U.S. stock markets closed mixed on Wednesday after a choppy session. A favorable court ruling of an Internet giant lifted the entire tech sector. However, tariff-related concerns continue to hurt investor’s sentiment. A weak labor market data further aggravated the situation. The Nasdaq Composite and the S&P 500 ended in positive territory while the Dow finished in negative territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.1% to close at 45,271.23. Notably, 23 components of the 30-stock index ended in negative territory and seven finished in positive territory. At the intraday low, the blue-chip index was down nearly 315 points.
The tech-heavy Nasdaq Composite finished at 21,497.73, rising 1% or 218.10 points due to the strong performance of technology stocks. At the intraday high, the tech-laden index was up nearly 274 points.
The S&P 500 gained 0.5% to finish at 6,448.26. Out of the 11 broad sectors of the broad-market index, eight ended in negative territory, and three in positive territory. The Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) advanced 0.6% and 1.7%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) tumbled 2.2%.
The fear gauge, the CBOE Volatility Index (VIX) was down 4.8% to 16.35. A total of 14.95 billion shares were traded on Wednesday, lower than the last 20-session average of 16.18 billion. Advancers outnumbered decliners on the NYSE by a 1.33-to-1 ratio. On the Nasdaq, a 1.03-to-1 ratio favored declining issues.
Favorable Court Ruling Lift Tech Sector
On Sep 1, justice Amit Mehta of the U.S. District Court for the District of Columbia ruled against the Department of Justice (DOJ) proposal including the forced sale of Google’s Chrome browser. In his judgement, Mehta stated “Google will not be required to divest Chrome; nor will the court include a contingent divestiture of the Android operating system in the final judgment. Plaintiffs overreached in seeking forced divestiture of these key assets, which Google did not use to affect any illegal restraints.” Consequently, shares of Google parent Alphabet Inc. GOOGL jumped 9.1%.
In August 2024, the U.S. District Court for the District of Columbia ruled against Google for violating Section 2 of the Sherman Act and accused the company of using monopoly power in search and related advertising businesses. However, justice Mehta also ruled that Google will be barred from entering exclusive search deals and must share its search data.
In his ruling, Mehta further stated “Google will not be barred from making payments or offering other consideration to distribution partners for preloading or placement of Google Search, Chrome, or its GenAI products.” Therefore, Google can continue to pay $20 billion per annum to Apple Inc. AAPL to be the default search engine on the Safari browser on iPhones, Macs and iPads. As a result, shares of Apple also surged 3.8%.
Both Alphabet and Apple currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Concerns About Tariffs’ Legal Validity
On Aug 29, the U.S. Court of Appeals for the Federal Circuit ruled that most of President Donald Trump’s global tariffs including “reciprocal” tariffs are not legally acceptable. In a 7-4 verdict, the court said that the Constitution does not allow the President to impose such tariffs unilaterally.
The court ruling said “Tariffs are a core Congressional power. The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution.” However, the verdict will not be applicable till Oct. 14, during which time the Trump administration can appeal to the Supreme Court against this ruling.
President Trump has called the Appeals Court’s verdict “Highly Partisan” and expressed confidence that the apex court will finally rule in his administration’s favor. The Trump administration will seek an immediate hearing from the Supreme Court.
Economic Data
The Department of Labor showed in its Job Openings and Labor Turnover Survey (JOLTS) report that job openings fell by 176,000 to 7.181 million in July, marking its lowest level since September 2024. More importantly, this is only the second time since the pandemic-era of 2020, when the metric fell below 7.2 million in a month. Year over year, job openings decreased by over 300,000 in July.
There were 0.99 job openings per unemployed person in July compared with 1.05 in June. July marked the first month in which this metric fell by 1.0 since April 2021. Hiring increased by 41,000 in July to 5.308 million. Hiring rate was 3.3% in July, unchanged month over month. In July, layoffs increased by 12,000 to 1.808 million.
The U.S. Census Bureau reported that the new orders for factory-made manufactured goods fell 1.3% in July to $603.6 billion. The Zacks Consensus Estimate was for a decline of 1.4%. The metric for June plummeted 4.8%. New orders for manufactured durable goods in July decreased 2.8% to $303.2 billion. New orders for manufactured nondurable goods increased 0.3% to $300.5 billion.
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Apple Inc. (AAPL): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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