US stocks snap 3-day los­ing streak in roller coaster week

Kuwait Times - - BUSINESS -

Gains among tech­nol­ogy com­pa­nies helped snap a three-day los­ing streak for US stocks Fri­day, though the mar­ket ended with its worst weekly loss since March. The mod­est re­bound came at the end of a tur­bu­lent week on Wall Street as escalating ten­sions be­tween the US and North Korea rat­tled global mar­kets.

In the first four days of the week, the Stan­dard & Poor’s 500 in­dex swung from mark­ing its lat­est record high to post­ing its big­gest sin­gle-day drop in nearly three months. The neg­a­tive head­lines pro­vided many in­vestors with an op­por­tu­nity to pocket some of their re­cent gains fol­low­ing a string of record highs fu­eled by strong cor­po­rate earn­ings.

“It’s been a bit of a roller coaster this week, with all the rhetoric be­tween the US and North Korea,” said Jeff Kravetz, re­gional in­vest­ment strate­gist at US Bank Wealth Man­age­ment. “That did tem­po­rar­ily shake in­vestors’ com­pla­cency, but we think mar­kets are ready to move higher in the back half of the year, and earn­ings and eco­nomic data are go­ing to drive that.”

On Fri­day, the S&P 500 rose 3.11 points, or 0.1 per­cent, to 2,441.32. The in­dex had its big­gest drop since midMay a day ear­lier. The Dow Jones industrials av­er­age gained 14.31 points, or 0.1 per­cent, to 21,858.32. The Nas­daq added 39.68 points, or 0.6 per­cent, to 6,256.56. The Rus­sell 2000 in­dex of smaller-com­pany stocks picked up 1.69 points, or 0.1 per­cent, to 1,374.23.

Re­cov­ery

The re­cov­ery fit a re­cent pat­tern of in­vestors us­ing dips to put more money in stocks. De­spite the past week’s de­cline, the major in­dexes are in pos­i­tive ter­ri­tory so far this year, led by the Nas­daq, which is up 16.2 per­cent. The S&P 500 is up 9 per­cent, while the Dow is up 10.6 per­cent.

“If you strip away what’s go­ing on in North Korea, and if you strip away what’s go­ing on in Washington, which are things that are tougher to pre­dict, the econ­omy, the global re­cov­ery, earn­ings, it all paints a very pos­i­tive pic­ture for the rest of the year,” Kravetz said. Ten­sions be­tween the US and North Korea con­tin­ued to sim­mer ear- ly Fri­day. In a tweet, Pres­i­dent Don­ald Trump warned of mil­i­tary ac­tion “should North Korea act un­wisely,” not­ing that the US is “locked and loaded.” Ear­lier in the week, Trump said the US would un­leash “fire and fury” on North Korea if it con­tin­ued to threaten the US.

North Korea had an­nounced a de­tailed plan to launch a salvo of bal­lis­tic mis­siles to­ward the U.S. Pa­cific ter­ri­tory of Guam, a major mil­i­tary hub and home to US bombers.

Still, there were fewer signs of anx­ious­ness in the mar­kets Fri­day. Bond and gold prices, tra­di­tional havens for ner­vous in­vestors, were lit­tle changed, and the VIX, a mea­sure of how much volatil­ity in­vestors ex­pect in stocks, fell 3.3 per­cent fol­low­ing a 44.4 per­cent jump the day be­fore. It’s still the high­est it’s been since May.

In­fla­tion

In­vestors also drew some en­cour­age­ment from new govern­ment data show­ing US in­fla­tion at the con­sumer level inched higher last month. July’s 0.1 per­cent in­crease in con­sumer prices sug­gests that the Fed­eral Re­serve may be less likely to raise in­ter­est rates next month. In­fla­tion has risen 1.7 per­cent over the past 12 months, sug­gest­ing that in­fla­tion pres­sures re­main well un­der con­trol. The Fed, which raised its key in­ter­est rate in March and June, has sig­naled it plans a third rate hike be­fore the end of this year. But some econ­o­mists say the Fed may stand pat for the rest of 2017 un­less in­fla­tion ac­cel­er­ates in com­ing months.

“Today’s in­fla­tion data put the Fed on pause and re­ally di­min­ishes the fact that there’s still some noise go­ing around with the North Korea-US sit­u­a­tion,” said Phil Blan­cato, CEO of Laden­burg Thal­mann As­set Man­age­ment. Tech­nol­ogy com­pa­nies, which suf­fered the brunt of the selling a day ear­lier, were back in the lead Fri­day. Lam Re­search Corp. climbed $4.82, or 3.2 per­cent, to $154.26.

Sea­gate Tech­nol­ogy gained 2.3 per­cent af­ter in­vestor ValueAct dis­closed that it had ac­quired a 7.2 per­cent stake in the dig­i­tal stor­age com­pany. Sea­gate shares rose 74 cents to $32.29. — AP

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