S&P 500 closes at record high; Dow posts its best week since De­cem­ber

Muscat Daily - - BUSINESS -

New York, US - Amer­i­can stocks rose to record lev­els on Fri­day and posted strong weekly gains. The Dow Jones in­dus­trial av­er­age rose 64.86 points to close at 22.2686.34, a record. Boe­ing, 3M and Ap­ple con­trib­uted the most to the gains. The in­dex also posted an in­tra­day high of 22,275.02

The S&P 500 also notched record highs, ad­vanc­ing 0.2 per cent to fin­ish at 2,500.23. Fri­day also marked the first time the in­dex broke above 2,500. In­for­ma­tion tech­nol­ogy and fi­nan­cials were among the best-per­form­ing sec­tors.

The Nas­daq com­pos­ite out­per­formed, clos­ing 0.3 per cent higher at 6,448.47; it also man­aged to an in­tra­day record of 6,464.27.

“Peo­ple are al­ways look­ing for a rea­son for the mar­ket to go down but stocks keep go­ing up and earn­ings re­main strong,” said JJ Ki­na­han, chief mar­ket strate­gist at TD Amer­i­trade.

Tech stocks kicked off the ses­sion as the worst per­form­ers be­fore turn­ing around in late­morn­ing trad­ing. Shares of Ap­ple and Face­book both closed higher.

The three ma­jor in­dexes fin­ished the week at least 1.4 per cent higher. The Dow also notched its big­gest weekly gain since the week of De­cem­ber 9.

“The mar­ket has been di­gest­ing its gains in a con­sol­i­da­tion phase fol­low­ing Mon­day’s gap up” in the S&P 500, said Katie Stock­ton, chief tech­ni­cal strate­gist at BTIG, in a note. “The break­outs that have de­vel­oped sug­gest over­bought con­di­tions will be ab­sorbed with­out a sig­nif­i­cant pull­back.”

The SPDR S&P Bank ex­change-traded fund (KBE) gained 4.2 per cent for the week, its big­gest weekly rise since June. The jump comes on the back of stronger-than-ex­pected in­fla­tion num­bers which in­creased ex­pec­ta­tions for a Fed­eral Re­serve rate hike.

The La­bor Depart­ment said Thurs­day that the con­sumer price in­dex rose 1.9 per cent last month on a year-over-year ba­sis. Mar­ket ex­pec­ta­tions for a De­cem­ber Fed rate hike are now at 52.9 per cent, ac­cord­ing to the CME Group’s Fed­watch tool.

“Al­though CPI re­mains be­low the FOMC’s 2 per cent tar­get, the move back higher should be enough to con­vince most ob­servers that the Q2 weak­en­ing was a tem­po­rary phe­nom­e­non and that this ver­sion of in­fla­tion should be able to move back above 2.0 per cent dur­ing the 4th quar­ter,” said Michael Shaoul, chair­man and CEO of Mar­ket­field As­set Man­age­ment, in a note to clients.

“Our own view is that cur­rent con­sen­sus un­der­plays the de­gree to which CPI has been held back by the long com­mod­ity bear mar­ket that ex­tended well beyond en­ergy prices,” Shaoul said.

The Fed is sched­uled to an­nounce its lat­est de­ci­sion on mon­e­tary pol­icy next week. Most mar­ket par­tic­i­pants do not ex­pect a rate hike. How­ever, the cen­tral bank is pro­jected to an­nounce the un­wind­ing of its mas­sive $4.5tn port­fo­lio. The Fed ac­crued most of its hold­ings dur­ing the fi­nan­cial cri­sis.

US Trea­sury yields have also surged this week. The bench­mark 10-year yield started the week near 2.09 per cent; it traded around 2.19 per cent Fri­day.

Wall Street di­gested two key data sets Fri­day ahead of the Fed’s meet­ing.

Re­tail sales for Au­gust fell 0.2 per cent. “I think Hur­ri­cane Har­vey had a bit of an im­pact on the data,” said Christian Ma­goon, CEO of Am­plify ETFs. Mean­while, in­dus­trial pro­duc­tion fell nearly 1 per cent last month.

In­vestors also looked to Asia af­ter North Korea launched a mis­sile that flew over Ja­pan and landed in the Pa­cific Ocean. Still, world mar­kets had a mixed re­ac­tion to the event.

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