished Wednesday roughly flat, with the yield on the benchmark 10-yr Treasury note closing unchanged at 2.88%. Meanwhile, the U.S. Dollar Index slid for a fourth straight session, dropping 0.2% to 94.47, and the CBOE Volatility Index declined 3.2% to 12.10.
Reviewing Wednesday's economic data, which included the second estimate of Q2 GDP, July Pending Home Sales, and the weekly MBA Mortgage Applications Index:
- The second estimate of second quarter GDP pointed to an expansion of 4.2%, while the Briefing.com consensus expected a reading of +4.0%. The first estimate came in at +4.1%.
- The key takeaway from the report is that it included a downward revision to personal spending growth (from 4.0% to 3.8%) that was offset by a higher estimate for nonresidential investment growth, government spending, and a downward revision to imports, which are a subtraction in the calculation of GDP.
- Pending Home Sales declined 0.7% in July (Briefing.com consensus +0.5%). Today's reading follows an unrevised 0.9% increase in June.
- The weekly MBA Mortgage Applications Index decreased 1.7% to follow last week's increase of 4.2%.
Looking ahead, investors will receive the weekly Initial Claims report and July Personal Income, Personal Spending, and PCE Prices on Thursday.
- Nasdaq Composite +17.5% YTD
- Russell 2000 +13.1% YTD
- S&P 500 +9.0% YTD
- Dow Jones Industrial Average +5.7% YTD