Dow hits record high again; Nasdaq higher
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.”
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