Dow hits record high again; Nas­daq higher

Kuwait Times - - BUSINESS -

The Dow hit an­other record high and the Nas­daq opened slightly higher yes­ter­day, while the S&P was lit­tle changed. The Dow closed at a record high for the eighth straight ses­sion on Fri­day, pow­ered by a ro­bust July em­ploy­ment re­port that showed US em­ploy­ers added more jobs than ex­pected in the month.

The re­port is likely to clear the way for the Fed­eral Re­serve to an­nounce a plan to start shrink­ing its $4.2 tril­lion bond port­fo­lio in Septem­ber, and could strengthen its case to raise rates for the third time this year in De­cem­ber. “The jobs re­port was quite well­re­ceived on Fri­day de­spite suf­fer­ing the same pit­fall that has plagued the US re­cov­ery for years, in­ad­e­quate wage growth,” said Craig Er­lam, se­nior mar­ket an­a­lyst at on­line forex bro­ker Oanda.

At 9:36 am ET (1336 GMT), the Dow Jones In­dus­trial Av­er­age was down 8.3 points, or 0.04 per­cent, at 22,084.51, the S&P 500 was down 0.42 points, or 0.01 per­cent, at 2,476.41. The Nas­daq Com­pos­ite was up 9.36 points, or 0.15 per­cent, at 6,360.92. Six of the 11 ma­jor S&P sec­tors were lower, with the en­ergy in­dex’s 0.49 per­cent fall lead­ing the de­clin­ers.

Oil prices edged lower, slid­ing away from nine-week highs, as wor­ries lin­gered over high pro­duc­tion from OPEC and the United States. Mean­while, in­vestors will con­tinue to closely track the sec­ond-quar­ter earn­ings sea­son to see if pricey val­u­a­tions are jus­ti­fied.

The S&P is trad­ing at 18 times ex­pected earn­ings, com­pared to its 10-year av­er­age of 14, ac­cord­ing to Thom­son Reuters Datas­tream.

Shares of United Tech­nolo­gies were down 1.56 per­cent fol­low­ing a re­port that the com­pany has sub­mit­ted an of­fer to buy air­craft com­po­nent man­u­fac­turer Rock­well Collins. Rock­well was up 5.97 per­cent. War­ren Buf­fett’s Berk­shire Hath­away was down 1.19 per­cent af­ter the com­pany re­ported a drop in sec­ondquar­ter profit.

Tyson Foods rose 3.74 per­cent af­ter the No1 US meat pro­ces­sor re­ported bet­ter-than-ex­pected quar­terly profit and sales.

Euro­pean stock mar­kets traded mixed yes­ter­day de­spite in­vestor en­thu­si­asm over bright jobs data in the United States. Asian eq­ui­ties also ad­vanced yes­ter­day, spurred by the strong US fig­ures on Fri­day which raised op­ti­mism over the health of the world’s big­gest econ­omy.

US stocks started the week where the Dow left off Fri­day af­ter the rosy em­ploy­ment fig­ures had sent the US blue-chip in­dex to an eighth straight record fin­ish. In open­ing trad­ing the Dow moved a few points higher, with the S&P 500 and Nas­daq Com­pos­ite also ris­ing.

Lon­don pushed ahead yes­ter­day but Frank­furt was hob­bled by lack­lus­tre sec­ond-quar­ter earn­ings from Ger­man health­care gi­ant Fre­se­nius. Paris was near flat. “Euro­pean stock mar­kets are quiet this morn­ing,” said an­a­lyst David Mad­den at CMC Mar­kets UK. “The FTSE 100 is out­per­form­ing the eu­ro­zone bench­marks ... as min­ing com­pa­nies are help­ing the Lon­don mar­ket. “Glen­core, An­glo Amer­i­can, Rio Tinto and BHP Bil­li­ton are some of the big­gest gain­ers on the FTSE 100 as the price of iron ore moved higher in Asia overnight.” The US La­bor Depart­ment re­ported that the econ­omy added more than 200,000 net new po­si­tions for the sec­ond straight month-well above fore­casts-with the unem­ploy­ment rate fall­ing back to a 16-year low.

An­a­lysts said the ro­bust job creation fig­ures cou­pled with ris­ing wages could spur the US Fed­eral Re­serve to raise the cost of bor­row­ing a third time this year to keep a tight rein on in­fla­tion.

“The com­bi­na­tion of stronger jobs and wage growth, a fall in the unem­ploy­ment rate and an in­crease in the par­tic­i­pa­tion rate all scream a strong labour mar­ket,” added Greg McKenna, an­a­lyst at Ax­iTrader.“That, in turn, re­in­forces the Fed’s path back to­ward pol­icy nor­mal­iza­tion and sug­gests the ta­per­ing of the bal­ance sheet will be­gin soon and more rate hikes are com­ing.”

‘Broad-based growth’

The prospect of higher rates has pro­vided mod­est sup­port for the green­back. Con­tin­u­ing po­lit­i­cal tur­moil in Wash­ing­ton had cast doubt on Pres­i­dent Don­ald Trump’s stalled eco­nomic growth agenda and dragged the dol­lar down, and mar­ket-watch­ers warned the out­look for the dol­lar re­mains un­cer­tain.

“Given typ­i­cal Au­gust liq­uid­ity con­di­tions, we could be in for a bumpy week as the mar­ket irons out if we’re in a short­term USD cor­rec­tion or a trend re­ver­sal,” said Oanda an­a­lyst Stephen Innes. In com­modi­ties trad­ing, US crude was trad­ing at around $49 as a meet­ing of lead­ing oil-ex­port­ing coun­tries gets un­der­way to ex­am­ine why some pro­duc­ers were fail­ing to fully im­ple­ment cuts to rein in global sup­ply. — Agen­cies

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