Dow, S&P hit record highs on strong tech, health stocks - Business News | The Star Online

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Dow, S&P hit record highs on strong tech, health stocks


  • Markets
  • Tuesday, 20 Jun 2017

Healthcare and tech stocks power Wall Street higher

Healthcare and tech stocks power Wall Street higher

NEW YORK: U.S. stocks rose on Monday, with the S&P 500 and the Dow hitting record highs with growth sectors such as technology in favor again as investors appeared to regain confidence in the economy after upbeat comments from Federal Reserve officials.

Nasdaq's biotechnology index rose 2.5 percent in its biggest one-day gain since February while the S&P's healthcare index had a record-high close.

Amazon.com's Friday announcement that it would buy Whole Foods and an upbeat tone from Federal Reserve speakers seemed to help reassure investors after the U.S. central bank's rate hike last week, according to J. Bryant Evans, portfolio manager at Cozad Asset Management, in Champaign, Illinois.

"It looks like a bet that interest rates, such as the 10-year yield, are bottoming out," said Evans. "It's a resumption of this idea that the economy is in decent shape."

He added that a "push in M&A tends to propel the market" and that the Amazon/Whole foods $13.7 billion deal was a "tangible sign the mergers and acquisition environment is pretty good right now."

The Dow Jones Industrial Average rose 144.71 points, or 0.68 percent, to end at 21,528.99, the S&P 500 gained 20.31 points, or 0.83 percent, to 2,453.46 and the Nasdaq Composite rose 87.26 points, or 1.42 percent, to 6,239.01.

The S&P's financial sector was also one of the benchmark's strongest gainers with a 0.98 percent rise after New York Federal Reserve President William Dudley said U.S. inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening monetary policy.

The Fed commentary last week had surprised investors who expected more caution after some weak U.S. economic data.

"My sense is investors must be looking at this as a pro-growth belief that perhaps Dudley sees underlying strength in the economy that the data doesn’t show right now. The Fed’s base case is that this is just kind of a soft patch and we will continue to cycle higher," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

The S&P technology sector finished up 1.7 percent after its second straight weekly decline, which was triggered by fears of stretched valuations. Tech stocks have led the S&P 500's 9.6 percent rally this year.

"Investors were temporarily chased from the space but many companies in the sector offer growth which is difficult to find in the market as a whole," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Apple rose 2.9 percent to $146.34, providing the biggest boost to the S&P followed by JPMorgan Chase, which rose 2.2 percent to $88.07.

The S&P 500 bank subsector rose 1.3 percent.

The two biggest boosts for the biotechnology index were Biogen Inc and Clovis Oncology.

Biogen ended up 3.5 percent to $260.54, after it was upgraded to "neutral" from "sell" at UBS.

Shares of Clovis Oncology soared 46.5 percent to $87.88 after late-stage data on its ovarian cancer drug.

Advancing issues outnumbered declining ones on the NYSE by a 1.76-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 99 new highs and 87 new lows.

About 6.3 billion shares changed hands on U.S. exchanges compared with the 6.8 billion average for the last 20 sessions. - Reuters

Earlier report:

NEW YORK: US stocks were higher in early afternoon trading on Monday, with the S&P 500 and the Dow Jones Industrial Average hitting record highs as technology stocks rebounded after recent losses.

The S&P technology sector is coming off its second straight weekly decline, triggered by fears of stretched valuations and investors moving money to other sectors. Tech stocks have led the S&P 500’s 9.4% rally this year.

Apple rose 2.5%, providing the biggest boost to the three major sectors. Facebook and Alphabet were also higher.

The tech sector’s 1.37% rise led the gainers on the S&P 500, putting it on track for its biggest one-day percentage rise since March.

“Some of it is folks taking a second-look at names that may have been unduly punished in the rotation out of tech that started about 10 days ago,” said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York.

“There has been no change in the fundamentals for the tech sector. Earnings growth, earnings revisions and forward looking indicators remain healthy.”

At 12:47pm ET (1647 GMT), the Dow was up 115.2 points, or 0.54%, at 21,499.48, and the S&P 500 was up 17.37 points, or 0.71%, at 2,450.52.

The Nasdaq Composite was up 75.64 points, or 1.23%, at 6,227.39.

While the tech sector is at the high end of its valuation, Lefkowitz said they were nowhere near the bubble territory of the 90s.

The S&P tech sector is trading at about 18.7 times forward earnings, compared with the historical 10-year average of 14.5, according to Thomson Reuters Datastream.

New York Fed President William Dudley, a close ally of Fed chair Janet Yellen, said US inflation was a bit low but should rise alongside wages as the labour market continues to improve, allowing the Federal Reserve to continue gradually tightening US monetary policy.

Yellen’s confidence as her team raised interest rates for the third time in six months last week surprised investors who had expected more caution about the economy following a set of weak US economic data.

Advancing issues outnumbered decliners on the NYSE by 1,808 to 1,049. On the Nasdaq, 1,888 issues rose and 916 fell.

The S&P 500 index showed 49 new 52-week highs and 10 new lows, while the Nasdaq recorded 99 new highs and 87 new lows. - Reuters

 

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