Stock Market News for Jun 11, 2020

U.S. stocks closed mostly lower on Wednesday after the Fed projected that the U.S. GDP growth rate will be significantly negative for 2020. On Jun 8, the NBER stated that the U.S. economy is in recession since mid-February. The Dow and the S&P 500 recorded back-to-back daily decline while the tech-heavy Nasdaq Composite maintained strong momentum registering fresh highs.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) tumbled 1% or 282.31 points to close at 26,989.99. Notably, 23 components of the 30-stock blue-chip index ended in the red while 7 finished in green. The S&P 500 declined 0.5% to end at 3,190.14. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) plummeted 4.9%, 3.7% and 2.4%, respectively. Notably, 10 out of eleven sectors of the benchmark index closed in negative territory and only one in positive territory.

However, the tech-heavy Nasdaq Composite finished at 10,020.35, gaining 0.7% due to strong performance of large-cap tech stocks. It was the first closing of the tech-laden index above 10,000 in its history. During the intraday trading session, Nasdaq Composite recorded a fresh all-time high of 10,086.89.

Large-cap tech stocks like Apple Inc. AAPL and Amazon.com Inc. AMZN hit all-time highs  rallying 2.6% and 1.8%, respectively. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) remains unchanged at 27.57. A total of 14.13 billion shares were traded on Wednesday, higher than the last 20-session average of 12.69 billion. Decliners outnumbered advancers on the NYSE by a 2.25-to-1 ratio. On Nasdaq, a 1.86-to-1 ratio favored declining issues.

Fed Projects Long Road to U.S. Economic Recovery

In a statement after the conclusion of the two-day FOMC meeting, the Fed has projected the U.S. GDP to decline by a significant 6.5% in 2020 before recovering at 5% in 2021. The central bank has forecasted to maintain 0% interest rate and asset buyback programs till 2022. The Fed Chairman Jerome Powell said the central bank expects to maintain this target rate " until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Notably, Fed is currently buying $80 billion Treasury Notes and $40 billion in mortgage backed securities per month.

U.S. Economy in Recession

On Jun 8, the National Bureau of Economic Research (NBER) stated that the U.S. economy has fallen in recession since mid-February, ending the historically longest 128 months of expansions. Moreover, three major global agencies, the World Bank, the International Monetary Fund and Organization of Economic Cooperation and Development, estimated that the global economy will shrink around 5.2%, 3% and 6%, respectively, in 2020 due to the coronavirus-induced devastations. These organizations have warned that the ongoing global recession may be worse than the Great Depression of 1930s.  

Economic Data

The Department of Commerce reported that consumer price index (CPI) dropped 0.1% in May compared with a decline of 0.8% in April. The CPI declined for three consecutive months. The consensus estimate was for an unchanged CPI. Year over year, the CPI gained 0.1%, its lowest monthly rise since September 2015. The core CPI (excluding the volatile food and energy components) decreased 0.1% in May, marking the three straight monthly decline for the first time. Year over year, the core CPI rose 1.2%, reflecting its smallest monthly gain since March 2011.

Stocks That Made Headline

Delta Expects 90% Decline in Q2 Revenues, Shares Down

Delta Air Lines Inc. DAL anticipates second-quarter 2020 revenues to decline 90% from the year-ago period, thanks to coronavirus-induced travel demand woes. (Read More)

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
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