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The expanded US market closed on a higher note on Wednesday. The three main indexes recorded an increase of nearly 1%.
Dow Jones Rallies
On Wednesday, the Dow Jones index rose 0.9% or 240 points to 26,203 points. The Nasdaq Composite rose 0.9% or 72 points to 8,020. The S & P 500 closed at 2,924. The S & P 500 rose 0.8% or 24 points.
The outperformance of the Dow Jones Index is mainly due to the increase of two of its high-weight stocks, Boeing (BA) and Apple (AAPL). Boeing shares gained $ 8.24 or 2.5%, while Apple shares rose $ 2.28 or 1.1% during trading on Wednesday. Boeing has the highest weighting of 8.8% in the Dow Jones 30 index. With a weight of 5.5%, Apple's stock ranks fifth. Together, the two shares represent 14.3%.
The US iShares Aerospace & Defense (ITA) ETF and Technology Select Sector SPDR (XLK) gained 0.8% and 1.2% respectively on Wednesday. ITA's portfolio includes companies engaged in the manufacturing, assembly and distribution of aerospace and defense equipment. XLK invests in technology stocks listed on the S & P 500.
Why did Boeing's shares increase?
Boeing's stock won on Wednesday. According to the company, it hired hundreds of temporary workers to help prepare the 737 aircraft grounded for delivery. The plane is notably subject to a ban from flying around the world since mid-March following two fatal accidents occurring within five months. Air carriers denied taking shipments of 737 MAX until security issues were resolved.
Boeing did not stop the production of MAX despite resistance from airlines to take delivery of jets. The company expects to speed up the delivery process as soon as it receives regulatory approval. The aircraft manufacturer announced Tuesday that it was planning to deal with MAX's problems in September. Boeing hopes to resume shipping in October.
According to a Reuters estimate, the total cost associated with the MAX crisis has already exceeded $ 8 billion. Expenses consist mainly of estimated compensation for MAX customers. Customers lost revenues and profits due to the grounding of the 737 MAX. Boeing recorded a $ 4.9 billion after-tax charge in the second quarter for airline compensation.
Once Boeing has got the regulatory approval in October, it can speed up the shipping process. The company's preparations have increased investor confidence. Investors are optimistic about Boeing's approval in October.
Why did Apple stocks win?
The Dow Jones index closed higher on Wednesday because of a substantial gain in Apple's stock. On Tuesday, Apple announced that its credit card was available to all consumers. The stock rose after the announcement. At the end of March, the company launched a co-branded credit card, Apple Pay, in partnership with Goldman Sachs. The credit card is linked to the Apple Wallet app of the company. Customers can request the card through the Apple Wallet app.
The card has lower interest charges on transactions and no annual fees. Apple has announced several compelling reward programs. In the press release, Apple said: "Customers will receive 2% Daily Cash each time they'll use an Apple Card with Apple Pay, and 3% Daily Cash on all purchases made directly from Apple." Apple, especially in the Apple Store, Apple.com, the App Store, the iTunes Store and Apple services. "
As a result, the card will likely gain market share quickly. Apple could be a competitive threat to other digital portfolio companies. This strategy will help Apple diversify its portfolio and reduce its reliance on iPhone sales.
Retailers also led the Dow Jones higher
In addition to Boeing and Apple, the Dow also advanced due to substantial gains in retail inventories. Home Depot (HD) and Nike (NKE) shares were up 1.5% and 2.7%, respectively. The strong results of Target (TGT) boosted equities. The target action closed up 20% Wednesday. The company posted better than expected results for the second quarter. Target's second-quarter EPS of $ 1.82 was higher than analysts' estimates of $ 1.62 and increased 23.8% year-over-year.
Home Depot posted positive positive results on Tuesday. The company announced EPS of $ 3.17, exceeding analysts' expectations by $ 3.08. The stock has increased about 4% year-over-year.
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