The broader US market closed on a higher note on Wednesday. All three of the major indexes registered nearly a 1% gain.
On Wednesday, the Dow Jones Index increased 0.9% or by 240 points to 26,203. The Nasdaq Composite increased 0.9% or by 72 points to 8,020. The S&P 500 closed at 2,924. The S&P 500 increased 0.8% or by 24 points.
The Dow Jones Index’s outperformance was mainly due to an increase in two of its high-weighted stocks—Boeing (BA) and Apple (AAPL). Boeing shares gained $8.24 or 2.5%, while Apple stock increased $2.28 or 1.1% during trade on Wednesday. Boeing has the highest weight of 8.8% in the Dow Jones 30 stock index. With a weight of 5.5%, Apple stock holds the fifth position. Together, both stocks account for 14.3%.
The iShares U.S. Aerospace & Defense ETF (ITA) and the Technology Select Sector SPDR Fund (XLK) gained 0.8% and 1.2%, respectively, on Wednesday. ITA’s portfolio consists of companies engaged in manufacturing, assembling, and distribution of aerospace and defense equipment. XLK invests in tech stocks listed on the S&P 500.
Boeing stock gained on Wednesday. According to the company, it hired hundreds of temporary workers to help get the grounded 737 MAX planes ready for delivery. Notably, the aircraft has faced a worldwide flying ban since mid-March following two deadly crashes within five months. Air carriers have denied taking 737 MAX shipments until the safety concerns get cleared.
Boeing didn’t halt MAX production despite airlines’ resistance to take jet deliveries. The company intends to make the delivery process quick as soon as it gets regulatory approval. On Tuesday, the aircraft manufacturer said that it plans to fix the MAX problems in September. Boeing hopes to resume deliveries in October.
According to a Reuters estimate, the total cost associated with the MAX crisis has already crossed $8 billion. The expenses are mainly estimated compensation for MAX customers. The customers lost revenues and profit due to the 737 MAX grounding. Boeing recorded a $4.9 billion after-tax charge during the second quarter for airlines’ compensation.
Once Boeing gets regulatory approval in October, it can make the shipment process quick. The company’s preparations increased investors’ confidence. Investors are optimistic about Boeing getting approval in October.
The Dow Jones Index closed higher on Wednesday due to a substantial gain in Apple stock. On Tuesday, Apple announced that its credit card is available for all consumers. The stock rose after the announcement. In late March, the company launched a co-branded credit card, Apple Pay, in partnership with Goldman Sachs. The credit card is linked to the company’s Apple Wallet app. Customers can apply for the card through the Apple Wallet app.
The card has a lower interest charge on transactions and no annual fees. Apple announced several compelling rewards programs. In the press release, Apple said, “Customers will receive 2 percent Daily Cash every time they use Apple Card with Apple Pay, and 3 percent Daily Cash on all purchases made directly with Apple, including at Apple Stores, apple.com, the App Store, the iTunes Store and for Apple services.”
As a result, the card will likely gain market share quickly. Apple could be a competitive threat to other digital wallet companies. The strategy will help Apple diversify its portfolio and lower its dependency on iPhone sales.
Apart from Boeing and Apple, the Dow Jones also rose due to substantial gains in retail stocks. Home Depot (HD) and Nike (NKE) stocks rose 1.5% and 2.7%, respectively. Target’s (TGT) strong earnings results boosted the stocks. Target stock closed 20% higher on Wednesday. The company reported better-than-expected second-quarter results. Target’s second-quarter EPS of $1.82 beat analysts’ estimate of $1.62 and increased 23.8% YoY.
Home Depot posted upbeat bottom-line results on Tuesday. The company reported an EPS of $3.17, which beat analysts’ expectations of $3.08. The stock increased approximately 4% on a YoY basis.