© Reuters. WALL STREET ENDS ON A NOTE OF IRREGULAR
by Stephen Culp
NEW YORK (Reuters) – Wall Street finished on a positive note Thursday, with a closing record high for the Nasdaq, after indicators u.s. better than expected, and announcements that are perceived as accommodative of the european central Bank, even if JPMorgan Chase (NYSE:JPM) and General Electric (NYSE:GE) dragged the Dow Jones.
The index of 30 large values transferred 25,89 points, or 0.10%, to 25.175,31, while the S&P-500, wider, has gained 0.25% to 2.782,49. The Nasdaq Composite took more frankly 65,34 points (0.85 per cent) to 7.761,04, a new level, in closing, supported by technology and in particular Facebook (NASDAQ:FB).
Before the opening, the department of Commerce announced an increase of 0.8% in retail sales in may, an increase two times higher than expected, which confirms the scenario of an acceleration in u.s. growth in the second quarter, and justifies the optimism shown yesterday by the federal Reserve.
Entries weekly jobless claims, have shown an unexpected downturn last week to fall to their lowest level in nearly 44 and a half years.
On the side of central banks, the ECB has as expected announced the end of its asset purchase program by the end of 2018, but it has also promised not to raise its key rates before the end of the summer of 2019, which came as a relief to investors after the announcements of the federal Reserve, which raised rates for the second time of the year and left to provide for two other constrictions that could take place in September and December.
This perspective had pushed Wall Street Wednesday, but investors have this time responded well.
“The rate increases from the Fed, the ECB’s decision to end its program of bond buy-backs (…), all of this is ultimately positive because the central banks feel that the economy is strong enough to support it,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon (New Jersey).
The caution of the ECB on rates has, however, affected the compartment bank, leaded also by the flattening of the yield curve in the United States after the announcements of the Fed.
The yield spread between the loan to 30 years and bonds for 50 years fell Wednesday night to its lowest level since January 2012.
JP Morgan Chase was down 1.76%, the second largest drop of the Dow Jones behind General Electric (-1,80%), and financial (-0,93%) have finished in the back of the pack of the 11 major sectoral indices S&P-500.
The most significant growth sector was the reverse for community services, followed by consumer discretionary telecom.
Featured, Comcast (NASDAQ:CMCSA) jumped 4.64% after having formalized a counter-bid of $ 65 billion (€55 billion) on the assets that Twenty-First Century Fox (NASDAQ:FOX) had already agreed to sell to Walt Disney in December.
Disney has not been forgotten, with a gain of 2.30%, the best performance of the Dow Jones, many analysts believed that the two groups could share the assets of Fox in the media and entertainment. Fox, controlled by Rupert Murdoch, has taken of 2.11% in the meantime.
To technology, Facebook has awarded 2,29% and Alphabet to 1.39%, resulting in other internet stocks like Twitter (NYSE:TWTR) (+6,10%), which reached a high of three years.
The specialist of photo storage Dropbox (NASDAQ:DBX) has soared 14% to 36,12 dollars, its second best session since the 35% earned on its debut on the stock Exchange on 23 march. The title took up 80% in two and a half months of listing.
Oracle (NYSE:ORCL) has dropped out of 4,91% after lowering the price target by Nomura to $ 60 as against 64 dollars before.
The EURO UNDER 1.16 AND DOLLAR AFTER THE ECB
Some 6.75 billion shares have changed hands, in line with the average (6,70 billion) in the past 20 sessions.
The ECB’s announcements, which have the effect of repelling from June to September 2019 the likely date of a first rate hike in the euro area since 2011, have pushed down the euro and bond yields.
Coming just after the decision of the Fed to accelerate its rate hikes, the prospect of a continuance of the rate of the ECB until the end of the summer 2019 “has taken the stakeholders against the foot,” said Peter Ng, a currency trader at Silicon Valley Bank in Santa Clara (California).
The euro has pushed the threshold of 1.16 dollars to settle at 1,1582 dollar in the end of the day, a decrease of 1.8% – the strongest since the 2.37% June 24, 2016, the day after the vote the british in favour of the Brexit. “The rate differential between the United States and Europe widens, and it is the dollar that benefits from it,” says Ed Egilinsky, head of alternative investments at Direxion, New York.
The dollar index, which measures the value of the greenback against a basket of currencies, rose 1.2%.
The yen strengthened against the euro but also against the dollar before the outcome Friday of the monetary policy meeting of the Bank of Japan and the markets do not expect, however, no major announcement.
On the bond market, the yield of the loan to 10 years is relaxed to 2.9351% against 2,979% Wednesday, mimicking the trend in Europe where the yield on the Bund of the same maturity fell by six basis points.
Oil prices have finished on a note irregular, light crude to u.s. West Texas Intermediate, WTI), winner of 0.38% 66,89 dollars a barrel while Brent North sea fell by 1.04% to 75,94.
(with Sruthi Shankar in Bangalore, Véronique Tison for the French service)