Markets ended higher on Friday after expectations of strong corporate earnings overshadowed tensions related to a possible government shutdown. The S&P 500 and Nasdaq posted record closes. The Dow also ended in the green due to broad based gains. Meanwhile, Mick Mulvaney commented that the likelihood of a government shutdown was around 50%.

The Dow Jones Industrial Average (DJI) increased 0.2% to close at 26,071.72. The S&P 500 rose 0.4% to close at 2,810.30. The tech-laden Nasdaq Composite Index closed at 7,336.38, gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) increased 5.6% to close at 11.54. Advancers outnumbered decliners on the NYSE by 1,423 to 1,122. On Nasdaq, advancing issues outnumbered the declining ones by 1,397 to 1,063.

How Did the Benchmarks Perform?

The S&P 500 amassed 12.3 points to finish at an all-time record, also hitting an intraday high earlier in the session. Of the 11 major sectors of the S&P 500, nine ended in the positive territory, with consumer staples and consumer discretionary segments leading the gainers. The Consumer Discret Sel Sect SPDR ETF (XLY) rose 0.9%, whereas, the Consumer Staples Select Sector SPDR ETF (XLP) gained 1.1%.

This marks another feat that the broader index achieved — not declining by more than 5% for 395 consecutive sessions. Previously, the S&P 500 had gone without declining more than 5% for 394 sessions between 1994 and 1996.

The Nasdaq gained 40.3 points to also close at a record, hitting an intraday high earlier. Gains for the tech-laden index were rather broad-based. Broader markets gained on Friday on optimism over economic growth and expectations of stupendous corporate earnings.

Meanwhile, the Dow pared earlier losses to climb 53.9 points on Friday. The blue-chip index came within half a percentage point of a record finish. However, a dip in the shares of IBM IBM and American Express AXP weighed on the blue-chip index. Shares of IBM declined 4% after the company reported that high tax rates in 2018 would weigh on its profits. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Further, shares of American Express declined 1.8% after posting its first quarterly loss in as many as 26 years. The credit card giant posted a fourth-quarter net loss of $1.19 billion, or $1.41 per share. The loss was due in large part to its previously disclosed charge related to the new GOP tax plan of $2.6 billion. (Read More)

Mulvaney Says 50% Odds of a Government Shutdown

Chief of the Office of Management and Budget, Mick Mulvaney commented on Friday that chances of a complete government shutdown could be 50-50. In an interview to CNBC he also said, “We were operating under sort of a 30 percent shutdown up until yesterday. I think we’re ratcheting it up now.”

On Thursday, the House passed a one-month spending Bill to keep the government funded up until Feb 16, 2018. However, the bill did not find much favor in the Senate and therefore could not reach the 60-vote mark to clear the Senate. The Senate adjourned without further voting for a final outcome on Thursday.

Weekly Roundup

For the week, the Dow, the S&P 500 and the Nasdaq gained 1%, 0.9% and 1%, respectively. All the three major benchmarks posted their third week of gains on the trot. The Republican tax Bill last year, now known as the Tax Cuts and Jobs Act of 2017 was passed by the House for the second time after Senate Republicans passed the tax overhaul Bill, excluding certain provisions.  The Senate voted 51-48 in favor of the Bill, which permanently slashes corporate tax rates from 35% to 21%. 

Additionally, in its Beige Book, the Fed provided an encouraging outlook about the U.S. economy, which in turn also boosted investor sentiment. Sectors like real estate and utilities, which are considered as alternatives to bonds, declined after yield on 10-year Treasury notes reached its highest level since 2014.

Stocks That Made Headlines

Upcoming Consumer Earnings Reports to Watch: JNJ, F, SBUX

Fourth-quarter earnings season is finally underway, and investors are already getting excited about the upcoming reports from market-moving tech companies like Netflix NFLX. (Read More)

Upcoming Tech Earnings Reports to Watch: NFLX, TXN, INTC

With this week’s release of marquee reports from the likes of Goldman Sachs GS, IBM, and American Express, fourth-quarter earnings season is officially underway. (Read More)

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it’s predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks’ 3 Best Stocks to Play This Trend >>

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International Business Machines Corporation (IBM): Free Stock Analysis Report
 
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